Category Archives: Kenya judiciary

Money-WiseKE: Safeguarding families using Wills

Last week, Money-Wise with Rina Hicks had a nice talk on “Safeguarding your Family after you’re gone: Wills and More”. Her guest was Leah Kiguatha, a family law expert who said that in the court processes encountered, only 10% of Kenyans of African descent have written wills.

Other excerpts of new stuff (from a male perspective!)

  • Why write a will? Make a decision, as if you don’t decide, someone else, who is handling a hundred other disputes, who does not know the pain and peculiarities of a family, will make that decision for you. Whether you write a will or not, there will be a court process.
  • Spousal Status Changes with Death: If a man has a secret wife and kids, he should mention and provide for them in the will. When he is alive, they may not be recognized, but once he dies, the law allows them to become wives and dependents for purpose of succession. (Laws made by a heavily-male parliament in the 1980s!)
  • Register Land: As joint ownership or in common as this enables you to by-pass the will process. Register land with someone so they are not harassed when you die. Also if a wife dies, and she expects that her spouse will remarry, through in-common ownership, she can ensure that 50% of the matrimonial house passes to her children.
  • Bank Access: Have your spouse or some older children to be signatories to a bank account and know your card PINs. If you are the only one who can access money, your family will be scrambling to feed mourners, pay school fees, and be disturbed by landlords – as it will be a year before they can access that money and after hiring a lawyer.
  • Update Records: Check your will every 5 years. Also, update your insurance, SACCO and pension beneficiary details every few years. Insurance does not have to go through a court process if a beneficiary is nominated a beneficiary, but if different people show up to claim it, they will leave it to courts to settle. Sometimes, as a widow is mounting, a brother or mother of the deceased has rushed to the employer to claim they are the intended beneficiary.
  • Reduce Unintended Beneficiaries: A will safeguards your family and minimizes disputes, and as dependent fight it out, assets and estates go to waste, or are exploited by opportunistic people. If you don’t have good records, squatters or a county government will benefit along with banks, insurance, and the Unclaimed Financial Assets Authority. It is estimated that over Kshs 200 billion deposited in banks belongs to families who are awaiting court grants to release the money to them.
  • Oral wills: Are only valid for three months unless one is in the military. Also, they must be witnessed (heard) by two people, who are not beneficiaries.

The full hour is online, and you can watch it here.

All about EADB

The East African Development Bank (EADB) is a development finance institution, headquartered in Kampala, Uganda and has country offices in Kenya, Tanzania and Rwanda. It was one of the  few institutions that survived the collapse of the original East African community. Its main products are medium-term financing and its long-term loans for projects that can be durations of 12 years. 

The bank is in the news over a case involving Kenya’s Cabinet Secretary Raphael Tuju over their demand that he repays $13.6 million (~Kshs 1.4 billion) that arose from a $9.19 million loan in April 2015. 

Excerpts from the 2019 EADB annual report:

  • The bank is owned by four East African countries; the Governments of Kenya 27%, Uganda 27%, Tanzania 23% and Rwanda 9.5%. Other shareholders are the African Development Bank with 8.8% and FMO Netherlands with 2.7%. 
  • EADB has $374 million in assets, which includes $190M in cash in the banks. It earned a profit of $8.7 million (~Kshs 944 million). It is exempt from taxes in all members countries but pays no dividend as their policy is to build up capital of the bank.
  • Had $152 million (~Kshs 16.5 billion) of loans of which $58M (38%) are to Tanzania ventures, $39M to Uganda, $36M to Kenya ones and $17M to Rwanda borrowers. $109 million (71%) of the loans are in US dollars which is the preferred currency of most borrowers.
  • Of the loans, $92M are in stage one (performing normally), $52M in stage two (higher credit risk) and $7M are in stage 3 (impaired). 
  • During the year, existing clients – Kayonza Tea Growers, Centenary Rural Development Bank, Opportunity Bank, and the Government of Tanzania all increased their borrowing. Also in 2019, some long term loans paid off and exited the bank including Nkumba University, Sugar Corporation of Uganda and New Forest Company. The bank also participated in the official launch of the Lake Turkana Wind Power which they partially-financed while Strathmore University completed a Law School Centre for which EADB has provided a Kshs 422M loan.
  • The bank disbursed $21.3 million to new projects during the year. Some were: in Tanzania (National Housing Corporation, $30M to Iyumbu Satellite Centre, and to Tanzania Petroleum Development Corporation to distribute natural gas to 30,000 households), in Uganda ($6.3M for a medical consumables manufacturing plant in Kampala), in Rwanda ($10M to a new cement plant and four lines of credit to a national development bank) and in Kenya (Kshs 30M working capital to Jumuia Hospitals in Huruma), Sidian Bank (EUR 2 million credit line) and Musoni Microfinance  (EUR 1 million credit line). 
  • They have borrowed $81 million from multilateral development banks and other financial institutions including the European Investment Bank, African Development Bank ($22M), CBA ($9M), the Arab Bank for Economic Development in Africa ($10M) and a new line from KFW Germany ($7.8M) whose recipients include Sidian Bank, Musoni Diary and West Kenya Sugar. 
  • Kenya’s  Treasury Principal Secretary, Dr. Julius Muia sits on the board while Treasury Cabinet Secretary, Amb. Ukur Yattani sits on the Governing Council along with other East African finance ministers.

Older notes on how EADB is different from a typical commercial bank:

  • EADB disburses payments to third parties e.g. supplier or contractors for work done/services rendered to sponsor. Disbursements are made against presented supplier invoice or completion certificate for building works. They insist that sponsors procure through open tendering as much as possible.
  • Most EADB loans are repaid quarterly except leases which are monthly. Projects are required to set up standing orders for loan repayment. 
  • They don’t have a deposit-taking, commercial bank so borrowers make repayments to special accounts at other banks (escrow accounts) e.g. payments from buyers of apartments financed by EADB are made into such accounts.
  • Companies are required to submit quarterly accounts for monitoring and failure to submit accounts can delay further disbursement to a project.
  • EADB lending approval decisions are made based on the loan amount involved and applications that are larger than $1 million are approved by the board of directors.
  • As a DFI, some criteria for the financing of projects include economic measures such as increasing the level of real consumption, contribution to government revenue (corporate tax, VAT, excise, export taxes), foreign exchange saved, and employment opportunities created.
  • Projects in arrears get transferred to their “Work Out Unit,” a special department that determines how to resolve these – either by a recovery (sale of assets), write-off (after selling assets), or a turnaround (reviving projects to normal) which is the preferred and most successful option. Sometimes, the borrower is asked to recommend a buyer of assets (provide leadership) if it becomes necessary to sell some of them. 
  • The bank enjoys immunity from prosecution and this has been raised by Tuju’s lawyers in several pleadings. In the past, EADB has also faced challenges including petitions to wind it up, such as a decade ago when they trying to recover over $13M from Blueline, a Tanzanian transporter.  
  • edit On September 28, the OPEC Fund for International Development signed a $20 million loan in favour of the East African Development Bank to go towards supporting SMEs and infrastructure projects in East Africa, in the third loan of this kind that the OPEC Fund has provided to EADB.

Kenya’s Money in the Past: TJRC

From reading the introduction to a new book (available on Amazon) by Ronald C. Slye,  a Commissioner with the defunct Kenya Truth, Justice, and Reconciliation Commission, he narrates how the Commission evolved and troubles it encountered as it sought to carry out  investigations, through to completing its report and handing it over to Kenya’s President. These included accusations again their Commission Chairman and delays to the release of their report so it did not clash with the 2012-13 Kenya electioneering period as well as demands that some clauses be deleted from the final report.

The foreword of the book written by Reverend Desmond Tutu is also available and he gives some more background to the Commission and Slye’s writing. Tutu writes that the Kenya Government did not support the report, and printed as few of them as possible and Parliament has not debated the TJRC report.

