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Kenya Allegations

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DP World is at the centre of a controversial plan to concession multiple port facilities in Kenya. Mike Mundy reports on serious allegations made and fundamental questions raised about the scheme

As Port Strategy goes to press, reports are emerging of DP World having agreed a deal with the outgoing Kenya Government to takeover, develop, manage and operate key port facilities in the ports of Mombasa, Lamu and Kisumu.

News of the deal was broken to local media, in forthright terms, by the Kenya Kwanza Alliance, an alliance of multiple political interests led by William Ruto, the current Deputy President and a Presidential candidate. Elections are scheduled to take place in Kenya on August 9 for the post of President, members of the National Assembly and Senate, as well as regional posts.

The Kenya Kwanza Alliance presented a five-page statement to the media on Wednesday June 29 in Nairobi – a statement that can only be described as hard hitting, highly accusatory and one which ultimately raises a number of important questions.

The opening sentence sets the tone: “Today, we reveal to Kenyans a clandestine plot by the outgoing Handshake Government of Uhuru and Raila to illegally mortgage our ports of Mombasa, Lamu and Kisumu, to a foreign country.”

The statement goes on to level several specific accusations including: 5 That the deal had been crafted on a secret basis “under the guise of an Economic Cooperation Agreement with the

United Arab Emirates, which the Kwanza Alliance alleges,

“epitomises grand corruption…” 5 That, there is “illegality in the opaque and hurried nature of this transfer of national assets.” 5 That, there “may be an engagement between a few people in government who may be keen to conclude the ‘illegal deal’ with speed before government changeover in August.” 5 That, the deal represents a: “Blatant violation of Article 227 of the Constitution and the Public Procurement and Asset

Disposal Act 2015.” The key factor here being that in combination these two pieces of legislation dictate that,

“when a State Organ contracts for services, such procurement should be done through a system that is fair, equitable, transparent, competitive and cost-effective.” 5 That, “the takeover of national strategic assets cannot be purported to be constitutionally processed and concluded without the involvement of Parliament.” 5 That there is also a violation to the Constitution in that matters relating to ports and harbours fall under the jurisdiction of both the National and County governments.

However, the Counties of Lamu, Mombasa and Nakuru were not consulted.

DEAL SPECIFICS

The Kwanza Alliance statement alleges that the origins of the proposed port deal hail from “a meeting in Mombasa disguised as Raila’s birthday party attended by outgoing President Uhuru Kenyatta, Raila Odinga (currently a presidential candidate) and the Governor of Mombasa Ali Hassan Joho.” Raila Odinga, earlier this year, stated that if elected he would retain President Kenyatta as an adviser in his government.

Subsequent to this first meeting the Kwanza Alliance alleges “the trio made several trips to Dubai jointly and severally,” where the parameters of the deal were worked through. These, the Alliance contends, were developed to comprise the following, that DP World will: i Redevelop berths 11 to 14 and establish a special economic zone at Mombasa. (Berths 11 – 14, currently handling containers and conventional cargo, that have long been slated for redevelopment as a high-capacity container terminal – existing capacity is put at 420,000TEU.) ii Equipping and operating the container terminal at the Port of Lamu. iii Development of a special economic zone adjacent to the

Port of Lamu. iv The development and operation of cold chains and logistics parks at both Kisumu and Naivasha.

GOVERNMENT RESPONSE

In response to the Kwanza Alliance allegations Ukur Yatani, Treasury Cabinet Secretary, has confirmed the existence of the agreement but rejected the idea that President Uhuru Kenyatta had mortgaged the country’s infrastructure. Essentially, he suggested the agreement is part of an effort to attract investors into the country and that would not result in it, “losing any of its assets or benefits but realise more revenue and employment opportunities for its citizens.”

HOT ISSUE

When news of this deal surfaced it was certain to become a hot issue. Mombasa port over the years has been at the centre of diverse corruption allegations and it was more or less certain that this latest development would add fuel to this simmering fire, which has proved to be the case. Clearly, a number of the allegations made by the Kwanza Alliance are very serious and it can be argued deserve a more comprehensive response.

One further relevant point is that port opportunities in Kenya have long been sought by foreign port sector investors and as such there are strong grounds to run any related concession process through a properly structured international tender which may realise stronger benefits than those foreseen. With this strong investor interest manifest, why, it is reasonable to ask, has this option, a tried and tested route to achieving an efficient and rewarding public private partnership, not been given serious consideration?

8 Berths 11 – 14,

port of Mombasa – jewel in the crown of the proposed deal?

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