Calls Mount for Kenyan Finance Minister to Resign Over Hotel Sale

By Derek Kilner

Nairobi

30 June 2008

Calls continue to mount for Kenya's finance minister to step down overthe sale of a luxury hotel in Nairobi. As Derek Kilner reports fromthe Kenyan capital, critics say the hotel was sold for a price farbelow its value, reviving concerns about corruption in a country thathas long struggled with issues of graft.

Cabinet ministers,members of parliament, non-governmental organizations and newspapereditorials have called for Kenya's Minister of Finance Amos Kimunya toresign, following news of a secret deal to sell the Grand Regency Hotelin downtown Nairobi.

Kimunya, who was appointed by PresidentMwai Kibaki in 2006, approved the sale of the hotel to a state-ownedLibyan company for about $45 million. Kimunya says the price was abovethe property's official valuation, but critics say the estimated marketvalue is at least $100 million, more than the selling price.

Thedeal has been condemned by leaders from the president's coalition, towhich Kimunya belongs, as well as the Orange Democratic Movement, theparty of Prime Minister Raila Odinga who challenged President Kibaki inlast year's disputed elections before joining a unity government.

TheMinister of Nairobi Metropolitan Development Mutula Kilonzo, a Kibakially, urged Kimunya to resign, saying the price of the sale was"laughable".

Minister of Land James Orengo, an ally of Mr.Odinga who exposed the deal, called the sale "fraudulent" and"mafia-like." Another Odinga ally, Minister of Agriculture WilliamRuto called the deal a "farce."

Kenya's The Nation newspapersaid in an editorial that the deal "stinks to high heaven." Anti-corruption organizations, including the Kenya chapter ofTransparency International and the Mars Group have called for aninvestigation.

Mars Group chairman Mwalimu Mati says the sale was either vastly undervalued or is hiding deeper misconduct.

"Thesecond and perhaps the more intriguing suggestion is that the saleprice recorded is only a fraction of what was paid, and if that is thecase, then that would be very, very illegal," said Mati. "Infact, he is being accused of having a secret interest in theundisclosed part of the sale price, which amounts to several billionshillings."

The hotel was owned by Kenyan businessman KamleshPattni who was at the forefront of a scheme in the 1990s to defraud thegovernment of $1 billion through nonexistent exports of gold anddiamonds. The case became a symbol of Kenya's troubles with corruption.

InApril, Pattni turned over the hotel to Kenya's Central Bank, in a dealwith the state-run Kenya Anti-Corruption Commission that many believegave him immunity from further prosecution. Calls have also surfacedfor the heads of the Central Bank and the Anti-Corruption Commission tostep down.

Even ministers and members of parliament from Mr.Kimunya's home region of Central Province, who often stick together,have distanced themselves from the finance minister.

Mati, of Mars Group, says there are suspicions of wider government involvement.

"Ithink we should be very concerned that a minister of finance, knowinghow much attention there was on him would be so brazen," said Mati."The questions Kenyans usually ask are who has the audacity to defy allthese institutions unless it is somebody who has higher protection. Sothe direction of attention is now starting to go up, and upwards inthis case would be to the appointing authority, the president. So Ithink we have got a scandal that is yet to totally come to boil. Iactually suspect that this is just the tip of the iceberg."

A group of lawmakers has said it will launch an effort to censure Kimunya in parliament, which would force his resignation.

PrimeMinister Odinga, who campaigned last year on a pledge to fight thecorruption of the previous Kibaki government, has said he will call acabinet-level meeting on the subject this week.

Kimunya hasremained defiant, saying he should be congratulated for bringing ingovernment revenue and dismissing complaints as "propaganda".