This archive report was first published on 4 September 2019.
The Lake Basin Development Authority's (LBDA) mall project in Kisumu has been plagued by a Sh3.5 billion debt, which has been rising due to accrued interest.
The principal loan taken from the Co-operative Bank for additional works was Sh2.5 billion, but the authority has failed to repay the debt on time, attracting penalties.
LBDA Chairman Odoyo Owidi explained that the bank has been charging a monthly interest of Sh30 million for the last six years.
The mall's construction was completed in April 2014, but the Ethics and Anti-Corruption Commission (EACC) has been investigating the cost of construction for six years, after the cost rose to Sh4.1 billion.
Mr Owidi disputed the narrative that LBDA allowed the contractor, Eldermann Property Ltd, to use its property as collateral to obtain the loan, saying that the bank used security of Sh110 million to issue a loan of Sh2.5 billion.
LBDA had agreed with the contractor to secure a Sh2.5 billion loan from the bank using their title as lien, which is a claim that someone or something has a property that you possess or use.
However, the State has not yet okayed LBDA to take over the loan to get its title back, leaving the debt to continue attracting interest per month.
