Pattni to get millions in botched EACC deal

The anti-graft agency will have to pay two companies associated with businessman Kamlesh Pattni millions of shillings after the agency lost a Court of Appeal suit challenging the payment.

Three Court of Appeal judges dismissed an appeal by the defunct Kenya Anti-Corruption Commission (KACC) now known as the Ethics and Anti-Corruption Commission (EACC), saying the compensation fee of Sh20.5 million to the two companies associated with Mr Pattni was correct.

EACC will now pay Mr Pattni the Sh20.5 million plus interest for the more than 15 years that the dispute has been in court.

Justices William Ouko, Asike Makhandia and Sankai ole Kantai agreed with a High Court judgment, which had earlier ruled that the amount owed to the firms associated with the tycoon was valid.

The compensation fee was brought about by a botched prosecution and attempt to place Marshalls East Africa Ltd and Delphis Bank Ltd under receivership for having been bought using proceeds from the Goldenberg scandal.

Mr Pattni and KACC settled the matter before it went for trial, prompting the tycoon to seek compensation for legal bills amounting to Sh140.9 million.

Mr Pattni has been tried but never convicted despite multiple investigations into the suspected loss of some $1 billion (Sh103 billion) of public funds over bogus diamond and gold exports, labelled the Goldenberg scandal.

The scandal that nearly ruined the Kenyan economy, spurred inflation, devaluation of the shilling and prompted international donors to cut funding to then President Daniel arap Moi’s regime.

The anti-graft agency had sought to place Marshalls East Africa Ltd and Delphis Bank as well as seven other companies under receivership, arguing that they were acquired using Goldenberg.

It also sought to stop the transfer of some of the shares in the firms to businessman Ketan Somaia.

Marshalls East Africa Ltd and Delphis Bank Ltd sought Sh60, 470,778 and Sh80, 573,021, respectively, but the court’s deputy registrar reduced the fee to Sh10,266,320 for each of the firms.

KACC opposed the payment at the High Court, arguing the costs were excessive and that the deputy registrar had made an errors because the two companies did not file any defence or response to the main suit.

After hearing the case, Justice Joseph Sergon dismissed the KACC suit and said the deputy registrar had not made any error in arriving at the figure.

The commission filed a second appeal but Justices Ouko, Makhandia and ole Kantai agreed with High Court judge.

“As we respectfully agree with the judge, we reiterate that there can be no doubt, from what we have said that the dispute was not only complex but also novel,” the they said.

They noted that Justice Sergon had correctly observed that the appointment of a receiver manager over the companies was bound to paralyse and divest the powers of the directors of the two companies and vest them in the manager.

The two companies accused KAAC of not conducting due diligence, arguing that withdrawal of the receivership pointed to an agency driven by malice.

But KAAC defended itself, saying it was erroneous for the taxing officer to come to the conclusion that the matter was complex based merely on the volume of the record and without stating any specific issue that made him come to that conclusion.