NAIROBI, Kenya May 8 – The Meru County Government has received a reprieve after the National Treasury committed to lifting the freeze on its funds and settling Ksh139 million owed to a French investor linked to Leopard Rock Hotel Limited.
The development follows reports that President William Ruto had informally directed the national government to clear a Sh640 million debt owed by the Meru County Government to the investor a liability that later triggered punitive action against the county.
National Treasury Cabinet Secretary John Mbadi, while sympathising with Meru Governor Isaac Mutuma over the debt burden, assured senators that the national government would intervene should liabilities exceed the Ksh139 million earmarked for settlement.
Appearing before the Senate Finance and Budget Committee chaired by Vice Chairperson Tabitha Mutinda, Mbadi said his ministry would formally communicate to Controller of Budget Dr Margaret Nyakang’o to facilitate the lifting of the freeze on Meru County funds.
“The move to stop the Controller of Budget from approving withdrawal of funds for Meru County had already been subjected to the provisions of Article 225 of the Constitution. The best we could do was to communicate the new development in writing,” Mbadi said.
“We agreed that we would formally notify her so that when she prepares her report to the Senate, the matter is captured and dispensed with.”
Mbadi explained that once Article 225 of the Constitution is invoked, the Controller of Budget is legally required to act, necessitating due process before normal funding resumes.
“Once I invoke Article 225 and request stoppage of funds, the law takes effect and the Controller of Budget must respond. That is why we are fast-tracking the process,” he said.
“We will communicate formally to the Controller of Budget so she can conclude her constitutional responsibility before funding to Meru County returns to normal.”
On the issue of accrued interest, Mbadi disclosed that negotiations had already commenced through the Finance Principal Secretary and the Ministry of Foreign Affairs.
He noted that the matter had escalated because Meru County allegedly failed to respond to several letters from the Treasury, including correspondence sent in January this year, only reacting after the transfer of funds was halted.
Mbadi further warned that the dispute risked straining diplomatic relations between Kenya and France after French President Emmanuel Macron reportedly raised the issue with President Ruto.
“Our bilateral relationship with France, including projects funded by the French government, was at risk. They had indicated that failure to resolve the matter could affect future funding,” Mbadi told the committee.
“We felt it would be wrong for the mismanagement of a county government to jeopardise relations between the two countries.”
In May 2025, while attending an event at Meru National Park, President Ruto announced that the national government would settle the Ksh640 million debt.
Despite the directive, the Treasury had not acted on the payment, prompting Mbadi to explain that no formal communication had been issued to his ministry.
“Had this decision been communicated to me officially, I would probably not have taken the steps I did,” Mbadi said.
“When I make decisions at the National Treasury, I do so within the law, the Constitution and the Public Finance Management Act.”
He added that he had since written to the Head of Public Service seeking formal confirmation of the President’s directive.
“I cannot act on a presidential decision that has not been communicated in writing. I have already spoken to the Head of Public Service and I expect the response soon,” he said.
“Once that communication is received, I will formally write to the Controller of Budget, likely by next week.”
The dispute dates back to lease agreements signed in 1997 between Leopard Rock Mico Limited and the defunct Nyambene County Council, the predecessor of the Meru County Government.
The arrangement was later replaced by a fresh lease agreement dated October 30, 2008, revising monthly rent to Ksh60,000 with a 10 per cent increment every two years. The agreement also introduced a daily bed occupancy levy equivalent to 10 per cent of total collections, payable monthly in arrears.
However, in July 2018, the Meru County Government moved to terminate the lease, citing failure to secure the necessary approvals for certain building plans.