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Martha Karua: Corruption Has Been Legalized and Sanctioned

By The Elephant

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By The Elephant

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.

Martha Karua: Corruption Has Been Legalized and Sanctioned By The Elephant

As militant groups spread across the Sahel, the West African nation of Niger went on a U.S.-backed military spending spree that totaled about US$1 billion between 2011 and 2019.

But almost a third of that money was funnelled into inflated international arms deals – seemingly designed to allow corrupt officials and brokers to siphon off government funds, according to a confidential government audit obtained by OCCRP that covers those eight years.

The Inspection Générale des Armées, an independent body that audits the armed forces, found problems with contracts amounting to over $320 million out of the $875 million in military spending it reviewed. The U.S. contributed almost $240 million to Niger’s military budget over the same period.

The Inspection Générale’s auditors said more than 76 billion West African francs had been lost to corruption, which is about $137 million at the current exchange rate. They discovered that much of the equipment sourced from international firms – including Russian, Ukrainian, and Chinese state- owned defense companies – was significantly overpriced, not actually delivered, or purchased without going through a competitive bidding process.

“The rigged bidding process, fake competition, and inflated pricing in these deals is astounding,” said Andrew Feinstein, a leading arms expert and author of “The Shadow World: Inside the Global Arms Trade.”

The Nigerien authorities are investigating the findings of the audit, which have caused a scandal in the country after some details were reported in the press earlier this year.

The country has become a key ally for the United States in fighting groups like Al-Qaeda in the Islamic Maghreb and the Islamic State West Africa Province, better known as Boko Haram. Auditors found a total shortfall in arms deals signed by Niger’s Ministry of Defense of 76 billion CFA, or $137 million. Credit: OCCRP

The surge in spending over the last decade helped Niger become one of the most formidable military powers in the region. The country – one of the world’s poorest – bought arms ranging from attack helicopters and fighter jets to armored vehicles and automatic rifles.

In addition to cash it provided to Niger’s military, the U.S. spent $280 million building a massive air base near the ancient trading city of Agadez in the north of the country. The base, which reportedly costs $30 million a year to run, allows U.S. forces to launch drones for both surveillance and air strikes.

American forces are also training Nigerien soldiers and fighting alongside them. In 2017, four U.S. Special Forces officers were killed in an ambush in the country’s frontier with Mali and Burkina Faso, reportedly by fighters associated with the so-called Islamic State.

France and the European Union are also major donors to Niger’s military, which receives further aid through its membership in G5 Sahel, a regional joint military force. The audit report raises the possibility that some of the military aid ended up in the pockets of unscrupulous private individuals and corrupt government officials.

Aboubacar Hima and Aboubacar Charfo. Credit: Nathalie Prevost/OCCRP

At the center of the network of corruption are two Nigerien businessmen who acted as intermediaries in the deals: the well-known arms dealer Aboubacar Hima, and Aboubacar Charfo, a construction contractor with no previous experience in the defense sector. Auditors allege that the two men rigged bids by using companies under their control to create the illusion of competition for contracts.

Their success points to the opportunities available to a small clique of well-connected insiders with close ties to Niger’s government.

“As far as the audit is concerned, I don’t think there’ll be any prosecutions,” said Hassane Diallo, head of Niger-based Centre d’Assistance Juridique et d’Action Citoyenne, an anti-corruption group.

“All the economic actors mentioned in the audit belong to the ruling party. They come from the same region as the president.”

Hima’s lawyer, Marc Le Bihan, declined to answer reporters’ questions and said that Hima wasn’t being prosecuted. Charfo and Niger’s defense ministry did not respond to requests for comment.

Rosoboronexport’s stand at the ShieldAfrica security and defense exhibition, held in Abidjan, Cote d’Ivoire in January 2017. Rosoboronexport relies on African governments for about 30 percent of its business. Photo: Rosoboronexport

‘Ferocious Style’

Through a handful of companies connected to him, Hima, who goes by the nicknames “Style Féroce” and “Petit Boubé,” handled at least three quarters of all the arms purchases scrutinized by the Inspection Générale. Together the deals were worth $240 million. It is unclear exactly how Hima, the son of a civil servant at the Ministry of Agriculture, rose to such prominence in Niger’s political and business circles.

One key moment was likely his 2005 marriage to the daughter of former President Ibrahim Bare Maïnassara, who was killed in a 1999 coup. The marriage is likely to have brought him closer to Niger’s political establishment, since the party that Maïnassara once led now “supports the current regime,” according to Diallo.

In 2003, Hima set up Imprimerie du Plateau, a printing business that remains active today. By 2010 he had made the leap into the arms business in neighboring Nigeria, where he established companies that would play key roles in the deals auditors scrutinized in his home country.

Most of Hima’s deals were signed under a 2013 national security law that allowed for some of Niger’s defense spending to be carried out in direct negotiations with any company, rather than putting it to public tender. Niger scrapped that law in 2016, replacing it with one requiring a more transparent process. But by that point, much of the damage had been done.

Most of the sales identified in the audit had bypassed oversight bodies within the Ministry of Defense and the Ministry of Finance whose input was required under the 2013 law. The tenders also did not include key documentation, such as the prices offered by the various bidders.

In one deal facilitated by Hima in 2016, Niger’s Ministry of Defense bought two Mi-171Sh military transport and assault helicopters from Rosoboronexport, Russia’s state-owned defense company. The purchase, which also included maintenance and ammunition, cost Niger 55 million euros, or $54.8 million – an overpayment of about $19.7 million, according to the Inspection Générale. The auditors noted that the prices had been inflated by fraud and corruption.Rosoboronexport relies on African governments for about 30 percent of its business. Because the state arms company is under U.S. and EU sanctions, it can’t openly receive payment for the deals in U.S. dollars or euros. As a result, the company’s transactions tend to avoid Western financial institutions, which are obligated to flag suspicious transactions to regulators.

In its contract with Niger’s government, Rosoboronexport asked for payments to be made into an account it held at VTB Bank, a Russian lender with majority state ownership. The account was held at the bank’s branch in Germany, which ranks as a top financial secrecy jurisdiction.

Rosoboronexport did not tell auditors who controlled that account.

“By using a VTB account in Germany, Rosoboronexport is trying to make the money flows from its arms deals as opaque as possible,” Feinstein said.Nigerien auditors visited Moscow early this year in search of information about the helicopters and other purchases that had been facilitated by Hima on behalf of Niger’s defense ministry. But the auditors were left in the dark about the terms of the deals. Rosoboronexport refused to provide any information, telling the Nigerien government auditors that the agreements were “confidential.”

“[Rosoboronexport’s] failure to explain the pricing difference on this clandestine deal can only mean one thing: corruption,” Feinstein said. “The Russians clearly colluded with Nigerien officials to sell overpriced arms in a deal that was obviously illegal.”

Rosoboronexport declined to answer OCCRP’s emailed requests for comment. Reached by phone, a representative said: “If you are from the United States, we cannot help you with any answers via email.”

The audit report outlines a series of unorthodox – and in at least one case, blatantly illegal – machinations that allowed Hima to control much of Niger’s arms procurement process.

Through his political influence in the defense establishment, a company Hima had founded in neighboring Nigeria, TSI, gained power of attorney on behalf of the Ministry of Defense. This gave him the ability to approve weapons deals and issue end-user certificates, a type of document meant to ensure that weapons sold to one client are not passed on, or resold, to an unauthorized third party.

This was a clear violation of Niger’s laws, which state that end user certificates can be issued only by the government, according to Ara Marcen Naval, the head of defense and security advocacy for Transparency International.The corruption of the end-user certificate system in Niger is particularly resonant given the country’s longtime role as an arms trafficking hub. This history dates to the Cold War, when the Soviet Union funneled arms into Niger before shipping them onward to its allies.

In the 1990s, when Liberia and Sierra Leone both plunged into civil war, the country again became a regional arms hub.

Niger was a key transit point for notorious Ukrainian arms dealer Leonid Minin in the 1990s. He sent weapons from his base in Sharjah in the United Arab Emirates to Charles Taylor, a warlord who was fighting the government in Liberia, where he later became president. Minin’s planes brought attack helicopters, anti-aircraft guns, missiles, and over a million rounds of ammunition to Niger before sending them on to Liberia.

The Russian arms dealer Viktor Bout also used Niger as a staging point to bring weapons into Liberia during its civil war. Known as the “Merchant of Death,” Bout is now in prison in the United States where he was convicted of supplying weapons to Colombian insurgents.The power to issue certificates himself gave Hima the ability to steer government contracts to his own companies, like TSI, or to his partners. It also allowed him to limit the amount of oversight included in the deals’ terms, which removed a crucial safeguard that allows authorities to know who they are selling arms to.

Even before being granted power of attorney, Hima managed to issue Rosoboronexport an end-user certificate on behalf of Niger’s Ministry of Defense in 2018. Hima was on both ends of the deal: While he organized the purchase on behalf of the ministry, his company, TSI, acted as Rosoboronexport’s Niger representative. His company did not appear on the contract.

“The fact that TSI was allowed to represent Rosoboronexport – let alone Niger’s Ministry of Defence – makes this one of the most extreme examples of corruption in the arms trade that I’ve ever come across,” Feinstein said.

Hima used other shady techniques, too. For the helicopter deal and others, companies under his control submitted fake bids to create fictitious and unfair competition, auditors noted.

Another company linked to Hima, Nigeria-registered Brid A Defcon, won a $4.3 million contract to build a specialized hangar for Nigerien President Mahamadou Issoufou’s official plane. Two other companies that submitted bids for the contract — both controlled by Hima — echoed the names of well-known international manufacturers.

One was Motor Sich, which appeared to be an Algerian affiliate of the well-known Ukrainian engine manufacturer. The Ukraine-based Motor Sich told auditors that the company had not made any bids in the deal, said they had no connection to the Algerian entity, and denied any wrongdoing.

However, according to the audit report, it appears that the Algerian Motor Sich affiliate did win other tenders offered by Niger’s government, including a $11.5 million arms supply contract. Hima’s company, Brid A Defcon, acted as Motor Sich’s local agent in Niger in that deal as well.

Auditors reviewed multiple deals signed between Brid A Defcon, a company linked to Aboubacar Hima, and the Ministry of Defense. Credit: OCCRP

The other company that submitted a bid for the helicopter deal was Aerodyne Technologies, which used the name of a defunct French aviation company. Though Aerodyne submitted its bid as a company based in the UAE, it appeared to actually be registered in Ukraine, according to the audit.

“As usual, Brid A Defcon has put the companies Motor Sich and Aerodyne Technologies in competition,” auditors noted.

Aerodyne opened emails from OCCRP but did not respond to questions. Brid a Defcon could not be reached for comment.

Among other problematic deals mentioned in the audit, Brid A Defcon also received $4.9 million to outfit the presidential plane with an anti-missile system that was incompatible with the aircraft. Niger soldiers with their weapons pointed towards the border with neighbouring Nigeria, near the town of Diffa, Niger. Photo: Luc Gnago/Reuters

Constructing Arms Deals

Sacks of cement and metal rods are piled on the ground next to a small building in Niamey, Niger’s capital. The compound, a one-story, dirt-colored concrete structure, is the unassuming headquarters of Etablissement Aboubacar Charfo, a construction company named after its owner.

Charfo had no prior experience in the defense sector, and there is no publicly available evidence of him winning any government contracts before President Mahamadou Issoufou came to power in 2011.

Charfo was known as an importer of bathroom tiles and building materials including cement, but he also managed to facilitate nearly $100 million worth of contracts for the government.

