After being found guilty of contempt, the foreign investors in the multi-billions shillings worth Tatu City investment have lodged a twin edged crusher, turning to the court of appeal to purge the contempt and on the other hand alluding that an impending audit against which the bitter-sweet axis of the case revolves, is no longer necessary.
The court of appeal application, according to local investors, is designed to arrest the highly explosive decision on the pending thorny audit issue.
While the court of appeal will be dealing with the Stephen Jennings, Francis Holiday, Hans Bochum Horn, Frank Mosier and Christopher Baron contempt application for disobeying orders issued for conducting an independent audit of the offshore loan accounts relating to the Tatu City investment, the parties have once more been invited to come up with a proposal for an audit firm and the manner of its appointment, and terms of reference which, according to their local counterparts was what ought to have been done but instead “they chose to go the way of appeal,” to forestall matters.
Firm of international repute
Lawyer Mansur Issa who informed a trial court in Nairobi of the appeal and a pending separate audit case in Mauritius, which he said may render the audit ordered by the court in Kenya “unnecessary,” confirmed the defendants “haven’t proposed an auditor yet….” but that any firm that may eventually take up the exercise will have to be screened for conflict of interest.
He also said it should be a firm of international repute and that it may have to start from “scratch and acquaint itself with what is in court.”
“Terms of engagement can be submitted to court for verification and sanction…and in event parties do not agree they are willing to take the route of an international firm with statutory recognition taking up the task.
Names like ICCA, and other certified accountant and audit firms were thrown in as samples.
Allusion that audit no longer necessary
Lawyer Nelson Havi who represents the local investors, former Nahashon Ngige Nyaga in the proceedings scoffed at the allusion by the defendants that an audit is no longer necessary since a report had already been filed in a Mauritius court!
“The pendency of claims in Mauritius cannot be a reason to preclude court from making an order to appoint a firm to succeed PwC,” Havi said.
He said that long before the Mauritius case was lodged, an order for the audit had been in force for two years!
“It (read Mauritius case) was also initiated way after the making of three orders by Justice Ogolla which was to give effect to the exercise…” the lawyer submitted.
Not parties to claims in Mauritius
Havi reminded the court that the plaintiffs are not “parties to the claims in Mauritius.”
“We are seeing it( read Mauritius claims) for the first time,” the lawyer said.
He said case file number COMM 46/2015 (which has been a thorn in the flesh of the foreign investors) “ should prevail over any subsequent litigation…”
This is the case file in which the three orders for the audit was issued and which was defied.
The Jennings team had objected to PwC while the Nyagah team cried foul when KPMG was also accused of being embedded with the defendants and may not be one of those to conduct the audit this time round.
Havi said that the best way to ensure that the audit is not interfered with is to appoint a professional body that governs the functions of auditors to vet the one to undertake the exercise while excluding those adversely mentioned.
A ruling will be delivered on notice in September 2017.
Scuttling commencement of audit
Two months ago Justice Francis Tuiyot had told the parties this: I direct Counsel for the parties herein to address me on which firm should be appointed in place of PwC….
The high court last year ordered the international audit firm PriceWaterHouse Coopers (PwC) to conduct independent in-depth audit account of the offshore loan of the Tatu City and Kofinaf Limited and to report its findings to the court within 45 days or a reasonable period of time they found adequate to perform the audit.
Stephen Jennings team has been accused of completely frustrating and scuttling the commencement of the in-depth audit.
Justice Tuiyot said in his contempt finding that further evidence that there was reluctance by the defendants to cooperate with PwC is seen in what Stephen Jennings, the first defendant, said on September 162015 during the board of directors meeting of Tatu City limited and Kofinaf Company Limited which later mutated into the contempt finding and the subsequent risk of a six months civil jail committal.
“If the defendants had no confidence in the firm PwC Kenya then they should have sought the removal from the audit by way of a review of court orders,” the judge said in his finding.
He said that instead the foreigners stonewalled on the question of the Letter of Engagement and eventually on September 23 2105 PwC asked to be excused from the exercise and court granted the request.