The Arror and Kimwarer Dams Project

The Real Story Behind the Dams Scam

By Alessandro Da Rold and Lorenzo Bagnoli

Since the 1970s, Kenya has been considered by convicted Italian criminals as a safe haven – a place to hide from justice. A recent tide has, however, occurred and now some of these criminals have been extradited after spending years enjoying the “good vibes” of the Kenyan sea shores, especially in their stronghold Malindi. It seems to be the end of an era marked by impunity as Kenyan authorities have started pursuing alleged felonies committed by Italians living in Kenya. The authorities are not just going after individuals, but companies as well.

On the 29th of July this year, the Milimani Chief Magistrate’s court in Nairobi allowed Kenya’s Director of Public Prosecutions (DPP), Noordin Haji, to issue an arrest warrant for the Italian citizen Paolo Porcelli, the CEO of CMC (Cooperativa Muratori e Cementisti) from Ravenna. Porcelli is charged with abuse of office, bid-rigging and misuse of public funds and could face jail time if he returns to Kenya. With him on the list of the indicted there is also the Italian joint venture between the Italian companies Itinera (Gavio Group) and CMC.

Porcelli declined to appear in court twice. “Porcelli is a fugitive. Despite being given the opportunity, he hasn’t presented himself in court for a second time,” DPP Special Prosecutor Taib Ali Taib told the court. “The Italians think they can break the law and get away with it contemptuously. They believe nothing will come out of it. Don’t allow it, your honour”.

Porcelli’s lawyers have a different opinion on his judicial status in Kenya: they explained that the indictment has charges only against the Kenyan top officials involved in the case. “It is not clear, and it is not explained [by the investigators] why Mr Porcelli and the joint venture CMC-Itinera could be indicted for the only charges they have, namely cashing in the deposit on the construction as it was agreed upon the contracts.”

The arrest warrant issued to the Italian manager is the latest development in a long saga reported in the international media as the “dams scam”. This story has many facets: the alleged criminal conduct of the Italian company in Kenya (CMC declines any involvement, claiming its innocence); the blatant lies and unfulfilled promises to the local population living around the proposed dams area; and the way local politicians turned Kenya’s natural assets into a personal gold mine.

The CMC’s long nightmare

CMC is a giant company in the field of construction globally. Wherever there is an important tender, the company is among the bidders. However, the glorious history of the company didn’t guarantee CMC’s success – construction is a competitive sector around the world. Sometimes to be awarded a tender, managers have to cross the line between lobbying and corruption.

In 2014, CMC signed a consultancy contract with Primo Greganti, a businessman and former politician who was arrested for alleged corruption: he would have helped some companies to be granted tenders for the construction of the site of Expo Milan 2015, the world food exhibition hosted in the Italian city. The trial ended in a plea: in the Italian judiciary system, it means there is no verdict on the culpability of the defendant.

This story has many facets: the alleged criminal conduct of the Italian company in Kenya; the blatant lies and unfulfilled promises to the local population living around the proposed dams area; and the way local politicians turned Kenya’s natural assets into a personal gold mine.

The company was effectively granted a six million euro tender for the recovery of the land of the so called “plate”, the foundation for the exhibition facilities. At the end of the work, the final cost skyrocketed to 30 million euros because of differences caused by unexpected changes in the project. These extra costs were heavily criticised by the Expo 2015 board members because there were no grounds for justifying them. But because time for the construction at the site was running out, nobody within the board could reject the CMC’s requests. CMC was also awarded the tender for the construction of one of the French pavilions at the exhibition.

In May 2018, the company issued a press release on its financial situation. Under “total turnover” it reads: “Decreased from €289.0 million to €258.2 million. In particular, construction revenue decreased from €278.0 million to €236.7 million, due to a €23.0 million reduction overseas and an €18.3 million reduction in Italy. A significant increase is expected from certain projects achieving full production stage and from the start of the new project secured in recent quarters.”

In another press release issued in November last year, the company stated: “The Board unanimously concurred that, in a market context that was already structurally problematic, for reasons that arose spontaneously without any predictability, linked to non-receipts of orders and/or the state of progress of work, the Company is facing a moment of cash-flow tension.”

The main “non-receipts of order” at that time was Anas, the Italian company partially controlled by the state and in charge of maintaining and managing Italian highways. With the Kenya dams tender, it seemed that the cash flow problem might be solved. Kenya and Nepal were at that point considered as possible anchors that could recover the company’s accounts. One of the primary goals of the managers, therefore, was to immediately cash in on the advances made on work yet to be carried out. And this is when new problems arose.