He appears to have gotten into the arms trading business through his contacts with the office of Issoufou. Both he and the president hail from the Tahoua Region, where Charfo is said to have strong ties to the ruling Nigerien Party for Democracy and Socialism.

According to publicly available audits of various government bodies carried out by the accounting firm Bureau d’Expertises Comptables in 2017 and 2018, Charfo received several contracts from the presidential administration. One of those was a 2017 contract to furnish the new headquarters of the Inspection Générale des Armées – the same authority that later produced the leaked audit which exposed his corrupt arms deals.

Charfo also received contracts from the president’s office to supply military equipment to the armed forces, including weapons and ammunition, night vision goggles, and a trailer for transporting tanks, according to Bureau d’Expertises Comptables auditors.

The subsequent Inspection Générale audit shows that cost inflation and corrupt practices by Etablissement Aboubacar Charfo and Agacha Technologies, another company linked to Charfo, cost the Ministry of Defense $24.7 million over what it would have paid with fair competition.

Auditors found that multiple companies connected to Hima had been used to create the appearance of a competitive bidding process. Credit: OCCRP

The auditors probed five contracts won by Charfo’s two companies between 2014 and 2018. These included a $40 million agreement to purchase armored personnel carriers manufactured by China’s state arms company, NORINCO. Auditors found Charfo had inflated the price, overcharging the government by $8.2 million.

In a 2017 deal, according to the Inspection Générale, Charfo’s Agacha Technologies won a $6.5 million contract to supply 30 buses to the Ministry of Defense. Over half of that total was lost to over-invoicing and wasteful spending, the auditors found.

They also discovered that, like Hima, Charfo manipulated the procurement process to create the impression that he was competing against rival companies.

In reality, the “competing” companies were either controlled directly by Charfo or linked to him. He and his associates benefited from “fake bids and the use of fake competition,” according to the audit.

“The winner of the contract was known in advance,” it read. Conflict steadily increased in Niger between 2011 and 2019, according to data collected by the U.S.- based the Armed Conflict Location & Event Data Project (ACLED). Researchers counted 192 battles that state forces took part in, and 340 involving militants. ACLED also measured “remote violence,” which included missile or mortar attacks, as well as improvised explosive devices like roadside bombs. State forces were involved in 35 such incidents, with militants taking part in 85. Militants were involved in 371 acts of violence against civilians, with state forces involved in 36. Credit: Edin Pašović

Jet-fuelled Corruption

Charfo and Hima weren’t the only businesspeople who appeared to have gotten rich on Niger’s military spending spree by using shell companies to rig bids for arms deals. Several companies in Ukraine, the United Kingdom, and the Czech Republic also appeared to benefit.

The people behind these schemes remain unknown because some of the companies were registered in offshore jurisdictions that enable their owners to remain anonymous. Others were formed as UK limited liability partnerships, which are controlled by other companies, not individuals, and are not obligated to disclose their directors or owners.

At least one of the deals involving these offshore entities appears to have included built-in kickbacks. Auditors scrutinized several deals related to the supply of aircraft to Niger’s Ministry of Defense. Credit: OCCRP

In 2012, Ukraine’s state defense company, Ukrspecexport, won a contract to supply Niger with two second-hand SU-25 fighter jets built in 1984. Niger’s Ministry of Defense paid $12.5 million for both aircraft, including $1 million for insurance and delivery and $1.9 million for spare parts. The audit noted that the prices had been inflated and the additional cost of more than 350 spare parts appeared unnecessary and suspicious.

“Adding spare parts to arms contracts is a common technique to build in the cost of kickbacks,” Feinstein said.

The Ukrainian company denied that it made the deals with Niger.

“Ukrspecexport did not make such deliveries and does not have any information on the issues you are asking about,” a representative said in an email.

Despite Ukrspecexport’s denial, international arms trade data collected by the Stockholm International Peace Institute confirms that Niger ordered the two second-hand aircraft, and that they were delivered the following year.

The Nigerien auditors also discovered an addendum to the SU-25 contract that appeared to facilitate a bribe. It stipulated that Stretfield Development, a London-based shell company with unknown owners, was to receive a $2 million commission on the deal in a “maneuver” the auditors described as “collusive” and “contrary to regulations.” The contract specified that the fee would be funded by the Nigerien Ministry of Defense, but paid through another London-based shell company, Halltown Business, which was shut down shortly after the deal was completed.

Details of the suspicious sale did not come as a surprise to Daria Kaleniuk, the head of the Anticorruption Action Centre, a leading Ukrainian advocacy group.

“For many years, Ukrspecexport was known to be a very dodgy company which has a monopoly of trading weapons and army equipment abroad through secret sealed deals,” she said. Transfers Database Niger ordered two SU-25 fighter jets from Ukraine in 2012, according to the Stockholm International Peace Research Institute’s Arms Transfers Database. Credit: SIPRI Arms

The address in London where Halltown was registered belonged to a company formation agent and was used by over 400 other companies. Among these were four firms that were part of the Azerbaijani Laundromat, a vast money-laundering operation that benefitted elites from that country and was previously reported by OCCRP. Following Halltown’s ownership trail led to a Panamanian company with two Ukrainian directors.

Niger also signed separate maintenance deals with a firm called EST Ukraine. The defense ministry agreed to pay the company $4.3 million for the upkeep of its MI-35s helicopter gunships and the second-hand SU-25 jets it had bought from Ukraine’s state defense company, which have yet to be delivered.

But EST Ukraine did not receive the payment. In fact, it was not even formally registered as a company. The company that received the payments — another Ukrainian firm called Espace Soft Trading Limited — was “not a party to the contract.”

That company, formed in 1998, is controlled by Yuri Ivanushchenko, once a member of the Ukrainian parliament and an ally of former president Viktor Yanukovych, who was ousted in a popular uprising in 2014. The auditors listed Ivanushchenko’s company as one of the beneficiaries of the rigged bidding.

“During Yanukovych’s presidency, his close associate Yuri Ivanushchenko was overseeing work of Ukrspecexport and had significant influence over its decisions,” Kaleniuk said.

As with many of the other deals, auditors found that the bids for these maintenance contracts had been rigged. In addition to EST Ukraine, several other foreign shell companies submitted bids, presumably in an effort to create the appearance of competition. One of these was the UAE- registered Aerodyne Technologies, under Aboubacar Hima’s control.

Both Aerodyne and the winning EST Ukraine were run by Gintautis Baraukas, an associate of Hima who appeared to run shell companies on his behalf. Little is known about Barauskas, who used a false nationality while operating a network of shell firms in the UAE.

“This gentleman is not Ukrainian, he is in fact Latvian … He is involved in several cases that served to extort large sums of money from the State of Niger,” the auditors wrote.

EST Ukraine did not respond to requests for comment.The United Arab Emirates is a world- renowned tax haven and the emirate of Sharjah is particularly popular with arms dealers due to its lax financial regulations and opaque aircraft registry, which allows goods to be moved through the airport in relative obscurity. The emirate is home to a host of shell companies that appear to be used to launder the proceeds of arms deals.

Many of the companies the Nigerien audit names as fake bidders and bribe recipients are based in Sharjah, and all appear to be connected to Baraukas.

One suspicious transaction flagged by the auditors involved Sky Rotors, a company that received a payment worth more than 1.5 million euros ($1.7 million) from Ivanushchenko’s Espace.

In an emailed statement, Sky Rotors confirmed it has supplied aviation parts to Niger since 2012, and said the defense ministry still has not paid its bill in full.

“The possibility of applying… to an international arbitration court for enforced debt collection is being considered,” a representative said, calling Sky Rotors “the injured party.”

“Hima was recommended as a person who has proven himself in working with the state authorities of Niger and who can assist in the return of the debts,” the representative added. Hima’s mansion in Niamey, Niger’s capital. Credit: Nathalie Prevost/OCCRP

The Spoils

A white marble mosque rises beside Hima’s palatial mansion. Nearby is an elaborate water feature with streams tumbling over rusty-brown rock. Frozen in sculpture, a family of elephants marches toward a whimsically curved swimming pool overlooking the Niger River.

Hima’s residence in Niger’s capital is an ostentatious display of wealth in a country that ranks dead last on the United Nations Development Index, which measures a nation’s well-being based on indicators like life expectancy and access to education.

Niger’s treasury is footing the bill for the country’s military spending, which has grown as a percentage of the country’s gross domestic product from less than 1 percent in 2009 to 2.5 percent in 2017, according to the World Bank.

Hima also owns three apartments in the Czech capital, Prague worth over $2 million in total. He acquired them in 2015, first shelling out $1.5 million for a penthouse in the Dock Marina, a luxurious residential complex on the Vltava River that allows residents to park their boats near the entrance. He purchased two more apartments in the development in the following months.

Hima’s business interests in Prague go beyond property. His now-defunct Nigerian company, Brid A Defcon, frequently partnered with a Czech-registered firm with a similar name, Defcon s.r.o, in 2009, according to the audit. In 2017 and 2018, the Czech firm fulfilled a $33.6 million contract from Niger’s government to deliver 80 trucks manufactured by the Austrian firm Steyr. Supposedly bidding against Defcon s.r.o was the Algerian branch of Motor Sich. Brid A Defcon submitted the bid on behalf of Motor Sich, which it controlled, in an apparent attempt to show the process was competitive.

Motor Sich managers said it had never made such a bid, leading auditors to conclude that the company name had been “usurped.”

Such deals fueled Hima’s luxury lifestyle and made him the most conspicuous of Niger’s illicit arms traders, said Diallo, the anti-corruption specialist, adding that it was “no surprise” that he invested his profits abroad.

“Charfo has buildings in Niamey, but he and the others are less visible than [Hima],” he said.

Diallo said the corrupt arms deals “not only exposed a hidden financial cost to Niger — the poorest country in the world — but also show how Niger’s sovereignty was captured and exploited.”

Additional reporting by Nathalie Prevost in Paris, Marshall Van Valen in Abidjan, Pavla Holcova in Prague, Elena Loginova in Kyiv, and Juliet Atellah in Nairobi.

This article was first published by OCCRP.

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.

Martha Karua: Corruption Has Been Legalized and Sanctioned

By The Elephant Read Article

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.

Martha Karua: Corruption Has Been Legalized and Sanctioned

By The Elephant On the 2nd of September 2017, an angry President Kenyatta lashed out at the Judiciary after the Supreme Court invalidated the presidential election results, a full-frontal verbal attack against the judiciary by the head of state, unprecedented in the country’s history. In the past, manipulations of the judiciary were always carried out quietly through political manoeuvring, the public only coming to learn of the interference through the media. “We shall revisit this thing. We clearly have a problem”, Kenyatta said, referring to the judiciary. “Who even elected you? Were you? We have a problem and we must fix it”, he said, speaking on live television at State House in Nairobi after a meeting with governors and other elected officials from his Jubilee party.

The not so strange case of Governor Mike Sonko

At the beginning of December, the governor of Nairobi, Mike Mbuvi Sonko, was sensationally arrested in Voi on a number of charges including corruption. Unsurprisingly, the spectacle of his arrest dominated the media over the following days.

It was a most dramatic action, carried out against our most colourful and most controversial of governors, but deep down, no one was really surprised that the arrest of the governor of the capital city had been turned into a circus; sadly, it is something Kenyans have become inured to.

But this is partly because Mike Sonko is also an authentic grassroots populist with a genuine constituency of support especially among the poor of Eastern Nairobi who first elected him to parliament in 2010. Sonko’s life story is a weave of narratives that the poor relate to at a personal level. His life prior to entering politics was characterised by run-ins with the law, including an escape from prison in the 1990s. His unfiltered style of speaking and his acts of calculated philanthropy have turned him into something of a Robin Hood.

