Tech firm Seven Seas Technology, co-founded by businessman Michael Macharia, is set for a boost after lawmakers set aside Sh1 billion to repay its dues owed by the government.
The National Assembly’s Budget and Appropriations Committee (BAC) has proposed an additional allocation of Sh1.55 billion to the Attorney-General’s budget on the Treasury’s initial estimates, out of which Sh1 billion will be paid to Seven Seas.
Mr Macharia owns 60 percent of the company. The allocation is a third of the Sh1.58 billion damages the government was ordered to pay the firm for breach of contract.
It is however unclear if the State has already paid the remaining portion of the damages.
“Increase Sh1 billion (recurrent) to settle pending bill owed to Seven Seas Technology Limited court arbitration,” said the committee chaired by Kiharu Member of Parliament Ndindi Nyoro.
The allocation is a major boost to the businessman, who took the government to court after a multi-billion-shilling contract he won was terminated.
Seven Seas, an IT services company, was awarded a Sh4.7 billion contract by the Ministry of Health to provide 98 government hospitals with technology for the Managed Equipment Service (MES) programme.
Part of the deal was the provision of teleradiology, which allows doctors in top hospitals to read X-rays, CT scans, MRIs, and other medical images to treat patients in remote facilities.
The contract would, however, be terminated by the ministry in November 2019, triggering the legal battle that saw Seven Seas awarded Sh1.58 billion through arbitration by retired justice Aaron Ringera.
The arbitrator said the firm was owed the sum in unpaid bills and costs incurred by the firm before the contract was cancelled.
The firm’s claim for nearly Sh2 billion for lost profits was declined as this was not stated in the contract as a remedy for breaches.
If the payment is made, Mr Macharia will be among the lucky few businessmen and other victims of violations whose legal awards against the State have been paid. Courts have awarded damages totalling Sh150 billion against the government, Attorney-General Justin Muturi revealed last year.
Some of these awards have not been paid for decades, with beneficiaries losing hope of ever being paid compensation by the government despite the court awards.
The awards against the government include breaches of contracts for public tenders, unlawful dismissals, human rights violations, and other legal disputes.
The Treasury has been facing a hard time paying the awards which continue to rise, forcing the Attorney-General to propose strict laws to punish State agencies and officials responsible for the breaches to shoulder the awards.
“Going forward, I may be forced to recommend that State officers who are shown to be reckless in decision-making assume personal liability in certain instances,” said Mr Muturi last year.
In the meantime, Mr Macharia is so far enjoying a fine year after the Kenya Revenue Authority (KRA) earlier this year sparing Seven Seas from paying Sh610.56 million in taxes.
KRA had been given the go-ahead to collect Sh900.4 million in unpaid taxes from the technology company, but the two entities reached an out-of-court settlement which saw the firm lower its tax liability to just Sh289.84 million.
The taxman had slapped the firm with tax demands on August 27 last year for the period between 2015 and 2019.
