Troubled South Sudanese government wants the Kenyan High Court to reverse an order it issued attaching a bank account it has with CfC Stanbic Bank, arguing that the $18 million in the account is part of the country’s emergency operation fund.
The Juba-based government says in court documents that the funds in CfC Stanbic had been earmarked for easing the economic and political challenges currently facing the country, and that Khartoum firm Active Partners Group’s (APG) decision to attach the account has stalled its operations.
APG attached the account to recover $41.9 million Kenyan courts awarded the Khartoum firm as compensation for a botched power project South Sudan had contracted it to undertake.
An arbitration panel awarded the Khartoum firm the huge amount in January last year, paving the way for APG move to the commercial division of the High Court in Nairobi to enforce the award.
APG filed the enforcement suit in Nairobi’s Milimani Court because the arbitration was done in Nairobi, giving the Kenyan courts jurisdiction over the matter.
“To date, South Sudan continues to experience severe economic hardship as it also seeks to restore peace and stability within its borders. It is in the interest of justice that South Sudan be allowed to settle the outstanding decretal sum in monthly instalments in order to alleviate its current foreign exchange cash flow crisis,” says Jeremiah Swaka Moses, the undersecretary of South Sudan’s Ministry of Justice.
The Juba government says it should be given nine months and then allowed to pay APG’s debts in instalments of $500,000 per month.
CfC Stanbic transferred the funds to APG’s lawyers after the firm secured orders to attach South Sudan’s account.
Justice Fred Ochieng has stopped APG’s advocates from transferring the money until he has heard South Sudan’s application.
APG’s lawyer Gilbert Mungu, however, says that South Sudan has previously duped them into accepting instalment payments, and that the Juba government used the same argument it is now making to the Nairobi court.
Mr Mungu says in his affidavit that the CfC account may have had nothing to do with emergency relief as shortly after it was frozen, he was approached by South Sudanese businessmen who tried to bribe him to have the orders lifted.
The lawyer claims that the businessmen told him that the freeze orders had interfered with the Juba government’s plan to pay them from the CfC account.
“My office was invaded by South Sudanese-looking persons who offered me inducement to have the orders lifted and told me they were expecting payments from the account for business they had done with South Sudan. I listened to them but declined their offers,” Mr Mungu says.
Arbitrators Philippe Pinsole, Karel Daele and Richard Omwela in January last year ruled that South Sudan had unlawfully cancelled the $197 million (Sh18.7 billion) tender awarded to APG for the electrification project.
The arbitrators found that South Sudan had breached clauses of the contract it signed with APG, which provided for a bank guarantee to secure the multi-billion shilling project.
APG managing director Mohammed Fagir says he was forced to flee Khartoum in 2009 after some of the firm’s creditors sued the firm for failing to pay for supplied equipment intended for the electrification project.
The firm says it spent $12.1 million in project survey, design, salaries, air charters and assorted equipment and urgently needs to be paid the money.
South Sudan blames the cancellation on civil war and a massive corruption scheme that saw several firms paid billions of dollars for grains that were never delivered.
South Sudan holds that it was not part of a deal struck between APG and CfC to release funds in the account to the Khartoum firm’s lawyers hence the transaction should be reversed.
But APG says that South Sudan had withdrawn from the suit entirely, a move that struck it from a concerned party in the consent over its CfC account. The firm says it is only willing to accept the recompense in one or at most tranches following South Sudan’s breach of an instalment payment plan.
Justice Ochieng will mention the matter on May 5 for further directions.