How SGR deal places Kenya's sovereignty and assets at risk of being siezed by China

An analysis of the initial deal signed on May 11 2014 by Treasury CS Henry Rotich reveals that the deal will be governed by Chinese laws with all disputes being resettled in Beijing, China effectively leaving Kenya with little or no control over the country’s largest infrastructure project.

Kenya’s assets both at home and abroad are also not protected in the deal with China at liberty to seize them should Kenya default in repaying the Standard Gauge Railway loan

According to the Sunday Nation, clause 5.5 of the deal reads that “Neither the borrower (Kenya) nor any of its assets is entitled to any right of immunity on the grounds of sovereignty or otherwise from arbitration, suit, execution or any other legal process with respect to its obligations under this Agreement, as the case may be in any jurisdiction”.

President Uhuru Kenyatta interrcts with commuters on the SGR train on 23 Dec 2018 Pulse Live Kenya

KPA at risk of being siezed by China-leaked audit report

Experts reveal that the devil lies in the details of the blanket reference to “any asset” which allows the Chinese lenders to seize critical resources and assets ranging from airports and natural resources to embassies abroad.

A leaked Kenya Ports Authority (KPA) caused public outrage after it alleged that the port is vulnerable to being taken over by China should Kenya default in repaying the loan.

The contract signed by CS Rotich and Mr Li Riogu, then-Chairman and President of the State-owned Export-Import (Exim) Bank of China compels Kenya to import goods, technology and services from China.

Government gagged in SGR deal, CS Rotich responds

The SGR loan agreement, signed May 11 2014 effectively gags the Kenyan government from making details of the deal that was marred by claims of corruption and reports that the cost was inflated by more than a hundredfold deal public as is documented in the confidentiality clause 17.7.

The clause reads in part that “The borrower (Kenya) shall keep all the terms and conditions hereunder or in connection with this agreement strictly confidential.

"Without the prior written consent of the lender (China), the borrower shall not disclose any information hereunder or in connection with this agreement to any third party unless required by applicable law”.

The clause contradicts Freedom of Information requirements by the Kenyan Constitution.

When Treasury CS Henry Rotich was asked about the full implications of the controversial clauses, his terse response was: “Where did you get such information? Send me where you got it from. Not aware about such a thing.”

Despite a promise by President Kenyatta to release the SGR deal to the public during his address on 28 Dec 2018 when responding to a question from NTV’s Mark Masai, the public is still groping in the dark more than two weeks later as details of the controversial deal remain a closely guarded secret.

File image of State House Spokesperson Kanze Dena during a past media briefing Pulse Live Kenya

Kanze Dena responds to delays in making the deal public and allegations of secrecy

Speaking on the delay in making the deal public and secrecy surrounding the deal, State House Spokesperson Kanze Dena stated that “It has nothing to do with secrecy, we have been on holiday and we are still settling back.”

"There is no diplomatic barrier preventing Kenya from making the loan deal public. The document will be made available even this week to everyone through the media houses,” she added.

Law Society of Kenya Nairobi Branch Chairman Charles Kanjama who was interviewed by Nation faulted the deal, maintaining that Kenya got a raw deal.

“The agreement is being made in Kenya, the railway is built in Kenya and the assets they are talking about are in Kenya, so why is it being governed by the laws of China?

"Had there been more transparency or choices of who funds the railway then Kenya may have got a better deal,” Kanjama stated.