Photo/FILE NSSF headquarters in Nairobi. According to Labour assistant minister Sospeter Ojaamong, inquiries at the Registrar of Companies revealed no records available for two firms that benefited from the payout by NSSF.
By PATRICK MAYOYO pmayoyo@ke.nationmedia.com
Posted Sunday, April 1 2012 at 22:30
Posted Sunday, April 1 2012 at 22:30
The national pension fund has paid a construction firm Sh590 million in an out-of-court settlement.
This is the second such payment the National Social Security Fund (NSSF) has made, bringing to Sh1.4 billion the money paid since last year following arbitration.
According to documents seen by the Daily Nation, Pan African Builders and Contractors were paid the Sh590 million following arbitration arising from a dispute regarding work at the fund’s Kitisuru housing estate.
The court had awarded the company Sh662 million.
The Sh590 million was paid to four entities — Pan African Builders and Contractors Ltd, Sh305 million, Liteline Enterprises Ltd Sh20 million, Speed Wings Ltd Sh121 million and Sh143 million to Kipkorir, Titoo and Ikiara Advocates.
When contacted lawyer Donald Kipkorir said the dispute between the NSSF and Pan African Builders and Contractors Ltd (Pabco) begun in 2003 in the High Court.
It then went to arbitration before it went back to the High Court on appeal. (READ: Prominent lawyers paid millions for NSSF services)
“After arbitral proceedings in favour of Pabco, a decree was issued in favour of Pabco for Sh662 million plus costs and interest. In spite of this, Pabco agreed to accept the reduced sum of Sh590 million,” he said.
Mr Kipkorir said whoever was pushing for the case to be published in the media was ignorant of the material facts and the court and arbitral proceedings. He said Pabco constructed and handed over the project as per contract.
“Any contrary allegation is actuated by malice, falsehoods and is defamatory,” he said.
However, it has emerged that records of Liteline Enterprises Ltd and Speed Wings Ltd cannot be traced at the Registrar of Companies.
A letter from the registrar dated March 12 addressed to the Labour ministry says the two firms are not in their database.
“We refer to your letter dated March 12, 2012. The above companies/business names do not appear in our database of registered companies/businesses,” the letter says.
On March 13, Belgut MP Charles Keter raised the matter in Parliament when he asked the Minister for Labour, Mr John Munyes, to explain how the money paid to Pan African Builders and Contractors was distributed.
Labour assistant minister Sospeter Ojaamong said inquiries at the Registrar of Companies had revealed no records were available for two firms that benefited from the payout.
Mr Ojaamong told Parliament he would refer the case to the Ethics and Anti-Corruption Commission for investigations, possibly leading to the prosecution of the concerned parties.
On Thursday, an NSSF official said Pan African Builders and Contractors was paid Sh500 million for breach of contract.
“The firm was building our houses in Kitisuru but their contract was stopped and they took us to court demanding Sh600 million plus interest.
''We asked for an out-of-court settlement and paid Sh500 million,” the NSSF official who did not want to be named because he is not authorised to speak to the media said.
Documents indicate that Pan African Builders and Contractors was in June 1997 awarded a tender to build 300 houses at the NSSF Kitisuru housing estate for Sh1.9 billion.
In December 2005, the company went to court seeking payment of Sh528 million as outstanding contractual claims, but following consent by both parties, the matter was referred to arbitration.
The award by Milimani Commercial Court was the result of that arbitration.
However, after further negotiations with the board of trustees, the parties agreed to a final amount of Sh590 million.
In the earlier one, Lugari MP Cyrus Jirongo and a construction firm owned by a Ugandan businessman were recently paid more than Sh830 million as settlement for incomplete housing projects from the Kanu administration.This is the second such payment to come to light. (READ: NSSF pays millions for Kanu era deals)
According to documents seen by Nation, NSSF entered into an agreement with Mugoya Construction and Engineering and S.K. Jirongo and Sololo Outlets as settlement in two cases against the pension fund.
In one case, the fund paid Sh342 million to Uganda businessmen James Isabirye of Mugoya construction Company for a project in which the contractor was supposed to build 265 housing units on a plot owned by the fund in Karen.
In September last year, the board authorised the management of the company to negotiate with Mugoya and reach a final settlement.
Subsequently, negotiations were held and the parties agreed to settle at Sh342 million.
The Sh490 million paid to Mr Jirongo was in respect to the development of Hazina Housing Estate.
MPs Kabando wa Kabando (Mukurweini) and Nderito Murithi (Laikipia West) have demanded that NSSF explains why they withdrew the cases.
“Whilst out-of-court settlements are legal, it’s very possible that both parties colluded to withdraw the case for fear that the courts may refuse to enforce an illegality,” the MPs said.
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