WHITE ELEPHANT

EACC: Arrests loom in Sh4.2bn empty Kisumu mall

EACC recommend prosecution of Influential people

In Summary

•EACC awaiting Haji's signal to make arrests.

•LBDA gave its title to a Chinese firm to secure loan.

A file photo of EACC headquarters in Nairobi.
A file photo of EACC headquarters in Nairobi.
Image: FILE

High-profile arrests are expected in the construction of the controversial Sh4.2 billion Lake Basin Development Authority Mall that detectives have concluded was riddled with graft.

The LBDA Mall was supposed to be Kisumu’s fanciest, featuring a mega supermarket, a three-star hotel, showrooms and a doctor’s plaza.

It is still struggling to sign anchor tenants two years after it was completed.

 

The Star has established that the Ethics and Anti-Corruption Commission has concluded the probe and heads are likely to roll in the coming days.

EACC insiders confided to the Star that the investigation file recommending prosecution of influential people has already been sent to Director of Public Prosecutions Noordin Haji.

“We are only waiting for the green light from the DPP to make arrests,” an EACC insider told the Star.

At the centre of the alleged fraud is the decision by the Lake Basin Development Authority bosses to hand over its title to the land to a Chinese contractor, Erdermann Properties, that was to pump in 80 per cent of the financing.

FILE SENT TO DPP

EACC insiders confided to the Star that the investigation file recommending prosecution of influential people has already been sent to Director of Public Prosecutions Noordin Haji.

The Chinese firm then used the title to secure a Sh2.5 billion loan from the Cooperative Bank, which it used to construct the same mall. The move defies logic why the board could not go for the same bank loan themselves.

Questions are now being asked why government land was used to secure a loan from the bank without the consent of the Attorney General, the government’s chief legal adviser.

The mall was to be built through a partnership between LBDA and Erdermann Properties on a 20:80 basis.

 

Former secretary general of the defunct TNA Party Onyango Oloo, who was the chairman of the parastatal in 2014-2015, has been at the centre of the probe.

Oloo, who was a non-executive chairman, has previously been cited for personally signing the revised contract that escalated the cost of the project by almost Sh2 billion, contrary to the provisions of the State Corporations Act.

The law only allows the Chief Executive Officers and executive chairmen of state corporations to execute contracts.

The initial cost of constructing the mall was capped at Sh2.5 billion but reports indicate that about Sh4.2 billion was spent to build the mall.

Last month, the EACC raided the homes of Oloo, former LBDA Managing Director Peter Abok and Bobasi MP Innocent Obiri, who served in the procurement department.

Oloo, who decamped from Jubilee to ODM in 2017, is now the Kisumu County Assembly Speaker.

Part of the Cooperative bank loan was to be settled from rent received from the mall, which is largely empty.

The Sh2.5 billion loan was at some point attracting up to Sh43 million monthly interest.

Oloo has previously insisted that the cost of the mall was only adjusted from Sh2.5 billion to Sh3.8 billion.

According to the Speaker, in the initial plan, the three-star hotel, the wall, the tyre centre as well as the showroom were not included.

“This raised concerns that we may have varied the contract beyond the 25 per cent permitted by law. But I have always maintained that there were additions like the three-star hotel, a tyre centre and showrooms, which were not in the first budget,” Oloo said last month.

He maintained that the additional Sh630 million only amounted to a 19 per cent variation.

“There is a difference between variation and additions. There were additions that did not form part of the original contract of Sh2.5 billion,” he said.