Court halts Sh2.5 billion case against Lake Basin mall scam suspects
The High Court has suspended further prosecution against multi-billion real estate company Erdermann Properties Limited and two of its directors facing graft charges in the alleged loss of the Sh2.5 billion Lake Basin mall scam.
In a ruling, Justice James Wakiaga temporarily issued conservatory orders suspending the trial against Zeyun Yang and Zhang Jing, directors of Edermann Property Limited who are challenging their prosecution.
"I therefore find and hold that the petitioners established grounds for the grant of the conservatory orders sought pending the hearing and determination of the petition herein which petition must be heard and determined within 21 days from the date herein failure of which the conservatory order granted herein shall stand discharged with no further orders of this court," Wakiaga ordered.
The court stopped the prosecution of the firm and its directors who are charged alongside Kisumu County Assembly Speaker Onyango Oloo, former LBDA managing director Peter Aguko, Bobasi MP Innocent Obiri and eight others at the Chief Magistrate courts.
In the case, Oloo is accused of conspiring with the contractors including Zeyun Yang and Zhang Jing, directors of Edermann Property Limited, to defraud the public of billions of shillings in the tendering for the construction of the LBDA mall in Kisumu County.
The firm, Edermann, was accused of bribing Oloo, the then chairman of the LBDA board, with Sh15 million. They are further accused that between January 21, 2013 and May20, 2018, former LBDA Managing Director, consultants and main contractor conspired to defraud LBDA of ksh667, 275, 202 in the tender for construction, development and financing of the retail mall at Kanyakwar, Kisumu town.
In the petition filed in court by Edermann Property Limited, they contended that unjustified prosecution of the petitioners’ unnecessary muddles and taints their hard-earned reputation and threatens their business with collapse over allegations of corruption and over valuation and unlawful charging of the project property and further failure to pay the Petitioner, had opened it to potential financial losses, while the 4 respondents was generating income from the project property.
The firm which is at the centre of the scam through lawyer Wilfred Lusi further argues that the criminal proceedings against the petitioners (Zeyun Yang and Zhang Jing directors of Edermann Property Limited) were premised on alleged over valuation, unlawful charging of public property and inducement of the public officers to over value and to unlawfully charge, which lies on civil complaint whether the project was overvalued.
"It was deposed that any issue of alleged fraud, inflation of cost, bribery or corruption, purportedly forming the substratum of the subject prosecution in ACECA number 26,2019 where the issues which fell squarely under the jurisdiction of the arbitral tribunal and that it was possible to separate those issues which were not arbitral under the doctrine of separability," says Lawyer Lusi.
They further argue contended that the legal opinion opinion by the Attorney General confirmed that validity of the contract, which was approved by the Director of Criminal Investigations parent ministry and for which the Ethics and Anti-Corruption Commission authorized payments, thereby creating a legitimate exception on the part of the first petitioner, that the state would not turn around and commence prosecution against it and its directors.
The lawyer further informed the judge that there were on-going negations between the DCI, National Treasury, Ministry of East Africa Community and the bank to have to the facility taken over by the first petitioner on the principal due, interest and penalties accrued.
The court heard that the facility was currently in arrears and that the variation was negotiated by the addition of the three-star hotel, a type center, show room, perimeter wall and back assess road.
Lusi says that that the project was finally completed and the DCI took possession of the mall which it is currently leasing out.
However, the firm is being accused of conspiring to inflate the cost of the construction of the mall from ksh2.5 billion to ksh4.1 billion.
The board members are also accused of approving the borrowing of Sh1.2 billion from Co-operative Bank, bringing the total borrowing to ksh 2.5 billion.
According to the charges the tender was awarded on March 14, 2013 and former Lake Basin Development Authority boss Aguko and ex-chairman David Oyosi executed the agreement.
In the case Oloo is accused of conspiring with the contractors including Zeyun Yang and Zhang Jing, directors of Edermann Property Limited to defraud the public billions of shillings.