State property can be auctioned or Cabinet Secretary jailed over debt

Court has opened floor for litigants to criminally hunt officials over unpaid govt debt. [iStockphoto]

Justice Sifuna was settling a dispute between ABSA and Kenya Deposit Insurance Corporation (KDIC) over Sh215 million debt.

He said many litigants are languishing with awards just on paper as the government and its officials take them in circles in a red tape created by the old law.

According to the judge, the Act ought to have been amended after 2010 but MPs either forgot or it escaped their minds.

"The Act is clearly skewed to give the Government, an unconscionable and discriminatory comparative advantage in suits against it. Right from the filing of the suit, to the execution process. This is untenable under the 2010 Constitution. Hence this Act is among the laws that were supposed to be repealed or otherwise amended, but escaped the watchful eyes of Parliament and the Law Reform Commission," he said.

According to the judge, the new dispensation created by the Constitution does not require men entrusted to run government offices to sit and wait as they shield themselves from obligations.

" I refuse to imagine that Kenya was unripe or unready for the ambitious reformative and transformative agenda of this Constitution. Now it is in force, its wind must blow through Kenya's entire legal system, every law, every hamlet, every village, every institution (whether government or non-governmental), the entire Government, and every sector of the Kenyan life."

"This Constitution is our new lifestyle. In that, we must allow it to smoke us out of our previous comfort zones, out of our previous hide-outs, and out of our former status quo that prevailed before its promulgation. This is a wind of change that is unstoppable," he continued.

Justice Sifuna echoed Justice Alfred Mabeya's sentiments that it is time for government officials to personally be answerable for failing to pay debts.

Justice Mabeya said this in a case where a Sh45 million legal fee debt owed to a law firm by the Insurance Regulatory Authority (IRA) has almost doubled in interest.

Justice Mabeya, in his ruling, stated that government officials enter into agreements on behalf of taxpayers, and then negligently refuse or decline to honour the terms of the agreement. The result, he said, is to have taxpayers shoulder the burden of footing bills that would have been paid without incurring interest.

The case was filed by senior lawyer Waweru Gatonye's law firm, seeking to attach IRA's accounts in the National Bank of Kenya, Kenya Commercial Bank, Co-operative Bank and NCBA Bank after it failed to foot legal fees for three years now.

Justice Mabeya stated that the insurance regulator's accounting officer knew that it had a debt from 2021 but he failed to offset the same. He added that it was more puzzling that IRA alleged that the money owed was never factored in its estimates for the 2023 budget. The judge said the claim cannot hold the court from issuing the orders.

"I agree with Senior Counsel on that. That it may well be that time has come whereby public officers who negligently subject public bodies to unwarranted losses should personally be held liable for such losses. Failure to plan is planning to fail. A simple answer to that is that, it is high time public bodies realised that they cannot incur obligations and fail to honour them. The accounting officers have a duty to factor in their work plans and budgets, settlement of Court decrees as are other liabilities," said Justice Mabeya.

At the heart of the case was a judgment issued in favour of Gatonye's law firm by Justice David Majanja. The judge ordered IRA to pay Sh262 million for legal services offered in a case filed by Lakestar Insurance Company.

Lakestar's director John Kilel had in 2013 sued the authority, seeking Sh12 billion compensation. He claimed that the insurance firm was illegally wound up in 2002.

In the case before Justice Mabeya, Gatonye told the court that IRA had paid his firm Sh283 million but had a balance of Sh45 million.

The court heard that the amount was paid again through an application to attach IRA accounts.

Gatonye told the court that since 2021, the debt owed has accrued interest of more than Sh80 million.

The judge allowed the lawyer to take the money in the accounts identified by KCB and NBK.