E-Clips:- Business Pictorial - Leaders Want New Probe On Mystery Firm Over Contract

The Public Accounts Committee now wants Anglo Leasing and Finance Ltd to be thoroughly investigated.

The committee recommended that investigators should establish how much money the Government lost in the Sh4 billion project, which has since been shelved. Investigations should also be carried out to establish how the company was introduced to the Government in August 2001 by officers in the Office of the President and the Treasury.

The forensic laboratories project first came to light when former Finance permanent secretary Joseph Magari appeared before PAC to answer questions about the passports project. He said the firm entered into a contract with the Government to provide the Sh4 billion needed to put up three buildings to house forensic laboratories for the CID.

Under the contract, the loan was to be repaid in 12 years at a half-yearly instalment on a reducing balance. The loan was not to attract any interest, but there was a clause for default interest of 0.5 per cent incase of a delay in payment.

Immediately the contract was signed, the then Kanu Government paid a commitment fee of Sh72 million. Anglo Leasing was expected to build the three laboratories, equip them and hand them over to the Government within a year of signing the contract.

But even as late as last year, no laboratory had been built. The firm was last November paid Sh152 million for merely submitting architectural drawings and designs to the Ministry of Roads, Public Works and Housing.

Acting permanent secretary Mr J. M. Oyula confirmed the existence of the project. Mr Dave Mwangi, the PS in Office of the President, the contracting ministry, denied any knowledge of the project or its financing. Finance minister David Mwiraria expressed shock that the Government had made two instalments of the half yearly payments and immediately ordered the cancellation of the payments and subsequent return of the money.

Late last month, the Secretary to the Cabinet, Mr Francis Muthaura gave a statement clearing the civil servants involved from any wrong doing and raising the ire of donors, Opposition MPs and the civil society.

Later, leading donors wrote to President Kibaki expressing concern over the high level of collusion between the Government and the company and singled out the Treasury and the Office of the President for censure. On Monday, the donors released a statement threatening to stop further aid if the Government did not take action on suspects. They urged that the ministers mentioned in connection with the two projects - the passports and forensic laboratories - to step aside to pave way for further investigations.