Kenya's finance minister has said he will step down to allow for an investigation into the government's controversial sale of a Nairobi luxury hotel. As Derek Kilner reports from the Kenyan capital, government ministers, lawmakers and civil society activists had been calling for the finance chief to step down since news of the hotel's sale emerged late last month.

Amos Kimunya (file photo)

Finance Minister Amos Kimunya told a news conference in Nairobi that he made the decision to step down after speaking with President Mwai Kibaki, who has so far remained silent on the issue. Kimunya denied any wrongdoing.

"As I have indicated before, my conscience is very clear on the role of Treasury, and specifically myself in this matter," he said. "I have maintained the position that I am open to an independent inquiry to prove my innocence. Accordingly, I have requested His Excellency the president, to be allowed to step aside to facilitate the inquiry."

Critics have assailed Kimunya's involvement in the sale of the government-owned Grand Regency Hotel in downtown Nairobi for a price they say is far less than market value, suggesting corruption was involved.

Parliament passed a vote of no confidence in Kimunya last week, and a government investigation panel recommended that the finance minister step down. But Kimunya had repeatedly refused to resign, saying his hands are "totally clean" and that he would "rather die" than step aside.

He said Prime Minister Raila Odinga, Lands Minister James Orengo, and Attorney General Amos Wako, who have all called for Kimunya's departure, were aware of the deal beforehand.

A government spokesman said Kimunya's resignation is designed to facilitate an investigation into the hotel's sale and is not a permanent move.

Kimunya initially denied the sale of the hotel to a Libyan group, but the deal was exposed by Orengo.  Kimunya belongs to the president's Party of National Unity, while Orengo is a member of Prime Minister Odinga's Orange Democratic Movement. The two parties are sharing power in a tenuous coalition following disputed presidential elections in December, and the disputes within the government over the hotel's sale have threatened to divide the coalition.

Cabinet positions are evenly split between supporters of the president and prime minister, and another ally of the president is likely to be named as Kimunya's successor at the Finance Ministry.

Mr. Odinga, speaking to parliament on Tuesday, praised Kimunya's decision to step down. He also warned that Western donors, including the World Bank, had communicated that future aid could depend on Kenya's handling of the hotel controversy.

There have been several demonstrations against Kimunya in the past two weeks. On Tuesday, police arrested a group of activists who were preparing another march in Nairobi.

The Grand Regency Hotel was at the center of Kenya's largest corruption scandal during the 1990s, known as the Goldenberg affair. The previous owner of the hotel, businessman Kamlesh Pattni is suspected of orchestrating a scheme to defraud the government of some $1 billion through nonexistent exports of diamonds and gold. Pattni turned over the hotel to the government earlier this year, in exchange, many believe, for amnesty.