Once when Sonko, then a senator, was picked up by the police, a crowd of his supporters showed up outside the police station shouting, “Mwizi wetu, mwizi wetu!” (Our thief! Our thief!). While we in the generally ideologically vacuous middle-class cringe and guffaw, Sonko and others of his ilk have transformed Kenyan politics in ways similar to what Duterte has done in the Philippines, Trump in America, Urban in Hungary, etc. This is because it is clear to his supporters that Sonko hasn’t been conjured up by branding professionals and PR specialists—he is his own brand. Indeed, Sonko has been at the forefront of redefining what normal political behaviour is in Kenya; what politicians say and how they say it; what they do and how they do it—just how garish and outrageous a public officer can be. He simply doesn’t bother to pretend; if he feels it, he expresses it in the most dramatic manner possible. In the crudest of ways, “he keeps it real”. Moses Kuria is of the same populist mould, as are Aisha Jumwa in Malindi, Oscar Sudi in the Rift Valley, etc. Our politics is increasingly replete with men and women who say on the platform what is usually said in the bar or the bedroom.

While we in the generally ideologically vacuous middle-class cringe and guffaw, Sonko and others of his ilk have transformed Kenyan politics in ways similar to what Duterte has done in the Philippines, Trump in America, Urban in Hungary, etc.

This “explicit” truth has found currency; it excites the multitude who believe that the other politicians are mostly lying. The vulgarisation of the public discourse is now complete and wananchi seem to love it not least because, especially in these difficult economic times, it is also a slap in the face of the wincing, apparently clueless, middle class and its political representatives.

This type of politician, blunt and openly estranged from the truth—part performer and often entertainer—has become more influential in public affairs since 2013. This is a global phenomenon as the neo-liberal economic model fails vast swathes of the citizenry who have come to the realisation that companies, or cartels masquerading as companies, are today far more powerful than governments, judiciaries, parliaments and other governance institutions. Indeed, the grand “institutions” that for over half a century development professionals have insisted are the pillars of peaceful, prosperous, equitable and free societies are under strain in many places and have altogether ceased to function in others. In the field of anti-corruption, experts are whispering to each other that perhaps too much has been made of building institutions over the last 30 years. Some experts point out, for example, that on the corruption index the north of Italy consistently scores better than the south despite both regions sharing governance institutions for several generations. It has become clear that there are many countries where the shadow state—comprised of a vast network of informal relations between the civil service, politicians, business, the security sector, the church and the media among others—is more important to understand than the laws in place to fight graft.

This is a global phenomenon as the neo-liberal economic model fails vast swathes of the citizenry who have come to the realisation that companies, or cartels masquerading as companies, are today far more powerful than governments

Under these circumstances, promises made are not kept and the wider public has realised that there isn’t even much effort being made to keep them. The 2013 Jubilee manifesto is a striking example of this trend. Indeed, it has become clear that many of its policy proposals were a fiction or an opportunity to create slush funds disguised as policy proposals, the verbiage therein being part of the theatre in which we willingly or unwillingly participate. It makes for a toxic environment, bereft of trust and goodwill. Unfortunately, given the current strains, the mechanisms of a modern society’s self-correction—in particular the elections that allow for regular renewal—have in many countries been captured by a tiny elite.

The Building Bridges Initiative (BBI) that emerged out of a political truce between Uhuru Kenyatta and Raila Odinga in March last year was to some another opportunity for a political reboot. This was especially the case following the 2017 election debacle that left the regime bereft of legitimacy. But it is the scale of these expectations that caused the BBI report to underwhelm and disappoint so many. The BBI team rose out of the Kenyan political swamp and led the population to believe that they would tell us how to drain it. Instead, they seem only to continue wallowing in it, deepening the disconcerting confusion prevailing in these times of economic austerity. It is in this light that we must understand how figures like Sonko have come to occupy so much political bandwidth.

It is within this context Uhuru Kenyatta has overseen the most corrupt administration in Kenya’s history while at the same time having his technical agencies expend the greatest amount of energy and resources purporting to fight corruption. This incongruity is derived partly from Kenyatta’s own familial circumstances; he speaks eloquently against conflict of interest in public service while sitting on a fortune created by that very conflict of interest.

Kenya’s elite consensus: Let’s eat!

Elites generally compete for power in Kenya so they can “eat”; development is extracurricular. Within the elite, however, a consensus is necessary for the “eating” to be “inclusive”. Competition, especially for lucrative public works contracts, is fiercest and most intense as the size of the pie shrinks and the elite fragments. This almost always leads to a dramatic decline in civic hygiene, often to civil rancour and sometimes even to civil strife.

Our transforming political culture has left us in an invidious position. For the first time, even though we know that all politicians lie, now we really cannot tell the truth from the lies so we mistrust everything. This infectious condition has helped exacerbate the split in the ruling Jubilee party; there are now two powerful amalgams of competing political and commercial interests—Jubilee A (behind Kenyatta and Odinga) and Jubilee B (allied to Deputy President William Ruto). A host of other smaller political parties hover around these two giants, negotiating their place at the trough.

The coarsening of public debate has been fuelled in part by the immediacy and anonymity social media provides, but overall it has made serious debate on shared challenges all the more difficult in a complex, rapidly changing, ideologically vacant, intellectually dumbed down but emotionally charged environment. From Kenya’s independence until the early 1990s, eloquent sycophancy was easier to interpret and manage because every mwananchi knew that it was just that—sycophantic babble. Sometimes we even pitied the babblers: “Poor fellow, having to embarrass themselves to keep the president happy”. The sycophant’s lies were different from those of today’s populists who push buttons related exclusively to group fears, antagonisms, worries and stereotypes. In the golden age of the sycophant, from 1963 to 1992, a number of important economic, political and social pillars remained true, retained their integrity and became the beacons that informed public discourse. Even in the most oppressive days of Jomo Kenyatta and Daniel arap Moi, Kenyans could trust the Kenya National Examinations Council (KNEC); a degree from a Kenyan university was a serious instrument of achievement; the government’s budget, read once a year, was treated as credible; the church was an institution to which the truth could comfortably retreat; the Kenya Army was considered professional and clean; the headlines of the Daily Nation and the Standard and magazines like the Weekly Review, Gitobu Imanyara’s original Nairobi Law Monthly, Society, Beyond, The People and others, were not doubted, and the IMF, World Bank, etc., were believed. This is the case no more—many named here have been bastardised or had doubts cast upon their credibility.

And so it is that even as Mike Sonko fights his corruption and other charges, there are many more Sonkos waiting to emerge over the coming few years.

(Additional research by Salma Mwangola) 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.

Martha Karua: Corruption Has Been Legalized and Sanctioned

By The Elephant

Experts on the study of corruption distinguish between political corruption and bureaucratic corruption. Political corruption involves vote-rigging, registration of unqualified voters, falsification of voter registers and election results, selling and buying of votes, and wiretapping the phones of political opponents. All this is aimed at helping politicians capture and/or maintain political power. With particular reference to Kenya, political corruption also involves instigation of “ethnic” violence in opposition regions by incumbent political parties in order to scatter voters and minimise their turnout on election day.

Bureaucratic corruption, on the other hand, is used by political leaders and civil servants – the bureaucrats – to extract extralegal incomes for themselves, their relatives, and associates. This involves extraction of bribes and rents in the distribution of public goods and services, theft of public resources, embezzlement of funds from state coffers, nepotism, and the granting of patronage to cronies and relatives, illegal taxation by bureaucrats with benefits accruing to them and their associates, capricious and selective enforcement of state laws and statutes in order to generate benefits for the bureaucrat, and differential treatment of private enterprises with the expectation of kickbacks from the favourably treated enterprises.

There are four categories of bureaucratic corruption in the literature on the subject, according to John Mukum Mbaku, an expert on the subject. The first is cost-reducing corruption, which involves actions by civil servants to reduce the regulation-induced costs of an enterprise below their normal rates. An example here is the illegal reduction of a private firm’s tax obligations to the government and exemption of a business from compliance with certain rules and regulations. In this way, a firm’s transaction costs are reduced and the finances thus saved are shared out between the bureaucrat and the firm owner.

The second type of corruption is cost-enhancing corruption. This occurs in situations where governments place controls on the prices of foodstuffs, which normally leads to hoarding and severe food shortages. Herein, civil servants who control government food stocks extract rents from potential consumers by charging them prices that approximate free market prices. Another way is the extraction of bribes by civil servants from entrepreneurs seeking for licences, including import/export, and investment licences. Yet another is where civil servants simply use the state’s coercive power at their disposal to appropriate private property for their own use, for instance through illegal taxation. In Kenya, the public procurement domain is the arena in which cost- enhancing corruption has been most pervasive. This is the situation in which public officials extract rents from their control of the public procurement process. They do so by demanding kickbacks from tender awardees and by inflating the same and skimming off the excess.

The third type of corruption is benefit-enhancing corruption. Herein civil servants may permit more public benefits such as bursary funds to public schools, or development resources to a particular region, to accrue to an individual or group than is legally permitted. Recipients of such benefits then share them with the bureaucrat on the basis of a prearranged formula. This type of corruption is quite pervasive in Africa and many other developing societies because it is relatively easy to execute and not so easy to detect.

The fourth and final type of corruption is benefit-reducing corruption. This is where bureaucrats simply appropriate for their own private use public benefits that are intended for other private citizens. One example of this is a civil servant manager of a pension fund who can delay the transmission of retirement benefits to pensioners, deposit such funds in a high interest-earning bank account, and subsequently skim off the accrued earnings. This type of corruption is also very easy to undertake because of information asymmetries in much of Africa and elsewhere, with bureaucrats having more information about public benefits programmes than the ordinary citizens. In Kenya, the problem of employers, especially in the private sector and within state corporations, making statutory deductions from employees, such as pensions, health insurance, and income tax, which never reach their legitimate destinations is a perennial one.

The evolution of corruption in Kenya

The fact that corruption in Kenya has reached epidemic proportions is beyond question. In the 1960s and 1970s, bureaucratic corruption manifested itself in bureaucrats’ demands for kickbacks valued at around 10 per cent of the total cost of a public tender, development project, or whatever goods or services were under procurement. By the 1980s and 1990s, the rates had escalated to around 40 per cent. In the current dispensation in Kenya, the rates have maxed out to 100 per cent! This is the situation where, for instance, a development project is conjured up, it is costed, awarded, and paid for, but nothing is done. The exemplification of this is the Kimwarer and Arror dams project scandal in which billions were paid out for nothing. Alternatively, public funds are simply withdrawn from bank accounts and directly pocketed by public officers, a most brazen form of corruption that was amplified by the investigative report on the financial shenanigans at Maasai Mara University.

In view of the pandemic levels corruption has reached in Kenya, a national conference on corruption was convened in January 2019 at the Bomas of Kenya. At the conference, President Uhuru Kenyatta asserted that the government would relentlessly pursue high profile cases already in the courts and launch a crackdown to ensure all corrupt persons are held accountable.

“For the first time,” the President reiterated, “no person is beyond the reach of the long arm of the law no matter how powerful or influential they may perceive themselves to be.” He further revealed that all branches of government were working collaboratively to eliminate the vice. Since then, a big show has been made of demolishing properties constructed on road reserves, on riparian land, and on illegally-acquired public land. Finance Cabinet Secretary Henry Rotich and his Principal Secretary, Kamau Thugge, among others, were arrested and charged with eight counts of financial fraud. Additionally, four high county governors were arrested and charged with corruption. These include Samburu governor Moses Kasaine Lenolkulal, Busia governor Sospeter Odeke Ojaamong, Kiambu governor Ferdinand Ndung’u Waititu, and Nairobi Governor Mike Mbuvi Sonko.

