The state broadcaster Kenya Broadcasting Corporation (KBC) will pay Sh200 million in legal fees for the 2021-22 financial year.
This follows a 13-year arbitration in London that threatens to bankrupt the parastatal in an arbitration in London.
The allocation is in the Supplementary Budget tabled in parliament by the National Treasury.
The sh 200 million fees are equivalent to more than half of KBC’s annual recurrent expenditure.
Treasury also moved Sh100 million from recurrent to capital expenditure. As a result, it ensured the legal firm will receive another Sh142.2 million in allocations.
“The increase is mainly on account of additional Sh200 million provision for legal costs to the arbitration proceedings under a KBC Channel 2 court case,” Treasury said in a statement.
Parliament’s Budget and Appropriations Committee last year raised the red flag on the arbitration.
“The committee further observed that the Kenya Broadcasting Cooperation is facing a lawsuit estimated at Sh40 billion in London UK for termination of a contract it had with Amjam TV, which later incorporated the British Virgin Islands,” stated the Budget and Appropriations Committee in its report.
It dates back to 2009 when KBC terminated a joint venture agreement with Channel 2 Group owned by a Dubai-based businessman Ajay Sheth.
Court documents show that KBC and Channel 2 entered a joint partnership in 2006 where the State broadcaster would provide technical equipment. On its part, KBC supplied the new digital station with staff, programming content and other resources.
Channel 2 and Sheth argue that KBC terminated the deal without notice in 2009. Sheth said that he lost billions.
The case is under arbitration in London, where the KBC, where the parastatal is at an Sh40 billion payout, should the case favour Channel 2.
Sh38.7 million was allocated to personnel emoluments.
Sh39.5 million from donors will sponsor the Kenya Yearbook.