Bid to recover State’s Sh1bn lost in failed Pan Paper revival
Entrance to PanPaper Mills in Webuye. FILE PHOTO | NMG
What you need to know:
- Auditor-General Edward Ouko questioned the value of the Sh1 billion used to revive the factory to taxpayers before it was shut down and subsequently sold below its valuation.
The National Treasury is seeking to recover Sh1 billion taxpayers lost in a botched bid to revamp the troubled Pan-Paper Mills before it was later sold for Sh900 million.
The Parliament’s Public Accounts Committee (PAC) had concurred in June 2016 with the Auditor-General Edward Ouko’s assessment that money sunk in the Webuye-based paper mill was a waste of public resources as had partly been demonstrated by the auditors audit query.
Mr Ouko had questioned the value of the Sh1 billion used to revive the factory to taxpayers before it was shut down and subsequently sold below its valuation.
The Treasury said the Director of Public Prosecutions (DPP) is pursuing officials implicated in the scam. It adds that the Solicitor-General is pursuing, at the court of law, officials involved to recover taxpayers funds.
“The issue of Sh1 billion used to revamp Pan-Paper Mills, is being handled by the DPP,” said the Treasury in response to queries raised by the PAC.
“(The) Solicitor-General is seeking judicial redress in court for immediate recovery.”
In April 2016, the wealthy Rai family announced that it had bought the collapsed mill for Sh900 million, paving the way for reopening after a 2009 closure.
Jaswant Rai, the chairman of the business group, said then that they had acquired the company and would revive it within the next few months. The family announced then that it would pump Sh6 billion into the mill over a five to 10-year period.
In 2010, then President Mwai Kibaki held a colourful ceremony in Webuye during which he switched on factory machines to signify revival.
But the factory was shut down shortly after even though the government had pumped in Sh1.2 billion to revive it and pay off lenders who had placed it under receivership.
“The company has now been sold off for Sh900 million, way below its valuation,” Nicholas Gumbo, who chaired the PAC then, had said in 2016 in a report to the House.