In the 1960s and 1970s, bureaucratic corruption manifested itself in bureaucrats’ demands for kickbacks valued at around 10 per cent of the total cost of a public tender, development project, or whatever goods or services were under procurement. By the 1980s and 1990s, the rates had escalated to around 40 per cent. In the current dispensation in Kenya, the rates have maxed out to 100 per cent!

A lot of fuss has been made before about fighting corruption, right from the 1960s, yet the problem has only gotten worse over time. The question is, given the manner in which the war on corruption has been conducted in Kenya, can it be successful? What chance is there that the current war on corruption will be successful? What will it take to seriously reduce and eventually stamp out corruption in Kenya? Where did Kenya go wrong on matters corruption?

When the rain started beating Kenyans

To understand how Kenya went wrong on the corruption issue, one has to juxtapose it with Singapore. Both Kenya and Singapore were British colonies. Singapore gained independence in 1959 while Kenya gained independence in 1963. Both had the same bureaucratic institutional legacy from colonialism.

For four decades, Kenya’s politics was dominated by one party, the Kenya African National Union (KANU); similarly, the People’s Action Party has remained the ruling party in Singapore since independence. Yet whereas Singapore is consistently ranked the most corruption-free country in Asia and among the top ten cleanest in the world, Kenya is rated among the top corrupt countries in Africa and the world. What accounts for these two realities is squarely the difference between adherence to leadership integrity and good governance principles, and lack of adherence to the same.

When Jomo Kenyatta became Prime Minister of Kenya in 1963, delegations of goodwill trooped to his Gatundu home bearing gifts for him, which he enthusiastically accepted. The gift bearers sought to ensure favourable consideration of their future requests. Even before he was released from prison, efforts were made to make Kenyatta’s post-prison life comfortable: a house was constructed for him; and, as the late Jackson Angaine stated in an interview with The Nation, “I mobilised the Ameru to contribute towards buying a Mercedes Benz car for Mzee Kenyatta shortly before his release in 1961.” This laid the foundation for favouritism, nepotism, and misuse of public office to serve private interests. The foundation for the appropriation of public office for self-enrichment was thus laid by Kenya’s founding president, Jomo Kenyatta, and it has gotten worse with each successive president.

A couple of years after Kenya’s independence, when Bildad Kaggia teamed up with Oginga Odinga and a few other truly nationalist leaders to fight for the rights of the landless for social justice and equity, and for restructuring Kenya’s colonial economy to work for the ordinary citizens, President Jomo Kenyatta publicly ridiculed him for failing to amass the kind of wealth that his former fellow political prisoners at Kapenguria had amassed for themselves: “We were together with Paul Ngei in prison. If you go to Ngei’s home, he has planted a lot of coffee and other crops. What have you done for yourself? If you go to Kubai’s home, he has a big house and has a nice shamba. Kaggia, what have you done for yourself? We were together with Kung’u Karumba in jail now he is running his own buses. What have you done for yourself?” Jomo Kenyatta boomed at Kaggia in disgust for refusing to use his position and ethnicity to accumulate wealth instead of teaming up with Odinga to oppose the acquisitive behavior of the new elite.

A couple of years after Kenya’s independence, when Bildad Kaggia teamed up with Oginga Odinga and a few other truly nationalist leaders to fight for the rights of the landless for social justice and equity…President Jomo Kenyatta publicly ridiculed him for failing to amass the kind of wealth that his former fellow political prisoners at Kapenguria had amassed for themselves.

Kaggia’s response to this rebuke was emblematic of a true servant-leader with the highest sense of integrity and commitment to the general good. He calmly responded: “I was not elected to Parliament to acquire a large farm, a big house or a transport business. My constituents sleep in mud houses. They have no shambas and have no businesses. So, I am not ashamed to be associated with them. By the time they have these things, I will also be able to have them for myself.”

Unfortunately for Kenya, as elsewhere in Africa and even beyond, such leaders of integrity have been rare. Indeed, the few extant ones were, at best, systematically marginalised from the centres of power and, at worst, silenced through assassination. For instance, when Josiah Mwangi Kariuki (popularly known as JM) incisively critiqued the government and declared that the manner in which the state was being used in Kenya would lead to a Kenya of ten millionaires and ten million beggars, he was assassinated and his body dumped in Ngong forest.

What Singapore did right

Just like Kenya’s Kenyatta, when Lee Kuan Yew became the first Prime Minister of Singapore in June 1959, he received many gifts from well-wishers who, like their Kenyan counterparts, wanted to ensure favourable consideration for their future requests. However, Lee declined to accept these gifts in order to set an example for his political colleagues and all civil servants.

A former senior civil servant, Eddie Teo, revealed that public servants watched and followed the example of Lee and his colleagues and “were incorruptible because they were incorruptible”. Eddie Teo and his colleagues were “motivated by the exemplary conduct set by our bosses” because “they lived simple, frugal and unostentatious lives” and the anti-corruption law was applied to everyone, regardless of position, by Singapore’s Corrupt Practices Investigation Bureau (CPIB).

The country relies on two key laws to fight corruption: The Prevention of Corruption Act (PCA), and the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA). The PCA applies both to persons who give and those who receive bribes in both the public and private sectors. When applied, the CDSA confiscates ill-gotten gains from corrupt offenders, including direct benefits as well as profits made by individuals or companies from contracts awarded due to bribery. The two laws combine to make corruption a high-risk, low-reward activity in Singapore.

Furthermore, the Singapore Public Service is guided by a Code of Conduct, which sets out the high standards of behaviour expected of public officers based on principles of integrity, incorruptibility, and transparency. The Code of Conduct is enshrined in the Government Instruction Manual for public officers and provides that a public officer (a) cannot borrow money from any person who has official dealings with him; (b) cannot at any time have unsecured debts and liabilities that are more than three times his/her monthly salary; (c) cannot use any official information to further his/her private interest; (d) is required to declare his/her assets at his/her first appointment and do so annually thereafter; (e) cannot engage in trade or business or undertake any part-time employment without approval; and (f) cannot receive entertainment or presents in any form from members of the public.

Perhaps the best exemplification of Singapore’s zero tolerance of corruption is the fact that the anti- corruption law is applied to everyone equally, including top government and ruling party officials. Among top political leaders that have been prosecuted include the Minister for National Development, Tan Kia Gan, in 1966; the Minister of State, Wee Toon Boon, in 1975; the Member of Parliament and trade union leader, Phey Yew Kok, in 1979; and the Minister for National Development, Teh Cheang Wan, in 1986. The case of MP and trade union leader Phey Yew Kok is particularly illustrative of Singapore’s unrelenting commitment to zero tolerance of corruption. Kok was charged with misappropriating $100,000 trade union funds in 1979. He, however, fled to exile. When, at age 81, he returned to Singapore in 2015 after 35 years abroad, his case was re-opened by the CPIB and he was prosecuted on 34 charges involving more than $450,000, almost five times the original $100,000 he was accused of stealing from trade union funds in 1979. Kok pleaded guilty and was sentenced to five years in jail.

In a nutshell, unlike Kenya, Singapore resolved from the very beginning to fight corruption as a matter of strategic imperative to ensure the rule of law, sustain a healthy state of governance, and facilitate economic and social development. Right from independence, the founding political leaders saw it as their onerous task to set good examples for public officers. Available evidence strongly indicates that the most important difference between a corrupt and corrupt-free state is the quality of their governance. A country’s incidence of corruption is related to its quality of governance. Multiple studies conclude that countries with high corruption have a low quality of governance, those with medium corruption have fair governance, and those with low corruption have good governance.

Singapore has minimised corruption because of the People’s Action Party (PAP) government’s strong political will and the provision of adequate personnel, budget and operational independence to enable the CPIB to enforce the Prevention of Corruption Act (PCA) impartially, regardless of an offender’s status, position, or political affiliation. Corruption offenders in Singapore are punished according to the law, without their jail sentences being suspended, or without being pardoned by the president. Consequently, corruption is perceived as a high risk, low reward activity in Singapore today because those persons convicted of corruption offences are punished according to the law.

As early as 1996, Singapore was ranked first among the 12 Asian countries in the Hong Kong-based Political and Economic Risk Consultancy’s (PERC) corruption survey. The PERC attributed Singapore’s top ranking to its strict and consistent enforcement of anti-corruption laws as corrupt officials, particularly high-ranking ones, are dealt with in Singapore with a severity rarely seen elsewhere. The country consistently ranks among the least corrupt in Transparency International’s annual Corruption Perception Indices.

Lessons from Singapore

A number of lessons can be extracted from the Singaporean experience. The first, and perhaps the most critical one, is the importance of political will in the fight against corruption. For the war to succeed, a country’s political leadership must be sincerely committed to the eradication of corruption. They must demonstrate exemplary conduct, adopt a modest lifestyle, and eschew indulging in corruption themselves. Anyone found guilty of corruption must be punished, regardless of his or her position or status in society. If the big fish are protected from being prosecuted for corruption, and only the small fish are caught or prosecuted, as is the case in Kenya, the anti- corruption strategy will lack credibility and is unlikely to make any difference.

The second lesson from Singapore is that to effectively combat corruption, incremental measures won’t suffice. Instead, comprehensive anti-corruption measures must be employed. These include comprehensive anti-corruption laws and a non-corrupt and autonomous anti-corruption agency. The anti-corruption legislation must be comprehensive enough to prevent loopholes and must be periodically reviewed to introduce relevant amendments whenever required.

The third lesson is that the anti-corruption agency must itself be incorruptible. To ensure this, it must be controlled or supervised by an incorruptible leader. The agency must be staffed by honest and competent personnel. Overstaffing should be avoided and any staff member found guilty of corruption must be punished and dismissed from the civil service.

The fourth lesson from the Singaporean experience is that to reduce the opportunities for corruption in those government departments that are vulnerable to corrupt activities, such as customs, immigration, internal revenue, and traffic police, such departments should review their procedures periodically in order to reduce the opportunities for corruption.

The fifth lesson that the Singaporean experience teaches us is that the incentive for corruption among civil servants and political leaders can be reduced by ensuring that their salaries and fringe benefits are competitive with the private sector. The long-term consequences of low civil service salaries are unfavourable as talented civil servants will leave to join private companies for higher pay, while the less capable will remain and succumb to corruption to supplement their low salaries. However, governments might not be able to increase salaries unless there is economic growth and adequate financial resources. The basis for making civil service salaries competitive with the private sector is thus good governance and effective economic management that ensure sustained economic growth and development.

In short, Singapore’s success in minimising corruption can be attributed to its dual strategy of reducing both the opportunities and incentives for corruption. Indeed, Singapore’s experience in curbing corruption demonstrates that it is possible to minimise corruption if there is strong political will. Needless to say, the situation becomes hopeless if such political will is lacking, when political leaders and senior civil servants pay only lip service to implementing anti-corruption strategies in their countries. Unfortunately, this has been the case in Kenya where the anti-corruption war has been waged half-heartedly, where low-level corrupt individuals are prosecuted while those who perpetrate grand corruption are celebrated and cleared to run for top political offices, and where even the half-hearted war is politically weaponised and applied selectively. It is thus no wonder that the scourge of corruption continues to grow in Kenya and constitutes perhaps the single most lethal threat to the future of the state.

