Le Pettey: We have officers from the Central Bank who have come here and said they were told to keep it secret and Mr Musalia Mudavadi was also looking for them but you kept them secret.
Koinange: My lords there is a lot of difference in the classification of letters. Merger: That will be all my lords.
Kittnga: Mr Miller you are next,
Bosire: If you follow Mrs Murgor’s example, then we will be very happy, because you can see she never touched what. Mr Ojiambo cross-examined on.
Miller: My lords, you will see that I will follow her example to the T’s and I will limit myself to my client. In so doing, I will ask Dr Koinange to go straight away to page 7 of his statement, that’s exhibit number 137_ Are you there sir?
Koinange: Yes, my lords.
Miller: Now there is a paragraph there reacting. “During the period, I saw Governor Kotut,” you see that sir?
Koinange: Yes, my lords. Miller: You say, I worked under two Governors, Mr Eric Kotut and Mr Micah Cheserem. Kotut was secretive and manipulative, withheld Information from the IMF, whose officers complained to me about the Sh13.5 billion, He arranged for rescue of an African Bank and politically connected banks by obtaining money from the Deposit Protection Fund”.
Koinange: I see that my lords.
Miller: Now for the record, as PS Treasury, is it true thatyou sat on the board of the Deposit Protection Fund?
Koinange: It Is true, after my appointment, I realised I was a board member.
Miller: Okay. For how iong did you serve as a member of the DPF, sir?
Koinange: As leng as one is PS Treasury, he would be a member.
Miller: Could you tell its precisely, which years were these?
Koinange: From mid December 1991 to May 1994.
Miller: Would It then be correct to say that when those payments to the Pan African Bank were being made, you were a board member of DPF?
Koinange: That is true.
Miller: Would it then be correct that when you say that Mr Kotut arranged for the rescue of the banks, you too were aware and participated in the rescue of the Pan African Bank as a board member?
Koinange: My lords, may l just explain this issue.
Kitonga: Go ahead. Koinange: My lords, I went to the Treasury as I have explained -before in very interesting circumstances and early 1992, after barely serving for three months, the Governor [Kotut] came to my office and told me: “Bwana PS, you know many banks are going to collapse on your laps”. I was very new obviously would have never Liked banks to collapse on my laps. I asked him,”Mr Governor, what do we do about it, and why are they collapsing?” He told me that the banks were going to collapse because there was a liquidity problem. I asked him what we could do about it. He told me “what We can do is to lend them money”. The Central Bank, my lords, was the supervisor and they had far much more Information on what was going on than the PS Treasury. So I told him that if that was the solution, then let us go ahead and lend them money from the Central Bank”,
Miller: Dr Koinange, let me just (interjection).
Koinange:. Am I too long?
Khaminiwa: My lords, with due respect, let him explain what he is saying, we better hear it.
Koinange: My lords, I was told we could not lend money from the Central Bank. We could only lend the money from the Deposit Protection Fund. That was the ‘ first time I heard about that Fund. I did not know about it.
Miller: You were a board member and you had not heard about it?
Koinange: I did not know about it.
Miller: So are you telling this Commission that you took over your job as the PS Treasury and you did not know that you were to be a member of the DPF?
Khaminwa: My lords, let Dr Koinange: explain what he has to say.
Bosire: Sorry, let me explain, Miller is cross-examining, let us give time to do that.
Miller: Thank you, my lords.
Koinange: So indeed the chairman of the Deposit Protection Fund, who was the Governor, did call for a board meeting, and I attended that meeting, which was very short and I asked him, how much money do you think we should lend, and he told me Sh300 million. I said Mr Governor let us go ahead, I don’t want banks to collapse
Miller: Okay,
Koinange: In fact, i may add, I did ask him which banks were most likely to face the pr
Bosire: Just a mom is cross-examining.
Koinange: Sorry, my Lords.
Miller: Thank you, my lords. Now are you then saying that Sh300 million was lend to Pan African Bank from the Deposit Protection Fund?
Koinange: During that. meeting, Sh300 million was toga the Pan African Bank, my lords.
Miller: Your statements say she arranged for the rescue of Pan African Bank, Would I be right to say that all of you as board members arranged for the rescue of the bank?
Koinange: Yes, the board did approve that expenditure.
Miller: And you were part of the board?
Koinange: I was.
Miller: Now, was it within the Governor’s powers to borrow money from the DPP to rescue a bank? Was it within the’ Governor’s powers to arrange for a rescue of a bank by borrowing money from the Deposit Protection Fund, sir?
Koinange: I believe so.
