State House is virtually running City Hall, making key decisions and appointments and reducing Governor Mike Sonko to a disgruntled figurehead.
An intergovernmental committee in the President's Office is deciding major projects, awarding mega contracts and filling influential posts in the capital.
It's all part of Jubilee's pre-election script to safeguard state interests in the capital, which generates 60 per cent of Kenya's GDP.
The Star has established Sonko and Deputy Governor Polycarp Igathe have a frosty relationship after the city boss learned of State House's efforts to have Igathe run the show.
"This is state capture, control of resources going to the counties and political positioning by the executive," Ndung’u Wainaina, Executive Director of the International Centre for Policy and Conflict, told the Star.
On November 8, the head of state told Sonko to his face to focus on politics and the leave day-to-day running of the city to Igathe and Tourism CS Najib Balala.
Igathe, former MD of Vivo Energy, is a well-connected professional.
This is understood to have taken place at a meeting on regenerating Nairobi, held at Harambee House and chaired by President Uhuru Kenyatta.
“The President told the boss to focus on city politics and leave Igathe to run the county. He [Sonko] did not utter a word, only nodded,” a source who attended told the Star.
Sonko now is said to be fed up with unfolding events and being relegated to bystander status.
He only goes to his City Hall office at night and spends the day at his private office at Lilian Towers, sources close to behind-the scenes manoeuvres tell the Star.
Sonko and Igathe have not picked numerous calls during this investigation.
The state denies it is running City Hall.
State House has, however, directly seconded individuals to six CEC positions. Peter Kariuki, former head of State House’s Project Delivery Unit, has been designated county secretary.
Although he had expected to have a free hand in appointing Chief Officers, this didn't happen. Presentation of nominees was delayed over high-level horsetrading.
CECs were sworn in a month ago and it was expected chief officers would soon follow.
City Hall sources describe intense lobbying for the 17 positions, the equivalent of Principal Secretaries. They are chief accounting officers in county departments.
"Those must be reports from the usual unnamed and faceless rumour- and bile-peddlers," State House spokesperson Manoah Esipisu told the Star, dismissing reports of state takeover.
Igathe and Balala were appointed by Uhuru to co-chair the technical committee of the special task-force on programmes to improve Nairobi's social and economic sector.
This team, sans Sonko, manages a Sh17 billion fund ostensibly created to enhance services and management.
CSs who attended the November 8 meeting and a part of the committee are Henry Rotich (Treasury), James Macharia (Transport), Eugene Wamalwa (Water), Cleopa Mailu (Health) and Jacob Kaimenyi (Lands).
“I don't think so [takeover and frosty ties]. The governor and his deputy are in a very good working relationship and they even organised the national event [Jamhuri Day fete] together,” acting county secretary Leboo Morintat told the Star.
Former Nairobi Town clerk Philip Kisia, who sought the Jubilee ticket for governor, also said the notion of State House capture is erroneous.
"The law is clearly distinct on the roles of national and county governments. Although distinct, the two bodies will work harmoniously with the single purpose of serving all governments," Kisia said.
Majority leader Abdi Guyo said Sonko and Igathe are on good terms.
“Their people might be fighting but the two gentlemen are in a very good and cordial relationship. I interact with them daily and understand them better,” he said.
While Sonko is putting on a brave face, people who know him say he resents erosion of his power and, in effect, his demotion to a ceremonial leader.
State House insiders tell the Star say everything is going according to Jubilee plan.
Last month, Sonko created the position of deputy county secretary — not provided in law — in an apparent attempt to accommodate his own loyalists. This is after State House filled most influential positions.
As part of Jubilee's plan, City Hall will terminate all court cases against the state, which in return will clear a Sh69 billion debt to Nairobi. The county owes Sh7 billion to KRA, part of the Sh58 billion debt owed to suppliers and the old City Council pension schemes.
The move is drawing opposition.
“City Hall money does not belong to Sonko and has no powers to clear any debt. The Public Finance Act is clear and we (County Assembly) have the final say when he brings the paper to the assembly,” Minority Chief Whip Peter Imwatok.
Observers see ulterior motives in the state's interest since departure of former Governor Evans Kidero of ODM.
The task force headed by Igathe and Balala is interested in land, information and communications technology, housing and settlement, infrastructure and transport and energy. Also water resources, environment and solid waste management and services to youth, women and people with disability.
A former county clerk, asking not to be identified, said, "We have always had interests from the national government in Nairobi county or the former City Council due to resources and employment opportunities. Any new government must work hard to balance the interests.
"You should know where to say no and where to say yes or else they will leave you alone to face consequences when you fail to deliver or a scandal is created."
Imwatok said, "As the assembly, we want to know the law they followed and who will supervise this [Sh17 billion] fund. Our priority is to ensure value for money."
The takeover follows a gentleman’s agreement after the controversial Jubilee primaries. It was crafted to ensure all candidates remained in the party after divisive nominations.
Sonko is in a dilemma. He is not only fighting a petition challenging his election but also his staunch supporters believe he has little wriggle room should State House decide to twist his arm.
The Constitution says national and country governments are interdependent, but critics say this arrangement is not backed by the Public Finance Act.
The Constitution requires the national government allocate operational funds to counties. The Inter-Governmental Budget and Economic Committee approves loans to counties.
President Uhuru heads the Summit of governors, DP William Ruto chairs IBEC bringing together the state and Council of Governors to harmonise policies.
The state has crafted the Nairobi Metropolitan Area Transport Authority through an executive order assuming management of the transport sector. This denies City Hall funding for its Sh35.9 billion budget.
According to Ndungu, counties perform 40 functions, which the state is targeting. Some have been cash cows for cartels in Nairobi.
The state has been using the National Assembly to enact legislation that undermines devolution, critics and courts say.
They include the Water Act 2016, National Drought Management Act 2016, Land Laws (Amendment) Act 2016, Community Land Act 2016 and Roads Reclassification Act — among laws courts have revoked as unconstitutional.
The state has also delayed releasing funds to counties for months, hobbling their functions.
Constitution Article 189 (b) says the state can only assist, support and consult and, as appropriate, implement legislation of the other level of government.