Other successful strategies

Beyond the momentous experience of Singapore, evidence from elsewhere, such as the Doing Business Indicators, demonstrates that there is a high correlation between the incidence of corruption and the extent of bureaucratic red tape. This suggests the imperative need for cutting bureaucratic red tape by eliminating needless regulations while safeguarding the essential regulatory functions of the state. Some of the regulations on the books of many countries, such as those related to starting a new business, registering property, engaging in international trade, and a myriad other certifications and licences, are sometimes not only extremely burdensome but governments hardly ever pause to examine whether the purposes for which they were introduced are still relevant to the needs of the present. Such are the regulations that induce corruption and most simply need to be done away with.

Second, experience from elsewhere indicates that creating transparency and openness in government spending is another great strategy for minimising corruption. Subsidies, tax exemptions, public procurement of goods and services, soft credits, and extrabudgetary funds under the control of politicians constitute the various ways in which a government manages public resources. Governments collect taxes, tap the capital markets to raise money, receive foreign aid and develop mechanisms to allocate these resources to satisfy multiple needs. Some countries do this in ways that are relatively transparent and make efforts to ensure that resources will be used in the public interest. The more open and transparent the process, the less the opportunities for malfeasance and abuse. This calls for high levels of citizen literacy, and an active civil society with a culture of participation. A good example here is New Zealand, which remains consistently one of the top performers in Transparency International’s Corruption Perception Index. New Zealand is a pioneer in creating transparent budget processes, having approved in 1994 the Fiscal Responsibility Act that provides a legal framework for transparent management of public resources.

Beyond the momentous experience of Singapore, evidence from elsewhere…demonstrates that there is a high correlation between the incidence of corruption and the extent of bureaucratic red tape. This suggests the imperative need for cutting bureaucratic red tape by eliminating needless regulations while safeguarding the essential regulatory functions of the state. A third strategy recommended by experts, and which is based on the Singapore experience, involves deploying smart technology. As already noted above, one of the most fertile sources of corruption in the world is the purchasing activities of the state. Purchases of goods and services by the state can be sizeable in most countries – somewhere between 5 and 10 per cent of gross domestic product. Since the awarding of contracts involves a measure of bureaucratic discretion, and given that most countries have long histories of graft, kickbacks, and collusion in public procurement, an increasing number of countries have opted for procedures that guarantee adequate levels of openness, competition, a level playing field for suppliers, and fairly clear bidding procedures.

Singapore has achieved this by streamlining cumbersome administrative procedures and slashing red tape to provide an efficient and transparent civil service so that no one needs to bribe civil servants to get things done. A national ICT masterplan was set up in the 1980s, which is updated regularly to enable the government to exploit technology to benefit the country and to spur economic growth. Through this, the government implemented e-services to enhance the accessibility and convenience of government services. Now thousands of government services are transacted online by Singaporeans in the comfort of their homes. With regard to public procurement, Singapore installed GeBIZ, an online procurement portal because of which, today, all government procurement is done online. The procurement specifications are posted online and are available to all prospective contractors, both national and international. Transparency and efficiency are enhanced, and opportunities for abuse and corruption are drastically reduced.

A third strategy recommended by experts, and which is based on the Singapore experience, involves deploying smart technology. As already noted above, one of the most fertile sources of corruption in the world is the purchasing activities of the state.

Chile is another country that has deployed the latest technologies to create one of the world’s most transparent public procurement systems in the world. ChileCompra was launched in 2003, and is a public electronic system for purchasing and hiring based on an Internet platform. It has earned a worldwide reputation for excellence, transparency, and efficiency. It serves companies, public organisations as well as individual citizens, and is by far the largest business-to-business site in the country, involving 850 purchasing organisations. In 2012 users completed 2.1 million purchases issuing invoices totaling US$9.1 billion. It has also been a catalyst for the use of the Internet throughout the country.

In many of the measures discussed above, the underlying philosophy is one of eliminating the opportunity for corruption by changing incentives, by closing loopholes and eliminating misconceived rules that encourage corrupt behaviour.

But an approach that focuses solely on changing the rules and the incentives, accompanied by appropriately harsh punishment for violation of the rules, is likely to be far more effective if it is also supported by efforts to buttress the moral and ethical foundation of human behaviour. For the anti- corruption war to succeed, the Singapore example illustrates that it requires unrelenting political will on the part of the top political leadership and it must be waged comprehensively and without fear or favour. Otherwise, the manner in which the war against corruption has been conducted in Kenya amounts to mere window dressing; it is emblematic of the proverbial preaching of water while simultaneously partaking of wine.

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.

Martha Karua: Corruption Has Been Legalized and Sanctioned

By The Elephant

Kenya’s elite is founded primarily on corruption and conflict of interest. Some observers claim that this is not unusual at this stage of our development where the government is the largest business in town and all the significant private sector players must interact with it. The line between where the public ends and the private begins can at times become blurred, and so, for our elite, a serious anti- corruption drive is akin to suicide.

In Kenya, a sort of consensus has held sway among the elite since independence: during his tenure, the president’s tribe “eats” more than the others while they await their turn. A similar informal arrangement holds in Nigeria where the presidency shifts from North to South, giving each amalgam of ethnic groups their turn to “eat” in this oil rich country that now has more people living in poverty than India. These informal arrangements often have greater currency than formal governance institutions. The police can arrest someone for an offence but ultimate punishment is entirely dependent on the complex and constantly shifting web of relationships that dictate who can steal, how much and for how long. The tribe “in power”—even if not in office—has the greatest access to economic opportunity and justice.

Millennial Hope

An important caveat at this point is that Kenya’s millennial generation—particularly urbanites—has started to shake off some of these links. It is a slow process that is expressed primarily by that generation’s rate of inter-tribal marriage, the highest since independence. They rage on social media against the incompetence and greed of all the previous generations that have left them to face the complexities of today’s rapidly changing society, economy and politics without the benefit of preparation from wiser elders.

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Throughout the 1990s, the most articulate and forceful opposition to President Moi’s authoritarian and corrupt regime came from the Kikuyu and the Luo communities. The Kikuyu middle class in the church, civil society and the media was vocal and relentless against the “corrupt dictatorship of Daniel arap Moi”. Unfortunately for Moi, the Cold War ended in 1991 and his Western allies dumped him almost as quickly as they dumped Mobutu Sese Seko in Zaire. The local pro-democracy energy dissipated immediately a Kikuyu, Mwai Kibaki, became President in 2002 and did not return with the election of Uhuru Kenyatta, another Kikuyu.

The President’s ethnic mobilisation has been so thorough that even as the economy now flounders under the weight of Jubilee’s graft and incompetence, well-off Kikuyus are nervously whispering “what next?” to each other as Uhuru serves out his final constitutionally mandated term.

The lengths to which educated, reasonably sensible people will go to rationalise the excesses of the current regime is astounding. A commonly touted narrative is that President Kenyatta’s failure has been caused by a constitution that tied his hands behind his back and made it a nightmare for him to expeditiously solve Kenya’s most pressing problems. This gobbledygook is self-reinforcing as people do all they can to convince themselves that the absurd is normal. This social reengineering has been accompanied by a retreat to the church; as the rationalisations fail to gain traction, they are rendered, through a variety of crusades and fellowships, by all manner of bishops, prophets, prelates, brothers and other holy men and women, into a realm where to question the absurd is to sin.

In an ethnically polarised contest it is dangerous for a tribal kingpin to relinquish power in the midst of an economic meltdown, political confusion and a fragmented elite

I’m fairly certain that if a non-Kikuyu replaces Kenyatta, the Kikuyu middle class will be back starting NGOs, weaponising the media along tribal lines, establishing think-tanks and waxing eloquent on corruption, transparency, accountability and human rights. But this time, more than at any other since independence, the mood among the other communities will likely be cynical if not outright hostile.

Indeed, it was quickly clear that when Uhuru Kenyatta became president in 2013 he was sensitive to these powerful ethnic sentiments. While also working to preserve his family’s legacy, Uhuru spoke often and persuasively about the evils of graft and what he intended to do about it. In an ethnically polarised contest it is dangerous for a tribal kingpin to relinquish power in the midst of an economic meltdown, political confusion and a fragmented elite and so, Kenyatta’s anti-corruption drive now has three clear phases impelled in part by these realities.

The Age of Speeches and Plunder

In the first phase, between 2013 and 2014, the government’s energies were concentrated on fighting off the International Criminal Court (ICC) and it was during this period that the most permissive environment for corruption in Kenya’s history was created. (By the end of 2014 the ICC had been tackled to the ground.) This phase was also undergirded by the flaccid narrative that “the president is too rich already to need to steal any more”. However, many of the most egregious scandals ostensibly being investigated today were cooked up then; the government went on a borrowing spree and public officials on a looting one. It was breathtaking—the Standard Gauge Railway, Eurobond and National Youth Service scandals will be the subject of academic scrutiny for many years to come. Ironically, this was also the period during which the president’s penchant for eloquent articulation against corruption was at its peak; it was the age of speeches and plunder.

A False Start

During the second phase, 2015 to 2017, and with the ICC cases out of the way, President Kenyatta injected new vigour into the fight against corruption. For the Kenyatta family, the end of the ICC cases also presented an opportunity to disentangle themselves from the increasingly odious partnership with William Ruto and restore relations with the West unencumbered. But while Uhuru desired to burnish his image and keep some of the promises he’d made regarding governance and the fight against corruption, it wasn’t clear how he would effect the grand shift short of physically exterminating his deputy. Still, relations with the West changed for the better and a number of investigative and development agencies from the United States, the United Kingdom, Switzerland and other Western nations threw their weight behind the change by providing resources and personnel on the ground.

Ironically, this was also the period during which the president’s penchant for eloquent articulation against corruption was at its peak; it was the age of speeches and plunder

After his State of the Nation address in 2015, Kenyatta presented a “list of shame” to parliament, a lineup of senior officials who were under investigation by the Ethics and Anti-Corruption Commission (EACC). While it was a dramatic move and excellent fodder for the press, seasoned investigators were aghast that the head of state had essentially handed over to parliament—in which some of the very officials mentioned in the report sat—a list that was a work-in-progress, an operational report prepared by the EACC. The EACC’s reputation has never really recovered from the effects of Uhuru’s action and although some senior officials did “step aside to facilitate investigations”, no successful prosecutions ever resulted from these investigations. Four months later, in a sign of the dramatic thawing of relations with the West, former President Obama visited Kenya and signed with Kenyatta a unique document of cooperation around the issue of corruption. In the meantime, the opposition was having a field day with all the scandals emanating from within the Jubilee government.

For some, the 2015 “list of shame” was the beginning of a determined weaponisation of the fight against corruption in Kenya, with the President’s aides using it to take on the Deputy President in increasingly direct attacks while the two sides continued to smile politically for the cameras. These new efforts failed to capture the public imagination although the narrative that “William S. Ruto is Kenya’s corruption problem” was touted with great conviction and energy by the president’s allies. However, it quickly became clear that in matters of public accountability at the elite level, William Ruto wields veto power over many of the government’s efforts in this area. By 2016, preparations for the 2017 general election were well underway and the anti-corruption drive was put on the back burner.

The Legacy Crusade

Following the shambolic 2017 election process that saw Kenyatta and Ruto re-elected but dramatically delegitimised politically, the president changed tack. In this third phase, the war against corruption was reinvigorated and the targeting of the deputy president and his allies became far more vigorous. A multi-agency anti-corruption team headed by the Attorney General and reporting directly to the president was set up and critical new appointments were made, with Noordin Haji named to head the office of the Director of Public Prosecutions (DPP), while George Kinoti was put in charge of the Directorate of Criminal Investigations (DCI). The EACC seemed to have lost the president’s favour after the “list of shame” blunder and the Attorney General, the head of the DPP and the DCI boss were now the energetic new anti-corruption triumvirate.

