KCB [photo: The Mount Kenya Times]
Nov, 13th 2020 – Kenya Commercial Bank (KCB) has moved to the High Court seeking to enforce a Sh4.3 billion award against Nairobi County arising from a longstanding loan dispute the lender took over from Equity Bank. In an application filed before the High Court in Milimani, KCB wants the court to recognize the award as a judgment and compel Mike Sonko’s government to pay the money.
The county government through lawyer Steve Mogaka has pleaded for more time to file an objection and also bring in the National Treasury and the Controller of Budget into the case. Evidence presented before the court showed that Equity Bank loaned the defunct city Council Sh5 billion in 2011. The loan was carried over to the county government.
KCB has pleaded through Mohammed Muigai saying, “Leave be and is hereby granted to the applicant to enforce both the third interim award and the final award as a decree of this honorable court.”
Equity, in 2014, said that City Hall owed it more than sh3.3 billion with an overdraft of sh1.45 billion. In an agreement dated the same year, KCB bought over the loans and interest giving the county more time to repay the debt by increasing the maturity period to eight year at a 13 percent lending rate. The lender also extended a grace period of six months before the county could start paying the debt.
However, a dispute rose and the matter was referred to an arbitrator where a determination was issued on the 12th of November 2019. The arbitrator, in his decision said that Nairobi County government has an outstanding debt of sh4.29 billion. Bliss further directed the county to pay sh6 million as additional costs attracted during pursue of the debt and a further sh3 million for tribunal costs.
The lender said that the county government has been unwilling to settle the amount, “The sums awarded to the applicant are significant. As such, it is necessary for the applicant to recover these amounts.”