The masterminds targeted by the investigation

CMC in Kenya has been granted contracts worth almost 800 million euros for the construction of the dams at Arror and Kimwarer. The awarding of the tender was officially presented during a meeting between the former Italian Prime Minister, Matteo Renzi, and President Uhuru Kenyatta. Both projects were expected to provide water to the population of the Rift Valley. According to the 2017 annual budget of CMC, Kenya was among the list of countries that contributed to expand the productivity of the company. Two years later, the situation is totally different.

In Italy, the authors of this article have since March been investigating the Kenyan dams case for La Verità, a right wing newspaper. The newspaper discovered a contract signed in 2013 between CMC and Stansha Limited, the company associated with the Lamu West MP, Stanley Muthama who was arrested on 28th June for tax evasion. It is a consultancy contract granting Muthama a fixed fee of 3 per cent in case CMC signs a contract with local development authorities in Kenya.

In that case, it was the Itare dam, another project to supply water in the Rift Valley, which apparently is not included in the current investigation. The investigation went silent until 22nd July when 28 other people were arrested on a different charge: international corruption. Among them was the Italian CEO, Paolo Porcelli, and Kenya’s Treasury Cabinet Secretary, Henry Rotich. The Italian prosecutor Lucia Lotti is handling the case in Rome, with the option to file a new investigation in Italy as well.

As is everything in Kenya now, this case could be framed as the battle between Uhuru and his number 2 in the 2022 election campaign, William Ruto. It has been suggested that Ruto could be using the Italian company for political support. Ruto’s daughter, June Chepchirchir, holds a senior position as the second counselor at the Kenyan embassy in Rome, Italy.

A key moment in diplomatic relations

The investigation on CMC Itinera is happening at a sensitive moment. Kenya and Italy are trying to collaborate on the Silvia Romano kidnapping. The 23-year-old Italian volunteer, who worked for the Italian charity Africa Milele, was abducted on 20th November last year from Chakama village in Kilifi County. But since then there has been no substantial information on her situation, apart from the trial of Gababa Wariu and Moses Lwari Chende, who confessed to aiding Romano’s abduction. But the investigation so far has not resulted in finding her.

In Italy the absence of updates on Silvia Romano’s health conditions are considered very alarming. At the same time, there is a new ongoing effort in Italy to have Romano released. The Kenyan head of public prosecutions, Noordin Haji, and Italian prosecutors in Rome are discussing a common strategy on the issue. If no positive results are achieved, the predictable outcome could be the cooling down of business and diplomatic relations between the two countries, at least in the initial stages. The investigation on CMC Itinera is happening at a sensitive moment. Kenya and Italy are trying to collaborate on the Silvia Romano kidnapping. The 23-year-old Italian volunteer, who worked for the Italian charity Africa Milele, was kidnapped on 20th November last year from Chakama village in Kilifi County.

While Italy is grappling with the dams scandal and the search for Silvia Romano, France is trying to find a foothold in East Africa by signing new contracts with the Kenyan government. Rivalry in bilateral relationships in Africa is always a hot issue within the European Union (EU) member states, who have been unable to come up with a single comprehensive strategy for how EU member states should deal with African governments.

A possible read on the dams case is that William Ruto was the guarantor for the Italians and he can’t assure them anymore because he is currently dealing with bigger challenges related to his re- election campaign, which has been marred by corruption scandals implicating individuals from his political camp.

Editorial note:

For additional information on the Arrow and Kimwarer Dams saga see links below.

Contract Agreement between KVDA and CMC di Ravenna – Itinera Joint Venture for Kimwarer Dam A contract agreement (KVDA/RPF/39/2014-15) between Kerio Valley Development Authority and CMC di Ravenna – Itinera Joint Venture signed on 5th April 2017 for works on the Kimwarer Multipurpose Dam Development Project on River Kimwarer.

Contract Agreement between KVDA and CMC di Ravenna – Itinera Joint Venture for Arror Dam A contract agreement (KVDA/RPF/36/2014-15) between Kerio Valley Development Authority and CMC di Ravenna – Itinera Joint Venture signed on 5th April 2017 for works on the Arror Multipurpose Dam Development Project on River Arror.

A consultancy agreement between C.M.C. di Ravenna South Africa Branch and Stansha Limited (a company registered in Kenya) for the general purposes to provide consultancy services for the Itare Dam and Ruiru II Dam project under Athi Water Service Board.