At the start of 2018 the President orchestrated a political peace treaty—dubbed the handshake—with his political arch-rival Raila Odinga. This consequential but not clearly articulated move had an immediate effect: it demobilised the opposition and brought another energetic ally on- board the Kenyatta family’s attempts to redeem its legacy and deal with William Ruto. It split Jubilee down the middle, with those backing Kenyatta baptised Kieleweke and those behind Ruto nicknamed Tanga Tanga. The handshake, as well as other changes, reinvigorated Kenyatta’s anti-corruption drive which was perceived to be many things at once: an effort to roll back the most corrupt regime in Kenya’s history and redeem some sort of legacy from it for the Kenyatta family while simultaneously isolating William Ruto, constitutionally the best positioned to succeed Kenyatta in the approach to the 2022 elections. Ironically, precisely because the post-2013 looting had been so widespread and so politically “inclusive”, by the beginning of this year, the president himself had in a sense become Kenya’s Anti-Corruption Czar; he had to sit there giving the nod— “prosecute that one, leave out that name, go slow on this one, go after that one”.

Liberal use was made of the media to “expose corruption scandals”. No sooner did one associated with Ruto’s Tanga Tanga camp hit the headlines—such as the Arror-Kimwarer dams scandal—than another associated with Kenyatta’s Kieleweke faction would make the front pages—the Ministry of Health ICU equipment scandal comes to mind. I believe though that this strategy of the heavy use of the media backfired; the scandals spilled out onto the front pages faster than even the government of a developed country could have dealt with. And even with the best will in the world, the multi- agency anti-corruption taskforce lacks the capacity to deal conclusively with even just 10 per cent of the scandals presented to it. For many, this failure has ironically served to confirm suspicions that the entire exercise was nothing but a PR stunt that was from inception programmed to fail. The many massive scandals are now having macroeconomic consequences and have served to increase despondency and anger, particularly among the youth, and as the complaints have intensified, blame has been redirected at the Judiciary, with a vicious whispering campaign deployed against the Chief Justice in particular.

Ironically, precisely because the post-2013 looting had been so widespread and so politically “inclusive”, by the beginning of this year, the president himself had in a sense become Kenya’s Anti-Corruption Czar Ultimately, it has become clear that the lack of a political strategy has undermined the little credibility the anti-corruption fight enjoyed amongst Kenyans. The police and prosecutors are busier than they’ve ever been but Kenyans don’t seem to believe that the fight is serious. For Kenyatta’s Kieleweke faction, as well as for Odinga, this also fostered the generally hostile response that their handshake initiative—the Building Bridges report—elicited from the public; it was ultimately meant to be an instrument of legitimation and the engineering of a political succession but it has failed in this respect.

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And so, even as the elite compete to “eat”, and no matter the ferocity of this competition, there is an unspoken understanding that they are all ultimately “eating” together. Elements of the elite will compete for particular deals, often using media exposés to claim corruption and the flouting of tendering rules, internal fallouts that are fodder for the media.

There is no distinction between personal commercial interests and the public interest in the conduct of national affairs and I believe this conflict-of-interest gene is deeply embedded in the Kenyatta family DNA. This is the reason why, despite all the hullabaloo about “not stopping the reggae” when bulldozers were knocking down illegally constructed properties in Nairobi, this captivating initiative died a quick death. The failure to distinguish between personal/political and national interests is now popularly referred to as “state capture”, where governance institutions are “repurposed” to serve these personalised interests. In Kenya’s case, however, “state capture” was built into the very design of Imperial British East Africa ((IBEA), the forerunner of what was to become Kenya; the entire political ecosystem is designed to serve the corrupt purposes of the elite.

The many massive scandals are now having macroeconomic consequences and have served to increase despondency and anger, particularly among the youth

It is clear, given Jubilee’s approach since 2013, that managing the Kenyatta succession—fixing an increasingly broken economy, soothing our polarised politics in time for the next general election, dealing with corruption comprehensively enough that Kenyatta can walk into the sunset with something of a legacy—makes for too many governance balls in the air for even the best of political jugglers. Much as Kenyatta is an experienced and skilful political performer, some balls are definitely going to drop.

Interestingly, given the divisions that appeared within the Jubilee alliance almost from the beginning, Kenyatta has been forced to hand over political problems to bureaucrats. (He is most partial to securocrats and intelligence officers.) Moreover, although the BBI initiative emerged out of a handshake between two politicians, as the BBI team set about its work, it became clear that the bureaucrats were managing the process on a day-to-day basis—a reading of the BBI report leaves one with this impression. But the conundrum in our kind of system is that bureaucrats will first act to preserve themselves, especially after all the looting that has happened and which implicates almost every minister and cabinet secretary. As a senior politician explained it to me as he tried to enlighten me on all the infighting and scandals within Jubilee, “The most powerful bureaucrats are doing the scheming for the Kenyatta succession, but bureaucrats are like ticks on a cow’s back—they hang on for dear life even if the cow is nearing its end.”

(Additional research by Salma Mwangola) 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.

Martha Karua: Corruption Has Been Legalized and Sanctioned

By The Elephant

Murchison Falls will always be under threat from developers, if the trajectory of Stiegler’s Gorge Dam in Selous Game Reserve in Tanzania is anything to go by. Since it was explored in 1902 by Stiegler, the pressure to build a dam on River Rufiji has been massive and unrelenting. Both Stiegler’s Gorge and Murchison Falls on the Nile are World Heritage Sites, a designation proving insufficient to preserve them. Work on Stiegler’s Dam began in 2019, more than a century after it was first mooted. Downstream from Stiegler’s Rock are the Rufiji plains, a farming area prone to seasonal flooding. The floods carry and distribute nutrients and are essential to the fertility of the soil and the survival of the algae in the wetlands. Another economic enterprise carried out there is fishing. The 150,000 dwellers of the area depend on the seasonal flooding for their livelihood, something a dam would change.

Twenty-seven environmental impact assessments (EIAs) of the potential effect of inundating the Rufiji Basin in the Selous Game Reserve had been carried out by 1980. Many warned of salination of the basin with adverse effects on downstream agriculture, prawn fishing and the Rufiji Basin’s ecology.

Like the proposed Stiegler’s Gorge project of the 1970s, Uganda’s dams produce power that exceeds consumption capacity. There is an argument for creating capacity – while only 28 per cent of Ugandans are connected to the grid, the Ministry for Energy says demand grows by 10 per cent every year. But this does not explain why alternative sources of power are not considered. The cost of installing capacity to generate power has to be paid out of revenues that would otherwise be used for other services. For example, expenditure on healthcare was $12 per head in 2016, short of the $17 as per the Health Sector Plan and the $28 needed to secure the National Minimum Healthcare Package.

Yet on 8 December 2019 the Secretary to the Treasury explained to the International Monetary Fund (IMF) that following the commissioning of Isimba Dam in April 2019, which adds 183MW, the total installed capacity is now 1200MW while peak consumption is only 600MW. An extra 600MW will be added when Karuma Dam is commissioned in early 2020.

Uganda’s dams produce power that exceeds consumption capacity. There is an argument for creating capacity – while only 28 per cent of Ugandans are connected to the grid, the Ministry for Energy says demand grows by 10 per cent every year.

The Rufiji Basin Project, as reviewed by Kjell J. Havnevik in his book Tanzania: The Limits to Development from Above, provides an interesting insight into the politics of the decision-making process in building dams. The review shows that there were many opposing views. To manage the process, Tanzania appointed an implementing authority, the Rufiji Basin Development Authority (RUBADA), which was tasked with coordinating the consultants studying various aspects of the project, the donors funding the study and the parent ministry.

Tanzanian institutions, including the University of Dar es Salaam, were unable for various reasons to have a major input. Once seen by some donors (including a faction of NORAD) as an important source of expertise in identifying and assessing environmental impact issues, they became marginalised after failing to reach agreement among themselves about whose interests the EIAs should serve and how to prioritise them.

The World Bank let it be known that they were not likely to fund a project based on a single development goal i.e. power generation. Other aspects of the Rufiji Basin development then came under review: transformation from flood-fed farming to irrigation; fishing; and ecological needs. Coming as an afterthought, some lacked depth. Even though the net benefits of building the dam to control River Rufiji floods were found to be marginal by Norplan, the Hafslund Report (commissioned to integrate previous reports and incorporate environmental studies) gave the primary justification of the dam as enabling Tanzania to cover the costs of irrigation and flood control projects in the Rufiji Basin. NORAD eventually came to the conclusion that Dar es Salaam University and their nemeses in other institutions would not be able to deliver and so most of the funds available for the assessment were spent on external consultants with local scholars carrying out minor assignments. Havnevik states that those opposed to the development tended not to be invited to participate. Although Dar es Salaam University professors were allowed to attend discussions between the Ministry of Water, RUBADA, NORAD and Hafslund to discuss the latter’s preliminary report, they were asked to leave when critical matters were on the agenda.

RUBADA itself was not entirely independent; NORAD insisted the assistant to the Secretary General be replaced as he was deemed not to have sufficient political backing and to have developed a negative attitude to the planning of the project.

The multi-purpose development goals for the Rufiji Basin had been ignored, Havnevik tells us, in 1972 when Norconsult prepared a single-purpose preliminary project for the hydropower station. That being so, the technical specifications of the physical dam took precedence over environmental, community and other concerns. The higher above sea level the point of flow regulation, and the lower the unit cost of power generated led Norconsult to recommend that the dam be located at Stiegler’s Gorge. At the time there was no market for the 620MW to be generated at Rufiji and so the project recommended that power-consuming industries be built.

The Murchison Falls project

In the case of Murchison Falls, there is no multi-disciplinary coordinating committee or any known committee representing all stakeholders. The Ugandan government abdicated its responsibility towards the environment, the communities downstream and upstream, as well as the greater population when it announced that the issue would be decided by a feasibility study by potential foreign investors.

The terms of the Norconsult/Bonang Murchison Falls feasibility study have not been made public. If, like Norconsult’s Rufiji Basin study, as described by Havnevik, it is a single-purpose study commissioned to test the technical and financial feasibility of the structure without considering multi-purpose development goals, such as agriculture and fishing, environmental, tourism and heritage matters, it will not have addressed the issues most important to the tens of thousands who have signed petitions since the controversy began.

Another risk is that data required for a feasibility study that includes a comprehensive EIA may simply not be available within the time frame, which is also unknown. Uganda does not lack the expertise to carry out an EIA – Makerere University teaches conservation studies and tourism. Their voice has not been heard in the current controversy. The National Environmental Protection Agency is similarly silent.

The Ugandan government abdicated its responsibility towards the environment, the communities downstream and upstream, as well as the greater population when it announced that the issue would be decided by a feasibility study by potential foreign investors.

The Uganda Wildlife Authority and various travel operator associations are fighting their corner, mainly by awareness raising. Murchison Falls is Uganda’s most visited of the country’s twelve national parks – 32 per cent of visitors see the Falls. Earnings from tourism are 23 per cent of exports (more than doubling between 2008 and 2015, from $540 million in 2008 to $1,366 million (Ushs.3,549.3 billion) in 2014/2015. The direct contribution of tourism to GDP in 2017 was Ushs.2,699.1 billion (2.9 per cent of GDP) while the total contribution, including wider effects from investment, the supply chain and induced income impacts, was Ushs.6,888.5 billion in 2017 (7.3 per cent of GDP), up from Ushs.6, 171.5 billion in 2016 (Budget Framework Paper 2017).

