South Sudan, Kenyan firm tussle over $49m

A Kenyan high court in Nairobi will on February 25 determine whether South Sudan will access US$49 million held in two bank accounts after the assets were frozen following a dispute with a local firm.

This is after High Court Judge Jaden Thuranira extended the orders earlier issued on December 30, 2020, to Thursday, February 25, when the case would be due for mention.

The freezing of the two bank accounts held at NCBA and Stanbic came under the backdrop of years-long payment disagreements between South Sudan and Yu Sung Construction Limited-a firm linked to Kenyan former minister Cyrus Jirongo.

The company was contracted through the Ministry of Defence and Veteran Affairs to build Dr John Garang Memorial Military Academy, four warehouses and fuel depots. The Kenyan media revealed the project—which was to run from 2007 to 2011 during independence –attracted a debt of US$18 million, which translated into US$49 million due to interest which piled at US$2.7 million per month over the years.

But according to an affidavit by the Ministry of Finance and Planning First Undersecretary Garang Majak Bol, the government contracted the company in 2008 but it failed to deliver the job as agreed despite pocketing US$24 million in down payment. The affidavit was prepared Macharia-Mwangi & Njeru Advocates which represents the country in court.

Issues at hand

Yu Sung went to the East African Court of Justice (EACJ) in Tanzania and sued South Sudan for payment in 2020. At the EACJ, the company sought to have a consensus on how they could agree on a structured mode of payment.  Part of the deal was to agree on an instalment and have the South Sudanese government ship crude oil to a United Arab Emirates company, which would pay for the commodity and have South Sudan Defense Ministry and Appolo Advocates preside over the payments. The firm then sought to freeze country’s accounts saying Exim Bank had sent US$250 million to it.

Kenyan press further reported that a deal was reached on November 26, 2020, on how Juba would pay the firm.

‘‘Recognising the fact that the failure and default of the respondent to uphold the contractual obligations it signed with the applicant may complicate the matter much more should the court’s proceedings be the only option left to the parties to follow,” South Sudan minister for Finance and Planning Athian Ding Athian, is quoted writing while committing for the agreement.

Through Ssemuyaba, Iga Advocates from Uganda, Yu Sung had sought a consent order from the country to settle the money in instalments of US$10.9 million beginning December 15, 2020, to September 30, 2021.

Shadow deal

In court documents, the company accepted having received the down payment but said the money was exhausted in 2009 to the point that it sold off assets to pay workers.

On the other hand, it blames the country for changing venues of the site. For instance, it claims the site changed from Rajaf to Kurmok after locals demonstrated over the project. However, it later had to be shifted to Mangalla, and then to Suleng due to frequent flooding.

The affidavit filed by the state presents a stark contrast to the details of the deal. The state protested the court proceedings and highlighted the key issues even as it fronted reasons on why it will not commit to settling the debt.

South Sudan argues that the November 26, 2020, judgment by the EACJ holds no legality given that the court has no jurisdiction to solve the dispute. The country argues that the orders cannot be executed on the state resources and how orders were issued, amended and served contravened the jurisdiction of South Sudanese courts. It argues that the legal process anticipates a lack of justice in the corridors of South Sudanese courts which is untrue.

‘‘Kenyan courts, including High Court of Kenya, have no power to oversee the affairs of South Sudan, including issuing orders against assets of the Republic of South Sudan,’’ the document reads in part.

Bol further said that he only received a communication from the Director-General of the Bank of South Sudan Johnny Ohisa that the accounts held by the Central Bank of South Sudan in Nairobi had been frozen.

And that no orders were served to the government and the court orders only landed at the NCBA and Stanbic banks.

‘‘It is entirely unfair and oppressive of the court to permit the accounts of a sovereign state to be frozen without hearing. The manner in which the orders were issued is evidence of a violation of the sovereignty of the people of the Republic of South Sudan.’’

The government lamented that the orders had affected payment for embassies and missions outside the country, currency printing, payment for printing of national examinations, meeting obligations to regional bodies such as EAC and IGAD and payments to World Health Organization and International Labour Organization. 

The state has also disowned Biong Pieng, a lawyer who attended EACJ proceeding on behalf of the country. This is after it appeared that Mr Pieng witnessed the sanctioning of crude oil export to UAE, a deal that the government has disowned as a fraudulent scheme.

It remains a push and pull situation as Yu Sung argues the Juba administration cannot run from the EACJ citing immunity from prosecution. But South Sudan has promised not to pay what it termed as services not rendered which will only amount to the fleecing of 3.12 per cent of the country’s budget.