Kira Hospital case : Burundi faces serious consequences

The major shareholder of Burundi’s most prestigious clinic, Kira Hospital, wrote to the Burundian Minister of Justice to denounce the deliberate blocking of the dispossession file of the majority private shareholders of Kira Hospital, imposed by the Burundian State. Swissmed International Limited speaks of indirect and irregular expropriation orchestrated by representatives of Burundian state entities. Swissmed also describes the incarceration of Dr. Christophe Sahabo, the former CEO of Kira Hospital, as “irregular” and recalls that the latter and Dr. Jean-David Pillot, former Chairman of the Board of Directors, were forced to resign from their positions on April 1, 2022 under duress and threats from the SNR (National Intelligence Service). Kira Hospital’s Majority Shareholder Reports Burundi Exposes Its Assets to Seizure Because the Company Can File a Complaint with ICSID (World Bank Group).

INFO SOS Médias Burundi

The letter addressed to the Burundian Minister of Justice Domine Banyankimbona was sent on November 25. Swissmed International Limited wrote as a representative of the individual shareholders and aggrieved majority shareholders of the company called “Kira Hospital S.A Swiss Clinic”.

The company explains that all management and appointment decisions taken by the board of directors since April 2022 were executed by irregularly appointed corporate officers, in total violation of the Burundian corporate law.

“Directors representing minority shareholders are in no way authorized to make corporate decisions in the total absence of the majority shareholder,” the letter says.

And they specify, ” […] We are currently shareholders with 57% of the share capital of the voting rights of Kira Hospital. Thus we draw your attention to the fact that the injured private shareholders represent the majority of the capital securities and voting rights of Kira Hospital”. The document cites various reports from the auditors and contribution auditors who confirmed this.

The injured private shareholders say they have been completely and irregularly excluded.

Arbitration procedure

The letter states that due to the irregular expropriation initiated by illegal corporate bodies indirectly representing the State of Burundi, in the absence of any nationalization law, the majority shareholder is now considering initiating an ICSID (World Bank Group) arbitration procedure.

Dr Christophe Sahabo, former Director General of Kira Hospital, detained at the Ruyigi central prison, east Burundi

The initiative is based on the bilateral treaty concluded between the Republic of Burundi and the Federal Republic of Germany. It was September 10, 1984. The treaty itself entered into force on December 9, 1987. It relates to the encouragement and mutual protection of capital investments.

“To date, we have not received any expropriation compensation from any state authority, it being specified that our financial loss is substantially greater than the investments we have made,” the document continues. Its exact amount will be established by an independent international financial expert in the framework of the ICSID arbitration procedure. In the absence of such fair and fair compensation, we remain fully majority and holders of the capital securities of the injured private shareholders,” the letter recalls.

It specifies that the civil and criminal proceedings that were initiated by the injured private shareholders before competent Burundian courts remain blocked by Burundi. “Reminder letters of July 25 and September 3, 2024 have remained unanswered.”

ICSID procedure and its consequences

The ICSID procedure is based on the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. It was adopted on March 18, 1965 and entered into force on October 14, 1966. It is called the “Washington Convention”. It was signed on February 17, 1967 and ratified on November 5, 1969 by Burundi.

“In view of the major budgetary, financial and reputational consequences that such an ICSID arbitration procedure would be likely to generate, we suggest that you find an amicable solution to our dispute with a view to restoring the rights of the injured private shareholders”, advises Swissmed International Limited in its letter.

Burundian President Evariste Ndayishimiye while declaring that Burundi is the main shareholder in the Kira Hospital clinic, May 10, 2022 in Bujumbura (SOS Médias Burundi)

And clarified, “we are indeed concerned to avoid that an arbitral award rendered by an arbitral tribunal sitting under the aegis of the ICSID could result in a seizure of property belonging to the Republic of Burundi since Article 53 of the Washington Convention provides that ‘the award is binding on the parties (…). Each party must give effect to the award'”.

In addition to this convention, the small East African nation has also adhered, by virtue of a law of May 9, 2014, to the convention on the recognition and enforcement of foreign arbitral awards known as the “New York Convention”. This was signed in May 1958.

“Once the ICSID award is obtained, Burundi will therefore have to apply the New York Convention”.

“The sentence would certainly have a considerable impact on Burundi’s ability to attract foreign investors…on Burundi’s financial rating assigned by the main international rating agencies and by international donors including the World Bank, the European Union, the IMF (International Monetary Fund) and the African Development Bank,” warns Swissmed International Limited.

“An amicable solution would avoid this dire fate,” the letter concludes.

Burundian authorities had not yet responded to this letter. But in May 2022, Burundian President Évariste Ndayishimiye claimed to be himself involved in the detention of Dr. Christophe Sahabo, former CEO of Kira Hospital. According to President Neva, the Burundian state is the main shareholder of the Kira Hospital clinic.

The letter, copied to regional representatives including the World Bank and the European Union as well as President Ndayishimiye, was made public as Burundi prepares to host a donor roundtable on December 5 and 6 in the commercial city of Bujumbura.

At the head of a country going through a generalized crisis, Évariste Ndayishimiye continues to hope that the small East African nation will become “an emerging country in 2040 and developed in 2060”.

Some local and foreign observers compare this vision to myth and heresy.

——-

File photo : Kira Hospital S.A Swiss Clinic