City Hall sued by NBK over Sh336million debt row
In a case filed before the Commercial courts at Milimani, NBK stated that it inked a deal with the county in 2019 to collect revenue for them but the county government terminated the contract and failed to honor the financial obligations under the agreement.
Nairobi City County government has been sued by the National Bank of Kenya over Ksh 336 million debt owed to them after termination of contract of services to collect revenue for the City County.
In a case filed before the Commercial courts at Milimani, NBK stated that it inked a deal with the county in 2019 to collect revenue for them but the county government terminated the contract and failed to honor the financial obligations under the agreement.
In their petition to the court, the lender stated that any further delays by City Hall to pay the debt are prejudicial to the government-owned bank as they discharged their duties as per the agreement.
They indicated to have filed the suit after the Sakaja-led administration failed to pay them the due amount despite having confirmed to have indebted NBK.
“The County has expressly agreed to being indebted to NBK Sh336, 199, 820.00 but has neglected to resettle the said amount,” NBK Senior Manager Francis Kioko stated in his affidavit.
The government-owned bank told the courts that the City-County government had prioritized paying them in the 2020/21 financial year but never made the obligation.
In 2020 NBK collected Sh3.5 billion in revenue from the Co-operative Bank of Kenya, while NBK had at least Sh2.8 billion.
The bank’s then managing director Paul Russo, had written to former governor Ann Kananu indicating that the county had been paid Sh250 million in October 2020 but was yet to clear a balance of Sh346 million.
“We implore your urgent intervention to have our fees settled forthwith to enable us to continue the seamless provision of revenue collection services, especially noting the criticality of this current period which the Nairobi City County citizens pay their various annual license fees,” Russo, who is the current Kenya Commercial Bank (KCB) boss previously wrote to the former governor.
In June 2019, City Hall contracted NBK to collect revenue on their behalf in a five-year contract before they were kicked out when NMS took over and KRA took over as the revenue collector but the Nairobi Revenue System was later brought and is still being used to collect the City Revenue even though overshadowed by mysteries.
NBK was offering automated revenue collection services and other value-added services such as tracking revenue collection activities and sealing loopholes for revenue losses together with enforcing payments for services rendered.
Before suing City Hall this year, in 2023, NBK wrote to them requesting Sh500 million after their contract was canceled stating that it was for the unpaid dues and losses they underwent from the investment they had made.
