Meru County has been spared a financial shutdown after senators rejected a decision by the National Treasury to suspend part of its allocations over an unpaid compensation claim tied to a French investor, restoring normal funding to the devolved unit.
On Tuesday, May 12, 2026, the Senate adopted a report from the Standing Committee on Finance and Budget and voted to reverse the Treasury directive that had halted half of Meru County’s disbursements.
The motion was supported by 26 senators, with none voting against it and three abstaining.
The Senate resolution stated:
“THAT, the Senate adopts the Report of the Standing Committee on Finance and Budget on the stoppage of transfer of funds to the County Government of Meru laid on the Table of the Senate on Tuesday, 12th May, 2026 and pursuant to Article 225 (5) of the Constitution and section 97 (4) of the Public Finance Management Act, the Senate rejects the decision by the Cabinet Secretary for the National Treasury and Economic Planning to stop the transfer of funds to the County Government of Meru.”
The dispute stems from an arbitral award involving Leopard Rock Mico Limited, a firm linked to French investor Michel Dechauffour, who was evicted from a lease in Meru National Park in 2018.
In 2019, the High Court ordered compensation of about Sh339,070,485, attracting annual interest of 14 per cent, which has pushed the total liability close to Sh700 million over time.
During its inquiry, the Senate committee established that Meru County had already made partial payments totalling Sh200 million, paid in four instalments between September 2023 and March 2025.
The Standing Committee on Finance and Budget, chaired by Mandera Senator Ali Roba, noted that the matter exposed tensions between diplomatic pressure and devolution financing, warning that the Treasury decision risked setting a worrying precedent.
Committee findings indicated that external diplomatic engagement played a role in the decision, with concerns raised that the matter had reached the President of France, raising questions among lawmakers over equal treatment of investors and local contractors.
Treasury Cabinet Secretary John Mbadi defended the suspension, telling senators that the government had acted to protect fiscal stability and international relations.
“The continued non-settlement of the arbitral award is detrimental to the fiscal sustainability of the County Government and foreign relations between Kenya and France,” Mbadi said.
He added that France had raised the issue through diplomatic channels and warned that continued delays could escalate tensions.
However, senators pushed back against the move, arguing that it unfairly targeted Meru County while many other counties with pending obligations had not faced similar action.
The committee held sessions involving the National Treasury, Controller of Budget, Auditor-General and Meru County officials, including Governor Isaac Mutuma.
Treasury officials insisted the suspension was lawful under constitutional provisions governing financial interventions, arguing that Meru County had not fully complied with repayment arrangements.
The Controller of Budget also warned that continued default could expose the county to further financial enforcement measures under public finance law.
Despite these arguments, senators said freezing county funds would directly affect residents who rely on devolved services.
They warned that essential services such as health care, water provision, road maintenance and salary payments would be disrupted if the suspension continued.
Lawmakers also raised concerns about consistency in handling county debts, questioning why similar measures had not been applied elsewhere.
“The Senate must not only act fairly, but must also be seen to be fair,” submitted Senator Ali Roba, the Chairperson of the Committee.
“In light of that, we have pending bills that are weighing heavily on many local investors. That the National Treasury has taken a step on stoppage of funds for Meru County, based on the fact that an international investor was involved, was extremely concerning for the Committee,” he added.
Mombasa Senator Mohamed Faki also criticised the Treasury decision.
“The CS found it proper to do a stoppage of funds for this particular case, yet other similar undeserving cases, he has not been able to use that method.”
Instead of cutting off funds, the committee recommended that the National Treasury provide a conditional grant to Meru County to help clear the remaining principal amount.
Senators argued that this approach would ensure payment of the debt without disrupting county operations, noting that the county already holds all legal documentation required to process settlement through normal financial systems.
The committee also noted that Treasury had indicated willingness to contribute Sh139 million toward the principal sum, while discussions on the accrued interest would continue through diplomatic channels involving the Ministry of Foreign Affairs, the French Ambassador and the investor.
Lawmakers said this approach balanced financial responsibility with the need to protect devolution and public services.
The Senate invoked Article 225(5) of the Constitution and Section 97(4) of the Public Finance Management Act to overturn the Treasury directive, effectively restoring full funding to Meru County.
In the same sitting, senators also approved the Equalisation Fund Appropriation Bill, 2025, releasing Sh16.8 billion to support development projects in 34 marginalised counties, focusing on water, health, roads and electricity infrastructure.