In a chapter, available online, Slye explains how he came to join the Commission and some to the things he went through. He thanks his university, the Seattle University School of Law,  for making the complete TJRC report, in sectors and versions, available online on its website as well as also hosting supporting documents that he researched as the basis for his book.

In terms of finance and budgets, there were allegations against that the commission was a waster of public funds and Slye has dedicated a separate page called “Financial Scandals” that contains documents and correspondence on the financial affairs of the Commission. .. includes the letters written by the Commission to the relevant Parliamentary Committee’s requesting an investigation into the handling of the Commission’s finances by the Ministry of Justice. It also includes the only document the Commission received from the Ministry of Justice in response to our inquiry concerning how our monies were being spent.

Excerpts from the documents;

  • The Commission, while independent, never really had control of its monies which was stipulated in the TJRC act; that was done by the (Justice) Ministry. The Ministry also communicated that the Commission would have no control of funds until much later.
  • Some trips Commissioners made e.g to hear facts at the Kenya Coast were paid for out of their pockets but were never reimbursed. Nor did they get reimbursed for some medical expenses, some local travel which were done out-of-pocket, as well as for moving expenses of foreign Commissioners.
  • Money was spent on their behalf for activities which the Commissioners were not aware of e.g. Kshs 16 million to host a “council of elders.”

TJRC financial report from the Justice Ministry

  • In October 2009,  the Ministry sent three different sets of papers to JTRC purporting to give a breakdown of usage of their funds and Slye writes that it included bulk payment for Ministry of Justice retreats and bulk payments for unidentified casual workers when the Commission had just a CEO and two consultants
  • In December 2009, the TJRC submitted a two-year budget request for Kshs 2.06 billion. It also submitted a supplementary request for Kshs 631 million. When no answer was received, it wrote, in January 2010, requesting for a lower amount Kshs 480 million. In March 2010, the Ministry wrote that, of this request, they had been allocated Kshs 30 million in the budget for the rest of the fiscal year. The Commissioners soldiered on and decided to pursue alternative means of funding.
  • The page also contains a press release the Commissioner put out that stated:  “The TJRC would like to emphasise the need for financial independence and to restate that at no time has the TJRC had control over any finances. The Ministry, which has seconded one of its finance officers to the Commission, controls all and every aspect of our budget.”

In July 2011 the Commission was accused of corruption through media reports. Slye writes that internal investigations concluded there was no foundation. In their first year (2009-10), their budget was controlled by the Ministry and they had no control of finances till their second financial year. They lacked financial independence, they had to seek Ministry approval of all activities (delayed processes), and had no authority to approve /disapprove expenditure incurred by the Ministry on behalf of TJRC with no knowledge the ministry expenditure beforehand and they were not given a true account of expenditure in the first year. 

During their second year (2010-11), they ran low on funds and had to seek advances from the Treasury for 44 million and 80 million from the Ministry of Justice. They requested supplementary funding which never came which allowed hearing in Mount Elgon, Upper Eastern and North Eastern. Eventually, 650 million of the 1.2 billion was released. There were recurrent delays, payments came in tranches, they had to seek loans, and were only able to visit two provinces and hold public hearings.

Office of the Auditor General (OAG): 

Meanwhile, the Office of the Auditor General of Kenya mentions the TJRC in some reports:

  • In the report for 2010/2011, reference was made to the Commission’s failure to deduct Pay As You Earn (PAYE) from the salaries of 304 statement takers totalling Kshs.13,077,033. A review of the position during the year under review revealed that no attempt was made to recover the amount.
  • The statement of financial position of the Truth, Justice and Reconciliation Commission (TJRC) lacked opening balances. Further, the statement of management responsibilities was not signed by the officials as required. The whole financial statements were not dated and the necessary supporting documents and schedules including cash books and government ledgers, were not provided for audit review.
  • Although notes to the financial statements were provided, they were poorly numbered and arranged such that it was not easy to follow the financial statements. The financial statements also lacked numbered pages and headings.
  • In the circumstance, the accuracy and completeness of the financial statements could not be ascertained.
  • With regard to truth, justice and reconciliation activities, the Ministry reported to the OAG that it had facilitated the enactment of the Truth, Justice and Reconciliation Act, 2008 and the appointment of the TJRC Commissioners. 

