Laico Regency Hotel is battling for the release of Sh200 million bailout stuck in a commercial bank, six months since it was wired from Rwanda.
The money was wired by the Libyan embassy in Kigali to the North African country’s mission to Kenya to bail out the hotel on Uhuru Highway after it failed to pay staff, suppliers and contractors.
The former Grand Regency Hotel was originally owned by businessman Kamlesh Pattin. It was repossessed by the government to recover proceeds of corruption from Pattin.
The Central Bank of Kenya sold it to the Libyan government in 2008. Libya runs the once vibrant hotel through its business agency Libyan African Investments Company (Laico).
The hotel is unable to meet its operating costs and mangers fear it may lose its five-star status and go under as the coronavirus continues to wreak havoc.
The hotel staff were in March sent on unpaid leave after efforts to have some Sh50 million released to cater for their salaries and clear statutory deductions hit a dead end.
In a letter to Tourism Cabinet secretary Najib Balala, the hotel managing director Mohammed Omar said even before the Covid-19 pandemic the hotel was already facing financial challenges, which had greatly compromised business.
“The MD Libya African Investments Company Kenya in liaison with the hotel management has been following the release of the money from November 2019 to no avail,” Omar said in his letter dated March 30.
He said Laico was forced to send staff on unpaid leave “with empty pockets for an unspecified period” because of the standoff.
“These funds if they were to be released would greatly cushion them (staff) during this uncertain period,” Omar wrote requesting Balala’s intervention to have the money released from a KCB account.
According to documents in our possession, the Sh200 million was credited at the Libyan embassy in Kenya account held at Kenya Commercial Bank University way branch between September and October last year.
The Libyan embassy in Kenya was then expected to wire the money to Laico hotel with half of the mount already earmarked to clear tax arrears and penalties owed to the Kenya Revenue Authority.
According to Laico hotel’s letter, Sh50 million was to pay salaries for staff, an equal sum was to clear suppliers while KRA would pocket Sh100 million.
However, it emerged that upon the money hitting in the Libyan embassy account in Nairobi, the bank flagged the transaction questioning why the sale of the property in Rwanda was done in US dollars but wired in Kenya shillings.
However, the Libyan envoy to Rwanda maintained that the funds were remitted in Kenya shillings due to “a negotiated exchange rate in the US dollars at the time of remittance.”
And in conformity with CBK’s anti-money laundering guidelines, the Libyan embassy in Rwanda also wrote a letter confirming that the money wired to Kenya originated from there.
“This is to confirm that the sum of funds of USD20 million that was remitted to our embassy in Kenya were proceeds of payment of Laico (Rwanda) which was sold to the Rwandan government from the products of Laico’s share of the liquidation according to the decision of Rwandan commercial court,” wrote Libya’s ambassador to Rwanda Mohammed Alhaajmeelad.
According to the envoy, the Libyan Ministry of Foreign Affairs gave him instructions to transfer the funds to the Libyan embassy in Kenya to bail out the Laico Regency Hotel.
According to the documents, the Libyan Embassy in Nairobi wrote a letter directing the manager operations at KCB bank’s University Way branch to credit the money to Laico Regency’s account held at SBM bank, City Centre branch.
The letter dated February 18, 2020 was co-signed by the Libyan embassy in Nairobi charge d’ affaires Fathalla Aljadey and financial attache Almabrouk Almadhoun.
Correspondences by the Libyan African Investments Company show that the agency in January sought a meeting with Treasury Cabinet Secretary Ukur Yattani over the delays.
The Laico team which held a meeting with the CS was led by The Libyan ambassador to Kenya, Fathalla Aljadey, and the investment agency’s regional Tawfik Zambo
However, the CS referred the team to KRA management to get proper guidance on their tax issues and find an amicable solution.
Edited by Henry Makori