Conservation and environmental issues

The complexity involved in carrying out industrial developments without disturbing the ecosystem requires extraordinary expertise. Dr Eve Abe, a noted ethnologist working in the UK as a wildlife management consultant, had not been consulted or asked to join a coordinating committee by the time of writing. Dr Abe spent years residing in Queen Elizabeth National Park studying elephants where the elephant population had fallen from 4,000 to 150 (see My Elephants and My People by Eve Lawino Abe, 2008). Across the continent the elephant population stood at 415,000 in 2016, having fallen by 111,000 in the previous period. In the 1930s Africa’s elephant population was ten million.

In her ground-breaking doctoral thesis (Cambridge, 1994) Dr Abe identified a parallel between the destruction of the human family unit and its habitat in her native Acoli. The destruction of elephants and their habitats has happened all over Africa, but is particularly acute in northern Uganda.

It was Dr Abe who first posited a causal relationship between this type of destruction and globally increasing instances of human-elephant conflict (HEC). HEC has been a problem in Uganda. Previously it was thought HEC was driven solely by encroachment on feeding and foraging territory. However, in Queen Elizabeth National Park, the population had fallen yet food for the elephants was abundant. (Incidentally, Stiegler was killed in an HEC incident in 1907 during a hydropower feasibility study.)

Dr Abe observed that elephants live in family groups and maintain stable relationships for most of their seventy years. Elephants mourn and bury their dead. Poaching in 1980s Uganda (often mass killings using grenades) and other encroachments destroyed those units and displaced the animals, leading to displacement and dysfunction among individuals.

Dr Abe’s work informed later research into the effects of trauma on elephant culture and elephants, which now includes M.R.I. scans of elephant brains, which was first done in 2008. Those scans have in fact revealed physical changes in the brains of traumatised animals and new conservation interventions take into account animal trauma caused by humans.

There is an additional risk that increased human activity and road-building in preparation for oil exploration in Murchison Falls National Park and the planned hydroelectric dam on the Falls will make the animals vulnerable to poaching. A cache of smuggled ivory seized by the Revenue Authority in January represented an estimated 325 elephants.

A third risk is human-to-animal transmission of parasites, an area that has been studied by the multiple award-winning wildlife veterinarian (Uganda’s first), Dr Gladys Kalema Zikusoka. She is best known for a pioneering translocation of gorillas to save them from poaching. She is also a winner of the prestigious Whitley Prize. Her approach to healthy co-existence is to invest in promoting and maintaining healthy human populations. By marketing the Arabica coffee grown by the surrounding community, she and her organisation, Conservation Through Public Health, help boost the income of the community, enabling them to gain access to healthcare and other services.

Dr Abe observed that elephants live in family groups and maintain stable relationships for most of their seventy years. Elephants mourn and bury their dead. Poaching in 1980s Uganda…and other encroachments destroyed those units and displaced the animals, leading to displacement and dysfunction among individuals.

There is a real danger that independent experts on conservation and fields outside power generation may have been excluded from the Murchison Falls feasibility study. Because the consortium led by Bonang Energy, Norconsult and JSC Institute Hydro project has offered its services for free, the extent to which the Government of Uganda can influence the scope of the terms of reference is debatable. Even if the government were to commission the study, the lead firm lacks the expertise, its experience being in road-building and maintenance and housing construction. The experience of Ernest Moloi, the proprietor of Bonang Energy who also owns Moseme Road Construction (PTY), appears to be limited to minor road construction and maintenance and property development. According to Forbes Africa, it was to seek openings in these two areas that he first came to Uganda.

Uganda is institutionally vulnerable to corruption

The broader governance issues were made clear in 2011 when Norconsult was sanctioned for corruptly obtaining the Dar es Salaam Water and Sanitation (Dawasa) project in Tanzania. The Integrity Vice President of the World Bank, Leonard McCarthy, stated then: “What we are trying to do here is examine the key intersections between corruption risk, organized crime and money laundering on the one hand and the institutional vulnerability in developing countries on the other. This work will be a critical input to the governance and anti-corruption work that the World Bank is focusing on in the post-crisis world.”

Does the current Ugandan administration have the will and the capacity to insulate the decision- making process from corruption and organised crime? Nobody will deny that in 2019 the risk of corruption and money laundering is high in Uganda. An indicator of the level of institutional failure is the fact that investors (both local and foreign) only seem to be assured of success after gaining access to the head of state. In the past few weeks the State House Anti-Corruption Unit has announced a crackdown on brokers who charge fees to arrange meetings with the president. Moloi has had face time with the President Museveni.

Given their past involvement in corruption in weak control environments in Tanzania and NW Province South Africa, there is no basis to expect an impartial report from Messrs Norconsult and Bonang Energy. To invite them to undertake work that threatens the ecosystem of Murchison Falls is indicative of the impunity with which the NRM government now operates.

In a statement calling for the protection of the Falls, the Africa Institute for Energy Governance says: “The company could be a front for corrupt officials who have caused loss of taxpayers’ money, have caused untold suffering to Ugandans and have degraded the environment.” Bonang has pulled down its website and currently has no online presence but earlier sightings revealed that it has no track record in hydropower construction or engineering.

Because the consortium led by Bonang Energy, Norconsult and JSC Institute Hydro project has offered its services for free, the extent to which the Government of Uganda can influence the scope of the terms of reference is debatable.

Moseme Road Construction was cited by North West Provincial Government of South Africa for being improperly awarded a contract and was ordered off the site in 2011. A 2016 gazette notice shows Moseme Properties and one Ernest Moloi were defendants to a suit filed by their creditors, Standard Chartered Bank for non-payment of a loan. Three employees of Norconsult were prosecuted by Økokrim, the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime on charges of bribery in connection with the $6.7 million Dar es Salaam Water Supply and Sanitation Project (Dawasa). Irregular payments of $146,000 were found to have been made in connection with Dawasa.

Norconsult Tanzania Limited was convicted and pulled out of Tanzania after an audit revealed $332 million in irregular payments – they reversed that decision almost immediately. According to Corpwatch (25 March 2008), the subsidiary was established in Tanzania in 1998 but never registered with the companies registrar, Brela. Still, the World Bank and Norway awarded them six road projects worth over $100 billion. They were all terminated by Tanroads in 2008.

A parallel investigation by Tanzanian authorities found that Norconsult had not filed tax returns nor paid taxes between 2002 and 2007. It was believed these irregularities could only have been made possible by bribery using the equivalent of $68,257 (Swedish Krona 650,000) expenditure not supported by the required documentation (Corpwatch).

While the local MD was asked to step down, the firm stood by three Norwegian employees. They were eventually charged in Sweden along with Norconsult. However, the firm was acquitted and one employee had his conviction overturned by the Supreme Court. Two were convicted and one was jailed. The decision was partly based on technical grounds concerning the length of time it took to prosecute the case and the fact that the World Bank had already imposed sanctions (Implementing the OECD Anti-Bribery Convention Phase 4 Report).

The politics of dam financing

The Murchison Falls Project is likely to be further complicated by options for financing. Most likely the financing will be sourced externally. Borrowing from China could jeopardise Uganda’s ownership of the national park and surrounding areas.

There are other possibilities. In 2017 Ghana exchanged 5 per cent of the country’s bauxite deposits for $10 billion worth of railway, roads and bridge development. The Ayensu, Densu and Birim Rivers have their source in the Atewa Forest Reserve and provide drinking water for five million people. A hundred wildlife species face extinction.

In the past, the viability of hydroelectric dams has been guaranteed by building industries that consume most of the power. Ghana’s Akasombo Dam on the Volta River also required a large, regular primary consumer of the power it was to generate. It was decided an aluminium plant would be built alongside the dam. The Volta River Basin was rich in bauxite, the raw material, as are many African rivers. Aluminium processing is the most power-consuming industrial process (International Rivers).

Ghana had 80 per cent of the funds (earned from the cocoa boom) and needed to borrow the balance as well as to finance the power-consuming industry. Negotiations opened in the White House when President Nkrumah requested President Eisenhower to introduce him to the well-known aluminium entrepreneur Henry Kaiser.

The most important lesson to be drawn from the Akasombo experience is the geopolitical one. The relationship was threatened by Nkrumah’s apparent leaning towards the U.S.S.R. in the UN General Assembly. At one point he was warned by Kaiser that if he sought financial assistance from the Soviet Union for any other projects, the Akasombo deal would be off.

Similar circumstances had bedevilled Egypt’s Aswan Dam. After the relationship between Egypt and the United States soured, President Nasser financed the Aswan Dam with money from the U.S.S.R. Although Nkrumah was an irritant to the American administration and their withdrawal from Akasombo was discussed many times, they eventually funded the project fearing further Russian encroachment on their sphere of influence.

The contract was awarded to Volta Aluminium Company (Valco), a joint venture between the Ghanaian government and Kaiser Aluminium & Chemical Corporation; the latter had a 90 per cent shareholding. Valco was guaranteed 70 per cent of the power generated. According to International Rivers, most of Africa’s aluminium smelters consume most of the hydroelectricity generated and pay the lowest tariffs. It will be interesting to see if similar guarantees of supply at fixed low tariffs are offered to investors in the Murchison Falls Project feasibility report.

Akasombo offers other lessons in the importance of maintaining sovereignty in the management of natural resources and carrying out strong representative feasibility studies. Valco was meant to mine aluminium close to the dam, smelt it in Ghana and export the finished product. It turned out that Valco exported raw bauxite for the first five years. In the 21st century, they resisted attempts to increase the tariffs set in the 1950s and were paying less than Ghanaian domestic consumers.

Valco eventually sold its interest without clearing over $140 million it owed in taxes, claiming tax exemption. Meanwhile, Akasombo has recently suffered from falling water levels, which has forced up the domestic unit cost of the power (which has to be supplemented by fuel-driven generators), an outcome predicted by a minority voice in the 1950s.

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 The Elephant

The economic management space has become rather lively of late. A few weeks ago, the National Treasury published an updated national debt register that spooked quite a few people. A couple of days later, it circulated a draft debt policy for comments in whose wake followed a stern memo from State House to all state agencies. The subject of the memo was austerity measures and the following three directives were addressed to state corporations: “(a) to immediately remit the entirety of identified surplus funds to the National Treasury; (b) to assign (transfer ownership) of all the Treasury Bills/Bonds currently held in the name/or for the benefit of the State Corporations/SAGAs to The National Treasury, including any accruing interest by Friday, 15 November 2018; (c) to remit the entirety of Appropriations-in-Aid (AiA) revenues to The National Treasury”

SAGAs stands for Semi-Autonomous Government Agencies. Appropriations-in-Aid is the money that government agencies raise from the public, usually in fees; court fines, licences and payments for services. This money is usually factored into their budgets—for instance, if an agency’s approved budget is Sh1 billion and it expects to collect Sh200 million, the Exchequer will budget to fund the balance of Sh800 million.

It turns out that this memo was the agenda of the event at which Uhuru Kenyatta made his “why are Kenyans broke?” faux pas. Evidently, he had summoned the state corporation bosses to read them the riot act on the directive. Hot on the heels of the State House meeting, it was reported that Parliament had passed an amendment to the Public Financial Management Act requiring that all public agencies centralise their banking with the Central Bank of Kenya.

Why the sudden zeal?

The answer may be found in a press release issued by the IMF on 22 November disclosing that the Fund had concluded a visit to the country to review recent economic developments. It also disclosed that another visit was planned for early next year “to hold discussions on a new precautionary standby facility.” A precautionary standby facility is a credit line that IMF member countries can draw on in the event of a shock that affects a country’s ability to meet its external payment obligations, for example, a petroleum price shock, or a global financial crisis of such severity that a country’s foreign exchange resources would not be sufficient to cover both imports and debt servicing.

