Nairobi County is facing auction by the Kenya Commercial Bank (KCB) over a Ksh4.3 billion defaulted loan.
In a ruling by the High Court, KCB was given a go-ahead to auction Nairobi County government over the amount that was awarded in 2019 by Phillip Bliss Aliker, an arbitrator who was chosen by both parties.
KCB moved to court in October 2020 after the county defaulted on the loan.
“In the circumstance, therefore, having considered the application, the response and submissions as well as the law and the decisions relied on by parties, and upon giving due consideration to all those, the conclusion, I come to is that the application dated 2nd October 2020 has merit,” ruled Justice Chacha Mwita.
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The government wanted the amount set aside, but the judge ruled that the county did not give sufficient reasons on why it took time to appeal the decision.
The total amount loaned to the defunct Nairobi City Council entails Ksh4.29 billion of the award and costs of Ksh6 million. Originally, the amount was loaned by Equity Bank, before KCB bought it in 2014.
As of 2014, City Hall, which had inherited the debt from the defunct Nairobi City Council, owed Equity Ksh4.75 billion, including an overdraft of Ksh1.45 billion.
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After taking over the loan, KCB gave the county government a moratorium of eight years at an interest rate of 13 percent.
“The sums awarded to the applicant are significant. As such, it is necessary for the applicant to recover these amounts,” KCB said.
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