DPP’s press statement on investigations concerning KVDA and Rift Valley Water Services Board Following complaints to the Government of Kenya has been exposed to the loss of billions of shillings arising out of manipulation of the tendering process of several dam projects including the Arrow dam, Kimwarer dam, Itare dam, Embobut multi-purpose dam, Lower Turkwell irrigation scheme et.al the DPP’s office constituted a team of prosecutors to ensure the investigations of the aforementioned projects were carried out.

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The Real Story Behind the Dams Scam

By Alessandro Da Rold and Lorenzo Bagnoli Published by the good folks at The Elephant.

The Elephant is a platform for engaging citizens to reflect, re-member and re-envision their society by interrogating the past, the present, to fashion a future.

The Real Story Behind the Dams Scam

By Alessandro Da Rold and Lorenzo Bagnoli Sometime in mid-2017, Deputy President William Ruto led a team of Jubilee Party MPs, senators and some governors deep into the Arror forest in Marakwet West. It was a big team because it was ferried in three helicopters. The Deputy President had taken the team to the forest to show them where one of two anticipated dams – the Arror hydroelectric power station (HEP) – would be located. The other dam that was to be built was Kimwarer-Talaal, which was to be on the Kimwarer River in Keiyo South, Elgeyo Marakwet County.

“We flew over the dense, thick forests of Arror and Kimwarer and from high above, we could see the mighty Arror River roaring down the plains,” said Beatrice Ilachi, then a nominated senator. “But some of us wondered loudly how the dam was ever going to be constructed. The landscape is not only very steep, it would also mean that a huge chunk of the gazetted forest would have to be cleared off.” Many in the group wondered whether the dams would further encroach on the country’s remaining dwindling forest cover.

When the choppers landed on some flat land, Ruto led the team into scaling the steep heights of the Arror forest. “We had not been prepared for the climbing – from our attires to the shoes – least of all, mentally,” said Ilachi. “Half way climbing through the thicket and scrubland, we gave up, many of us by then had even removed our shoes.”

“It was about two months to the elections [in August 2017], and so it was obvious that countrywide campaigns had commenced. On our way to Arror and Kimwarer sites, we had stopped at Tot in Baringo County to presumably check on the state of the county’s food security. After touring the supposedly dams’ sites, we flew to West Pokot for more campaigns.” said the former senator. “We didn’t hear of the dams’ story again until last December, when talk of an Italian company and visits to Italy were made by the DP and his team and now with the explosion of the magnitude of the scandal.”

The two multi-purpose dams were supposed to cost an arm and a leg. The latest sum given of between Sh63 billion ($630 million) and Sh38 billion ($380 million) for Arror and Sh28 billion ($280 million) for Kimwarer have generated so much heat within the ruling Jubilee Party that the Treasury Cabinet Secretary, Henry Rotich, had to be grilled for two days at the Directorate of Criminal Investigation (DCI) offices on Kiambu Road and made to answer some 300 questions relating to the dams’ financing. (Rotich arrived at the DCI at 6am on 5 March, 2019 and was questioned the whole day. The following day, the grilling was so intense that he requested for his favourite liquor drink to be delivered to him in the afternoon to cool his nerves.)

The Deputy President’s front line brigade, led by the cantankerous Kapseret MP Oscar Sudi, have cried foul, accusing the Jubilee wing of President Uhuru Kenyatta of opening a succession war to bar Ruto from succeeding the President come 2022. Seemingly addressing the DCI boss George Kinoti, he recently lambasted and accused him of being used by some “crooked” forces within the government to destroy Ruto by waging a smear campaign against the person of the Deputy President. In his characteristic war-like utterances at a public rally in his constituency, Sudi lunged at President Uhuru and asked him to state categorically whether he was also engaged in a mendacious campaign to mudsling his deputy.

“This dams’ saga is not about fighting corruption, but fighting William Ruto,” wailed Sudi. “If you [President Uhuru] don’t want William Ruto, just state it openly instead of engaging in purportedly phantom-like corruption wars all over the county, but in real sense your agenda is to sideline the DP.”

The beginning of a scandal

Ruto first talked of the construction of the dams in May 2016 at St Patrick’s High School in Iten. At the school’s function, he spoke of plans to build three dams: Arror, Embobut and Kimwarer (all located in forests), which he said would generate 125megawatts of power and would cost Sh80 billion. David Kimosop, the Managing Director of the Kerio Valley Development Authority (KVDA), who was present, said that construction of the dams would be completed “before end of year, once Treasury released funds.”