Kenya’s Judiciary: Presidential petitions are decided quickly but other cases drag on

  • The Supreme Court rules for presidential petitions were tried and tested in 2013.
  • Virtually every Kenyan is affected by some unresolved judiciary court case, whether it’s a commercial dispute, employment, land, traffic, inheritance, bank loans and so on.
  • Disputes between borrowers and banks should not drag on for so many years that they incur legal, penalty and interest charges that eventually exceed many times the initial loan amount. From my notes while reading Charles Hornsby’s Kenya: A History since Independence, “15 petitions followed the 1969 elections and they were heard by Euro and Asian judges (Njonjo’s decision) – 3 were successful.” … “39 petitions followed the 1974 elections, and 9 MPs lost their seats, with 4 barred from contesting for 5 years.”… “The 1979 elections had no observers…31 petitions were heard by non-African judges and 9 MP’s (including 3 ministers) lost their seats”
  • This year is expected to be no different and the Deputy Chief Justice was quoted as saying the courts were expecting as many as 300 petitions following the August 8 election.

Read more

Kenya Elections 2017 Wrap – Electionske2017

Yesterday, the final results of the August 8, 2017, Kenya elections (electionske2017) were announced by the Independent Electoral and Boundaries Commission (IEBC).

This came with the announcement of the presidential results that were delayed by challenges and agreement on the tallying and transmission of the results that were a spillover of lengthy discussions and court cases (the IEBC chairman said they had 200 court cases) on independent candidates, political party petitions, procurement, electronic gadgets, ballot papers, as well as the brutal murder of the IEBC technology manager just a week before the election.

 

These were the fourth national elections in ten years (2007,2013, 2017 and a constitutional referendum in 2010) and they were closely contested in many places. Besides choosing a new president, 15 million Kenyans also voted on their choice for governor, senator, councilor (MCA), member of parliament (MP), and a county women’s representative from among 14,500 candidates.

But even after the results, there are expectations that dozens of petitions will be filed at the courts on Monday for determination.

 

Electionske2017 Predictions: 

  • Opinion polls were reported in Kenya. They have been widely derided for not accurately predicting the outcome of races and for contradicting each other. This could be due to misunderstandings by Kenyans about what polls mean, and sampling methods used, especially in rural Kenya.
  • Elsewhere, Charles Hornsby,  author of the classic must-read Kenya: A History Since Independence -did a series of election prediction posts in June and early in August that were based on his September 2016 prediction of a 55-45 victory for Kenyatta over the (yet to be chosen at that time) opposition candidate remains plausible. He later revised this; I still predict a Jubilee victory by 52% for Kenyatta and Ruto to 48% for Odinga and Musyoka, with all others less than 1% combined.
  • Another was a research report by Citibank (Citi) published in early August:  On Thursday we hosted a call with Richard Kiplagat, COO of AfricaPractice, to talk through political scenarios. Mr. Kiplagat takes the view that 1) the polls are very close but give a slight edge to the President; 2) the victor is likely to win outright in the first round, given limited support for third party candidates; 3) while the outcome may be disputed initially, the Supreme Court is likely to certify the outcome by September 10th, a judgment that could well be accepted by the loser; 4) widespread or prolonged violence is unlikely this time around, due in part to devolution of the 2010 constitution and in part to the ethnic balance of the incumbent presidential/vice presidential ticket.

What happens next?

For President: The date of the swearing-in of the president constitutionally depends on if there are any petitions

  • Petitions are filed with 7 days after declaration of results
  • If a petition is filed, the Supreme Court hears and gives a determination within 14 days
  • The President-elect is sworn in the first Tuesday following the 14th day if no petition has been filed or the 7th day following the date which the court renders a decision

For Governors transition rules

For Members of Parliament: The 12th parliament i.e the national assembly and the senate are to have their first sitting, not more than thirty days after the elections (tentatively not later than September 8, 2017).

Also, see other electionske2017 posts about: