Kenya discusses hotel sale

2008-07-03 19:25

Nairobi - Kenyan Prime Minister Raila Odinga called ministers of the cabinet's finance committee together on Thursday to discuss the fast-moving controversy that is filling Kenya's front pages and provoking outrage among its people.

A Kenyan government report into the secretive sale of a luxury Nairobi hotel has recommended the finance minister and central bank governor to step down to allow a full investigation into the "fraudulent" transaction.

Anti-graft watchdogs and some ministers have sharply criticised the no-bid sale of the Grand Regency to a group of investors, including Kenyans and Libyans, as the latest example of high-level corruption in east Africa's largest economy.

The government said in a statement on Thursday it had blocked completion of the deal "to protect the property until the government finalises ... the issues which have arisen in regard to the sale transaction of the property".

Odinga said he had no indication that Kimunya was on the verge of resigning: "He remains minister until otherwise announced."

The prime minister added, however, that the government would deal "very, very effectively" with any cases of misuse of public funds. "Any kind of breach is not going to be tolerated."

Calls to step down

The Wako-led report recommended that Kimunya and Central Bank Governor Njuguna Ndung'u step down over a deal that was "false, fraudulent and designed to deceive", according to a version read to Reuters by an aide to the team.

Kimunya, who said the hotel went for 2.9 billion shillings last week, told parliament on Wednesday "my hands are totally clean".

Political critics say the government asset was sold in secret at a knockdown price. Some analysts say the price was fair and in fact may have been higher than average.

In the capital Nairobi, police used teargas to disperse dozens of students protesting outside parliament chanting "Kimunya must go".

The Grand Regency affair has had a marginally unsettling effect on local financial markets, with the shilling currency down 2% against the dollar this week.

Despite the no-confidence vote, it will be up to President Mwai Kibaki to decide whether his minister stays in office.

- Reuters