Kimosop even stated that a down payment of Sh4.9 billion (15 per cent of the total cost) had been made for the design of the Arror dam. “Construction work is expected to commence around September or October [2018], after detailed design plan is carried out.” The KVDA boss also stated that 400 hectares of forestland would be acquired from Kenya Forest Service (KFS) in exchange for 570 hectares of private land.

Exactly two years later, in 2018, the chairman of National Land Commission, Mohammad Swazuri, said it had begun acquiring 8,000 acres of land for the construction of Arror and Kimwarer dams. Swazuri would go on to say that Sh63 billion had been set aside to buy land for people’s resettlement and to compensate about 800 families.

However, a month ago, the Kenya Forest Service pulled out of the deal, arguing that the project was ridden with controversy and corruption. “The matter failed to go through after the project was hit by allegations of corruption,” said Benjamin Kanyili, head of Kenya Forest Service North Rift Conservancy.

“One of the biggest lessons that is coming out of these mega scandals perpetrated during the first term of the Uhuruto presidency is the president’s lackadaisical attitude towards his deputy and sole responsibility of taking presidential charge,” said a former women’s representative who was also part of the Deputy President’s campaign trip to the dams’ site and who requested anonymity. “I remember early on in their dual rulership, we Jubilee Party Kikuyu MPs, having a sitting with the president and cautioning him against being too trusting of his deputy. But he brushed aside our concerns, claiming we needed to trust Ruto by giving him space to work and be in charge.”

“The dams’ projects were among the key drivers of the Jubilee government’s economic push and development, as captured in their first manifesto,” said the former women’s rep. “The other major project included the Galana-Kulalu Irrigation Scheme. Both of them were a total flop because there are some people in the government who didn’t see them as economic growth flagships, but as projects to rip off the state.”

The former women’s rep said that President Uhuru was now reaping the bitter fruits of having relegated his core duties to his deputy “who apparently took advantage of the president’s good- naturedness and his laid-back pose. Let us not kid ourselves – Ruto was the president in the first term.” In the initial days his first term, the president okayed the dams’ projects, confident in the knowledge that they were being handled efficiently and professionally by his deputy and the relevant ministries, said the former MP.

“The dams’ projects were among the key drivers of the Jubilee government’s economic push and development, as captured in their first manifesto,” said the former women’s rep. “The other major project included the Galana-Kulalu Irrigation Scheme [the one-million-acre agricultural scheme on Tana River that straddles both Tana River and Kilifi counties]. Both of them were a total flop because there are some people in the government who didn’t see them as economic growth flagships, but as projects to rip off the state.”

A former MP from Central Kenya told me he had “very early on raised the red flag about the Galana project and sounded the warning that it looked like some Jubilee functionaries were keen on using the project to siphon billions of shillings”. He said he was ignored by the presidency and in the process created some serious enemies within the Deputy President’s camp. “I became a marked man, and when the time for nominations came, they dealt with me.”

“When the dams’ scandal exploded, the president was very furious with his deputy,” claimed the former women’s rep. “He asked the DP why he had taken advantage of his good-naturedness and trust in him to bungle government projects. Of course, the president, in his fury, said that the state would get to the bottom of the scam and whoever was involved would be punished. But it is not always that easy. Fighting corruption is like walking through on tightrope; you must be very careful how you manage the politics.”

President Uhuru was not only furious and supposedly embarrassed by the magnitude of the corruption engulfing his Jubilee Party government, but he was also shamed internationally. Last month, a British Conservative Party MP contributing to the Brexit motion in Parliament is reported to have cautioned Theresa May on how she managed Britain’s exit from the European Union lest the country found itself having to deal with mega corruption scandals “like the one engulfing Kenya right now”.

The Italian connection

In Italy, La Verita, a conservative-leaning newspaper, picked up the dams’ scandal in Kenya and reported that an Italian company had been fingered in the labyrinthine maze of the dams’ sleaze. “There’s a new investigation coming from Africa,” wrote the paper on March 9, 2019. “This time it relates to an Italian construction giant, CMC of Ravenna, rocked by major scandals in Kenya.” The paper stated that “the investigations affect also four minister of the government of Uhuru Kenyatta. In the middle of this scandal, there are three dams, for a total of value of 800 million Euros. Two of them are built with Itinera (Gavio Group).”

According to www.globalcapital.com, Cooperative Muratoi Cementisti Di Ravenna filed for creditor protection in a court in Ravenna on December 4, 2018. (Around the same time that Ruto visited Rome.) “Distressed CMC Ravenna stokes HY’s Italian Fears,” read the headline story. (HYs stands for high yield.) Coincidentally, the company filed for bankruptcy just when it was about to take another construction job in Uganda – the UGSh500-billion contract work for the construction of the Busega-Mpigi Expressway. In Kenya, by the time CMC was filing for bankruptcy, it had pocked Sh15 billion ($150 million) as down payment and had done just half of the work at Itare Dam in Meru County, which had been valued at Sh38 billion ($380 million).

