KCB Group CEO Joshua Oigara. PHOTO | SALATON NJAU | NMG The High Court has cleared KCB Group to seize and auction the assets of Nairobi County over a Sh4.3 billion defaulted loan.
Justice Chacha Mwita dismissed the county government’s application challenging the amount awarded by an arbitrator in November 2019.
The lender moved to court in 2020 seeking recognition of the award by Phillip Bliss Aliker, an arbitrator who was chosen by both parties.
City Hall has, however, continued to default on the loan even after an arbitrator confirmed KCB’s claims and directed the Nairobi County government to settle the debt.
“In the circumstance, therefore, having considered the application, the response and submissions as well as the law and the decisions relied on by parties, and upon giving due consideration to all those, the conclusion, I come to is that the application dated 2nd October 2020 has merit,” the judge said.
The judge said there was no dispute that parties agreed to go for arbitration, settled on the sole arbitrator and proceeded before him.
He dismissed the county government’s application to have the award set aside, saying it did not give a good explanation as to why it took it too long to challenge the award.
The amount published in November 2019 and confirmed in May 2020 includes Sh4.29 billion of the award and costs of Sh6 million.
The loan was initially provided to the defunct Nairobi City Council by Equity Bank . The debt was inherited by Nairobi County following the creation of the devolved governments in 2013.
KCB bought the loan from Equity in September 2014, offering better terms on the credit facility to the county government.
Justice Mwita said the law demands that an arbitral award be recognised as binding and enforced after court’s approval.The county government further argued that it was not given an opportunity to be heard regarding the statement of account provided to the arbitrator, thus being condemned unheard.City Hall runs a budget that is dominated by payment of salaries to its bloated workforce, leaving little for payment of debt and key projects like building roads and hospitals.Its budget woes have been worsened by the transfer of Nairobi’s key functions and cash to the Nairobi Metropolitan Services (NMS) under Major-General Mohammed Badi.Evidence presented before the court showed that Equity had lent the defunct Nairobi City Council Sh5 billion in 2011.The money was supposed to help pay off statutory debts to allow the […]