The “historical” CMC Ravenna, as the La Verita newspaper describes the company started in the beginning of last century, had three jobs in Kenya: Arror, Kimwarer and Itare dams construction, all totaling about Sh150 billion ($1.5 billion). “That’s a whacking lot of money to give to one company,” said a government land economist who was involved in land evaluation for some of the intended dams’ construction. “It means a very influential person was behind the awarding of the contracts to this company. Do you have to be super clever to guess the name of that person other than the president himself?”

The paper listed the chronology of events leading to the contracts. “A contract in Kenya was obtained by CMC in 2014. The other two were signed in 2015 on occasion of a visit to Nairobi by our former Prime Minister, Matteo Renzi, who was photographed together with President Uhuru Kenyatta wearing a bullet-proof vest.”

La Verita reported that CMC requested to be admitted to the so-called “arrangement with the creditors” procedure. The paper said the company “is suspected of having paid bribes to win bids related to three dams.”

The work of the company, said La Verita, was meant to be “part of a wider project to redesign the water distribution in Kenya, which was one of the electoral promises of Mr Kenyatta himself.” The paper wrote that a sum of Sh4.9 billion ($49 million) was deposited in a bank in Westlands, “the Nairobi neighbourhood where the [Italian] expats live and international companies have their offices”. The newspaper mentions four cabinet secretaries in connection with the scam: Henry Rotich, the Treasury Cabinet Secretary, Mwangi Kiunjuri, the Agriculture Cabinet Secretary, Najib Balala, the Tourism Cabinet Secretary, and Simon Chelugui the Water Cabinet Secretary.

“Once it was clear that the project had been given the go-ahead, Rotich allegedly bought Elgeyo Sawmills owned by some South Asians through proxies for Sh1 billion,” confided a land economist working at the Treasury. (This is part of the land where KVDA had planned to build the dam.) “In 60 days, Rotich had offloaded the saw mills for Sh6.6 billion. What the CS did was to resell the land to KVDA for a killing.” The newspaper speculated this could be one of the biggest misappropriation of public funds ever experienced in Kenya. In February, reported the newspaper, the Director of Public Prosecutions (DPP), Noordin Haji, visited Italy, to, among other things, establish Rotich’s alleged association with Rita Ricciardi, the chairperson of the Italy-Kenya Association. The paper concluded by saying that “in reality, the 2015 negotiation with CMC was managed by the Ministry of Treasury,” clearly placing the onus of the scandal at Rotich’s feet.

Conflict of interest

The Treasury Cabinet Secretary, Henry Rotich, is alleged to be markedly neck deep in the dams’ saga. Sources at the Treasury, who asked that their names not be revealed because they are not authorised to speak to the media, spoke of a person who knew precisely what he was doing in relation to the Arror and Kimwarer dams project.

This is where the real murkiness begins, added the economist. “This is illegal. Rotich technically paid himself in a clear case of conflict of interest, abuse of office and negligence of duty,” said the economist. “The Evaluation Act is very clear: Such a sale of a huge going concern cannot be sold in at least under 90 days. The sale must appreciate for at least six months for it to be resold at 25 per cent of the appreciation.”

Three weeks ago, the former Attorney General, Prof Githu Muigai said at the DCI offices that he had advised Rotich against entering into a deal with CMC Ravenna. Githu said that due diligence had not been done on the Italian company and both Rotich and KVDA ignored his pleas to first conduct a thorough legal/financial status of the company.

The dams’ saga gets murkier when three senior government officials (Susan Koech, Principal Secretary, East African Community and Regional Development, David Kimosop, KVDA MD and Henry Rotich CS Treasury), all coming from the same village in Arror, are alleged to have been involved in the scam. It is alleged that Susan Koech, who was once the North Rift Regional Manager for Kenya Commercial Bank (KCB), arranged for payments to be made to the CMC. “By then the dams had been transferred to the EAC ministry for easy follow-up because the scam’s perpetrators’ person was there.”

This is not the first time such shenanigans – of shifting or retaining projects in certain ministries to either follow their minders or stay with them – have taken place. In 1986, Kamau Ngotho, writing in the Sunday Nation, last month said: “So personalised was the Turkwel (Gorge Dam) project, that when the Ministry of Regional Development, under which KVDA fell, was carved out from Mr Biwott’s Ministry of Energy and Regional Development, President Daniel arap Moi issued an executive order that the parastatal be retained in Mr Biwott’s docket.”

Peter Munya, the former Meru governor, who is the current Cabinet Secretary for Industrialisation, served at the East African Community and Regional Development (the ministry in charge of constructing the phantom dams) for six months. “Munya was very uneasy about the goings-on about the dams’ project, which was in his ministry,” said a senior bureaucrat at the ministry. He didn’t want to be suckered up in a mess that was clearly going to blow up sooner than later.” The bureaucrat told me that there is no love lost between Ruto & Ruto Inc. and Munya. “Munya still smarts from the fact that Ruto organised for his losing of the Meru governor’s seat. He has never forgiven him for that defeat to his political nemesis, Kiraitu Murungi. “So when Rotich allegedly approached Munya and pleaded with him to hush-hush the dams’ murky ongoings, Munya ignored him.” Consider Munya the whistle blower of this particular dams’ sleaze, said the civil servant.

Dams and development

“Dams have long fascinated scientists and politicians alike,” writes Dr Harry Verhoeven. “In the post-independent era of the late 1960s and 1970s, dams become popular in the developing countries seeking to meet the triple challenges of state-building, nation-building and economic development.”

The professor of politics, who has worked in the Great Lakes region and the Horn of Africa, argues that Jawaharlal Nehru, the first Prime Minister of independent India saw dams as the “modern temples of India, lifting hundreds of millions out of poverty through spectacular multiplier effect in industry and irrigated agriculture”.

In Africa, Gamal Abdel Nasser, considered to be the father of Pan-Arabism and the second President of Egypt, viewed the building of the Aswan High Dam – the biggest dam in Africa built in the 1960s – as Egypt’s “second independence”. Aswan has remained Africa’s largest and most important infrastructure project. It is credited with controlling the Nile flood for the first time in history. Aswan Dam is considered to be Egypt’s greatest engineering marvel, possibly only comparable to the construction of the pyramids.

Dr Verhoeven, observes that “dams are believed to magically transform barren wastelands into fertile acreage, elevating the nation and integrating, through irrigation and electrification, the domestic political economy.”

From the 1950s through to the 1970s, the World Bank provided the ideological and financial backing for the construction of hundreds of mega dams across Africa, Asia and Latin America. “But from the 1970s dams as development instruments become contested sites,” reports the don. “They were exposed as huge corruption scandals that contributed to the systemic over-estimation of their benefits. But from 2012, dams seems to be staging a comeback.”

To be continued…

Published by the good folks at The Elephant.

The Elephant is a platform for engaging citizens to reflect, re-member and re-envision their society by interrogating the past, the present, to fashion a future.

By Alessandro Da Rold and Lorenzo Bagnoli

The debut of this column in the E Review grappled with the Jubilee administration’s profligate spending. As it happens, dams were one of the big red flags that popped up. Records show that during its first term, the Jubilee administration spent upwards of KSh 160 billion on water and irrigation projects. These Arror and Kimwarer dams are costed at KSh 51 billion — let us say KSh 26 billion on average. The KSh 160 billion spent works out to at least six of these dams completed, or alternatively at least double that number under construction. And KSh 26 billion is a huge amount of money for a dam. Thika Dam, commonly known as Ndaka-ini, our biggest reservoir for drinking water to date, cost US$80 million in the early `90s, equivalent of US$140m (i.e. adjusted for dollar inflation) or KSh 14 billion today. These dam budgets are telling us that the cost of building dams has doubled in dollar terms, or that we are building infinitely grander dams. Neither is the case.

We now know for sure that there were no dams built. This mindless plunder is replicated in virtually every sector. The budget records show KSh 280 billion on power transmission lines, enough for 6,000 kilometres of 400 Kv lines (based on the cost of Marsabit-Suswa line), but information posted by KETRACO, the agency responsible for building them, shows only 2800 km of lines under construction, whose total cost is at most KSh 100 billion. We are talking KSh 180 billion missing, an amount, I should add, of the same order of magnitude as the Eurobond money that the Auditor General could not find.

Overall, records show that KSh 2.5 trillion went through the development budget during Jubilee’s first term. The biggest ticket item here is the SGR railway which cost KSh 350 billion. The remaining KSh 2.15 trillion works out to KSh 45 billion worth of development projects per county. The money available to county governments over the same period would have enabled expenditure on average of KSh 6 billion on development projects. In effect, we should be seeing six times more national government development projects in each county as county government ones. We now know for sure that there were no dams built. This mindless plunder is replicated in virtually every sector. The budget records show KSh 280 billion on power transmission lines, enough for 6,000 kilometres of 400 Kv lines …but information posted by KETRACO, the agency responsible for building them, shows only 2800 km of lines under construction, whose total cost is KSh 100 billion. We are talking KSh 180 billion missing, an amount, of the same order of magnitude as the Eurobond money that the Auditor General could not find.

Makueni county built a 200-bed Mother and Child hospital for a princely sum of Ksh. 135m. Kibra MP Ken Okoth built and equipped a girl’s secondary school that’s been all the rage for Ksh. 48m. A hospital like Makueni’s in every county is KSh 6.4 billion; a girls school like Kibra’s in every constituency, KSh 14 billion. Both combined add up to just over KSh 20 billion — about the money that has already been spent on the ghost dam projects. If national government has spent KSh 45 billion per county on development projects these two projects would not be the talk of the country. There would be the equivalent of 300 Mother and Child hospitals in every county or alternately, 150 Kibra girls schools in every constituency.

Galana-Kulalu Irrigation project is on its death-bed. It is not yet known how much money has gone down that drain. One senior Jubilee official said to me that it is their Goldenberg, to which I quipped that the competition for that dubious appellation would be strong. The last mile connectivity project was one of Jubilees flagship projects: over 800,000 connections are dormant. The connected households have never switched on the power. This should not surprise. Most of these households cannot afford electrical appliances other than a few lightbulbs that they would use only for three or four hours a day. It would have been infinitely more sensible and cost effective to mandate the Rural Electrification Authority to serve these rural hamlets with micro-grids and stand-alone domestic solar installations. The Kenya Power and Lighting Company (KPLC) is now weighed down with the costs of maintaining these loss-making connections. These costs have to be passed on to consumers. And this is over and above the costs of carrying the excess generation capacity courtesy of the equally hare-brained if-we-build-it-they will come 5000 MW drive that has now been abandoned. It has been a long climb for KPLC to recover from the plunder of the Moi regime.

Makueni County built a 200-bed Mother and Child hospital for the princely sum of KSh 135 million. Kibra MP Ken Okoth built and equipped a girl’s secondary school that’s been all the rage for KSh 48 million. A hospital like Makueni’s in every county is KSh 6.4 billion; a girls school like Kibra’s in every constituency, KSh 14 billion. Both combined add up to just over KSh 20 billion — about the money that has already been spent on the ghost dam projects.

This week, we have been entertained by the mysterious disappearance of 51 million litres of aviation fuel worth KSh 5 billion from the tanks of the Kenya Pipeline Company. This follows from a report that KPC lost 23 million litres worth Ksh 2.3 billion in 15 months. Even for the KPC, historically one of the most profitable and cash-rich public enterprises, a KSh 7 billion hole is a crippling loss. When Jubilee took over, the project on the table was to upgrade the 14-inch pipeline with a 16-inch one at a cost of KSh 16 billion. Jubilee scaled this up to a 20-inch one at a cost of KSh 48 billion, three times the mooted cost. The pipeline was to be completed in 18 months — by 2016 that is. Costs have escalated, and it is still not complete. It has been reported that the corruption investigation in KPC covers 27 projects worth KSh 95 billion. Most of this money is expensive foreign commercial loans. It’s hard to see how KPC can remain solvent. We are looking at another black hole here of the same order of magnitude as Kenya Airways, if not bigger. The mother of all Jubilee financial blackholes is indisputably the SGR. According to Compass International, an engineering and construction consultancy, the benchmark cost for a new single- track high speed rail at between US$997,000 and US$ 1.13m per km, plus cost of signaling infrastructure at between US$154,700 and US$189,000 for a total of US$1.15 million to US$1.3 million The SGR is not an electrified high-speed rail, but we paid $6.7m per km, five times the high end of the benchmarking cost.

After years of denial, a government task force has established that the SGR is not viable. The SGR was sold on bringing down the cost, and improving the efficiency, of freight. According to the said task force, the SGR has increased the cost of transporting a 20-foot container by 118 percent, from $650 (Ksh. 65,000) by road, to US$1,420 (Ksh. 142,000) and by 149 percent for a 40-foot container from $850 (Ksh. 85,000) to US $2,120 (Ksh. 212,000).

There are two components in this cost escalation. First, the SGR tariff is set to try and repay the loans. Even then, the SGR is yet to cover operating costs, let alone generate an operating surplus that can service debt. Secondly, the SGR has introduced additional costs notably “last mile” cost of transporting containers from the railway terminal to the owners premises, as opposed to trucking which is port-to-door, as well as additional container handling logistics. These challenges of integrating rail and seaport are universal, and are part of the reason why the rail share of freight in the EU has declined from over 40 percent in the 70s to less than 20 percent today.

Even for the Kenya Pipeline Company, one of the most profitable and cash-rich public enterprises, a KSh 7 billion hole is a crippling loss. When Jubilee took over, the project…to upgrade the 14-inch pipeline with a 16-inch one at a cost of KSh 16 billion. Jubilee scaled this up to a 20-inch one at a cost of KSh 48 billion, three times the mooted cost. The pipeline was to be completed in 18 months – by 2016 that is. Costs have escalated, and it is still not complete.

The long and short of it is that SGR is increasingly demonstrating what this columnist and others have maintained from the outset— that it is a white elephant. Without being forced, people would not use it. And if it were to charge a competitive tariff, it is doubtful that it would keep the trains running, let alone service its debt. I have opined before that the least costly option may be to mothball it, seeing as the debt will be paid by the taxpayer, we should not be made to pay four times namely, the debt, operational subsidy, higher freight cost and trucking industry jobs and incomes. The next best thing is to take over the debt, cancel the Chinese management contract and leave it to swim or sink in the market place under the management of Kenya Railways. The only beneficiary of this project is China. It is doubtful that the Jubilee administration can muster the resolve to bite the bullet on this one. So we will continue to bleed.

This is Uhuru Kenyatta’s legacy as it now stands. Mindless plunder and worthless vanity projects—a US$ 25 billion (Sh. 2.5 trillion) hole in the economy and counting, and contingent liabilities, financial booby traps if you like, Kenya Airways, Kenya Pipeline, Kenya Power and others we don’t know of yet, that could go off at any minute.

This is Uhuru Kenyatta’s legacy as it now stands. Mindless plunder and worthless vanity projects—a US$ 25 billion (Sh. 2.5 trillion) hole in the economy and counting.

The penny is beginning to drop, and sections of the regime are now beginning to talk about a turnaround strategy that can salvage the President something of an economic legacy. They have their work cut out. Economic crises of this nature are not solved by the same people who created them. Ethiopia’s EPDRF government came to this realisation about a year ago. Ethiopia was headed for a revolution such as unfolding next door in Sudan. Former Prime Minister Hailemariam Desalegn has recently intimated that he resigned to make it easier for the regime to reform. So far, the bet on a leadership change is paying off, even though the new Prime Minister’s magic touch is yet to be tested on the inevitable painful economic reforms. The political honeymoon also appears to be ending.

The rapprochement between Kenyatta and Raila Odinga a year ago, popularly known as the “handshake” offered an opportunity to engineer something similar. But as soon as they pledged to build bridges, Kenyatta set off to burn them. A year later, no-one seems to know where it is headed, other than hazy talk of a referendum, and holding the political ground as Kenyatta prosecutes yet another hypocritical and inept anti-corruption war, as opportunistic as it is ineffectual. With toxic succession politics in full throttle, it is difficult to see how resolve and focus on radical economic reform can be mustered.

Amidst the entire dam hullabaloo, there was a small event last week that did not attract much attention. The cornered Treasury CS took time out from his daily commute to the Directorate of Criminal Investigations to launch a private external audit of the Eurobond funds commissioned by the Treasury. No prizes for guessing that the audit sees no evil. External audit is an exclusive constitutional mandate of the Auditor General. We all witnessed the President staring down the Auditor General on his special audit ordered by parliament. It has yet to see the light of day. The national government’s audit for the year remains qualified. There is no country where questions can be raised about two billion dollars of public money, and the president of the country acts about it as nonchalantly as Kenyatta has, unless there is direct complicity with the thieves. Malaysia’s 1MDB and Mozambique’s Tuna sovereign bond frauds have unravelled. This one will too, in the fullness of time. Kenyatta has plenty of reason to want to extend his influence beyond his term of office.

To plunder the way the Jubilee administration has, it has had to raze the public financial management system to the ground. Without public financial accountability, there is no government, no economy, no country. To budget anything from a quarter to a third of the country’s annual GDP for stealing — to then borrow it, steal it, feign outrage, compromise parliament, and diffuse public anger with ineffectual corruption investigations, again and again and again – defies corruption. It is a crime against humanity.

Yes, the economy is crumbling, but its turnaround is not the priority. Getting rid of this monster called Jubilee is.

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