The previous standby facility, which was due to expire in March 2018, was suspended in the run-up to the 2017 general election because of non-compliance. In early 2018, the administration sought and secured a six-month grace period during which it would negotiate a new one (with no money available during the grace period as the government was not compliant). The grace period was to expire in September, but in August the talks collapsed. Some of the conditions that the IMF sought were the removal of both the interest rate cap and the controversial VAT on fuel. The exchange rate policy may have been another sticking point, as the IMF claimed that the government was artificially propping up the shilling, a contention that the Central Bank has vigorously contested.

It turns out then that the sudden flurry of activity may be all about impressing the IMF. Indeed, the centralisation of government banking—known as the Treasury Single Account (TSA)—is one of the IMF’s latest fads, And just as with IFMIS before it, TSA is supposed to be the silver bullet that will put an end to financial control woes.

There are at least two other developments that are consistent with the sort of demands that we can expect from the IMF.

First, the government has started to make wage bill noises again. The acting Treasury Cabinet Secretary was heard to lament at a conference convened to discuss the wage bill that it is consuming 48 per cent of revenue, way above the maximum of 35 per cent stipulated in the Public Finance Management Act. This appears to be a case of giving a dog a bad name. The total wage bill for the entire public sector including commercial enterprises was Sh600 billion, about 40 per cent of national revenue. But even this is misleading because commercial parastatals (Kenya Pipeline, Kenya Airports Authority, Central Bank, etc.) do not depend on government revenue. The consolidated public sector wage bill as a percentage of consolidated revenues is in the order of 34 per cent. This is not the first time that the government is cooking the wage bill figures.

It has also been reported that Kenya Power has applied for a 20 per cent tariff increase, in part to cover for the national government subsidy for low-income consumers. The IMF takes a dim view of subsidies of this kind and although this has not come into the public domain, I would expect the IMF to similarly take a dim view of the operational subsidy made to the SGR, which is even less defensible than the tariff subsidy.

Given that the same Jubilee administration that found IMF conditions unpalatable last year now appears to be bending over backwards to secure a deal, we are compelled to ask: what has changed?

Money is short. This year the government plans to borrow Sh700 billion. It plans to borrow Sh450 billion domestically, and Sh250 billion from foreign sources. Soft loans from development lenders are budgeted at Sh50 billion, leaving the balance of Sh200 billion to be sourced from commercial lenders, either by way of issuing sovereign bonds (Eurobonds) or by arranging syndicated bank loans. The Sh200 billion foreign borrowing is “net”, that is, over and above what the government will borrow to pay the principal installments on foreign bank loans (e.g. the Exim Bank of China SGR loans), and to refinance or roll-over maturing syndicated loans (thankfully, there are no Eurobonds maturing this year) amounting to Sh131 billion, bringing the total borrowing to Sh331 billion. As a rule, interest payments are paid out of revenue while the government aims to pay the principal by rolling-over or refinancing. The government has access to three potential sources of this kind of money: budget support (also known as programme loans, issued by multilateral institutions, including the IMF itself), Eurobonds and syndicated loans. Of the three, the multilateral lenders are the cheapest, but they take long, come with conditions and usually require that an IMF programme be in place (although last year the World Bank did extend a programme loan without one).

Eurobonds are the next best option. The Government does not need an IMF deal to go to the sovereign bond market. Indeed, it did not have an IMF programme in place during its previous two bond issues: the debut issue in 2014 and the second one in February 2018. But circumstances do change. With as many as 20 African countries either already in or at high risk of debt distress, it may be that the market has signaled to the government that an IMF stand-by would be “an added advantage.” Indeed, the IMF itself has downgraded Kenya’s debt distress risk from low to medium.

Multilateral lenders are the cheapest, but they take long, come with conditions and usually require that an IMF programme be in place

For what it’s worth, the Jubilee administration is finally owning up to the fact that its finances are in a worse state than it has previously cared to admit. The new narrative heaps the blame on the now- suspended Treasury officials, Cabinet Secretary Rotich and Permanent Secretary Kamau Thugge. I was taken aback recently when a cabinet secretary who has a strong background in finance remarked that they were not aware how bad things were until Rotich and Thugge were booted out, while the central bank governor has been quoted blaming Rotich’s rosy revenue forecasts—which he has characterised as “abracadabra”—for encouraging the government to pile up debt. This is disingenuous because that is not how it is done. The borrowing is decided politically first, and then they cook the revenue numbers to show that we can afford it. The Governor has been part of the racket. It is also mean to mock one’s colleagues when they are in trouble, not to mention that the Central Bank has been deeply implicated in the Eurobond fraud cover-up under his watch. The Governor’s turn to be thrown under the bus may yet come, but I digress.

What is now inescapable is that six years of the most egregious fiscal profligacy has caught up with us. As this column argued a fortnight ago, the government is now hostage to fate—it can kick the can down the road and hope and pray that the crunch does not come this side of the election, in which case an IMF facility seems like a good cushion to have. But it comes with a health warning: the cure may be worse than the disease.

A couple of weeks ago, Lebanese people took to the streets and brought down the government in what has been dubbed the Whatsapp revolution. Those of us who are a bit long in the tooth remember Beirut as the byword for urban warfare. Lebanon’s sectarian warfare ended when its fractious and venal political elite worked out an inclusive eating arrangement of the kind that our equally venal eating chiefs are now crafting with handshakes, bridge building and whatnot. With no agencies of restraint, the chiefs finished the tax money and progressed to eating debt, chomping their way into a 150+ per cent of GDP debt (third highest in world after Japan and Greece) that is consuming half the government revenue in interest payments alone, and causing economic stagnation.

What is now inescapable is that six years of the most egregious fiscal profligacy has caught up with us

On its knees, the government passed an austerity budget in July. The austerity budget coincided with an IMF mission which recommended “a credible medium term fiscal plan aiming for a substantial and sustained primary fiscal surplus.” Primary fiscal balance is the difference between government revenue and recurrent expenditure excluding interest. It is achieved by raising more taxes and cutting wages and O&M (operations & maintenance) spending. These cuts usually fall most heavily on social spending.

As the government set about imposing more austerity and raising taxes, it unveiled a tax on voice- over-IP (VOIP) calls in October, the idea being to protect tax revenue from regular voice calls. It was the last straw. Evidently, the eating chiefs had not realised that this was the social lifeline for the youth. The people took to the streets. Two weeks later, the government fell. Lebanon is now in full financial meltdown. The IMF is nowhere to be seen.

Mozambique had an IMF programme in place when it ran into debt payment difficulties that forced the government to disclose more than a billion dollars of secret “Tuna bonds” debt. Now, the purpose of an IMF programme is to help a country in payment difficulties, but because the secret debt violated the terms of the IMF deal, instead of bailing Mozambique out, the IMF led the other donors in suspending aid to the country. Instead of helping put out the fire, the fire brigade decided that teaching the culprits a lesson was more important than saving the victims. Mozambique’s economy went into free fall, where it remains. This is the very same IMF that cooked our books to cover up the Eurobond theft.

The borrowing is decided politically first, and then they cook the revenue numbers to show that we can afford it

What alternative does Uhuru Kenyatta have? In economics, we talk of the orthodox and heterodox approaches to dealing with a sovereign financial crisis.

The orthodox approach is a formulaic one-size-fits-all approach which adheres to one economic school of thought known as neoclassical economics. Its prescriptions are fiscal austerity and doctrinaire free market ideology. It is, as is readily apparent, the IMF prescription. Heterodox is another name for unorthodox, and refers to a pragmatic strategy that draws from the entire spectrum of economic ideas from Austrian to Marxist political economy and everything in between.

The dilemma governments have to face is that the orthodox cure is sometimes worse than the disease, but it’s the one with the money behind it. Heterodox approaches work better, but they require a resolve and an imagination that many governments are unable to muster, especially when they have their backs against the wall.

Can the Jubilee administration muster the resolve for a heterodox response? Doubtful.

Four years ago I contemplated the Jubilee administration ending precisely where it is headed, to wit: “I cannot think of a more fitting epitaph for the Jubilee administration’s reign of hubris and blunder, plunder and squander, than the rest of the term spent savouring copious helpings of humble pie in an IMF straightjacket. Choices do have consequences. Sobering.

Published by the good folks at The Elephant.

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Martha Karua: Corruption Has Been Legalized and Sanctioned

By The Elephant

The Western media is taking notice of growing agitation for regime change in Uganda at a level comparable to the 1980s when Yoweri Museveni was referred to as a “a young handsome guerilla” on ITV News and featured in a British documentary filmed in the Luwero Triangle. Even as the then President Milton Obote was denying the existence of a rebel threat in Uganda, British journalist William Pike was interviewing Museveni in the bush. Pike later became a mobiliser for international support for the National Resistance Army (NRA) between 1984 and 1986.

In the past two years, the international mainstream media have regularly covered the phenomenon that is the People Power movement. With the help of social media, the movement’s leader, Robert Kyagulanyi, better known as Bobi Wine, has been noted as a leader of the future by two influential Western publications and has won multiple leadership awards on the African continent. As result, the failings of the 33-year-old National Resistance Movement (NRM) government have been under the global spotlight. In his latest interview with Al Jazeera, Kyagulanyi appealed to the international community and investors to deal with Uganda and not with President Museveni. As the 2021 presidential and parliamentary elections draw near, foreign debt is coming to the fore in Uganda’s political discourse. Where human rights abuse once dominated, managerial failures in government and poor budget outcomes are gaining increasing attention. A series of events in 2018 and 2019 highlighted the impact of debt distress and managerial incompetence on service delivery.

Corruption and incompetence are no longer simply a drag on development but are bringing public institutions to a standstill. Special audits of thirteen out of fourteen regional referral hospitals show persistent drug stock-outs, understaffing and crumbling infrastructure. (The ICU at Jinja Hospital was shut down due to lack of batteries.).

In his latest interview with Al Jazeera, Kyagulanyi appealed to the international community and investors to deal with Uganda and not with President Museveni. As the 2021 presidential and parliamentary elections draw near, foreign debt is coming to the fore in Uganda’s political discourse.

Yet the health sector was unable to spend Shs.171 billion ($46,367,125.02) allocated to wages and construction and had to return the funds to the Treasury. Shs150 billion ($40,520,625.00) of that was external funding. Reasons given point to institutional failures, and inability to organise recruitment and procurement in time (Budget Monitoring and Accountability Unit, 2019).

In the education sector, the Makerere University strike was a reaction to the government’s inability to cover operational costs, and to the university increasingly relying on fees paid by private students. Ten years ago it was estimated that Shs.600 billion ($162,191,100.00) a year was lost through government procurement fraud alone. Professor Nuwagaba, a Makerere University lecturer and author of the study, estimated that the amount lost was enough to cover all of Makerere University’s student fees for two years.

The latest statistics from the primary education sector show the rate of literacy and numeracy fell from 39 per cent to 33 per cent. With a primary school drop-out rate of 60 per cent, this means that most of those who do not complete primary school education are insufficiently literate or numerate to go on to existing skills training institutions. Loans for skills training and higher education worth $100 million expired, with just a little over 50 per cent utilised and the rest returned to source. An application for a new $45 million has been tabled in Parliament.

Global climate right for change

The global climate is right for political change. By Executive Order 13818 (2017) the Trump administration declared global corruption and human rights violations “a national emergency” with respect to serious human rights abuses and corruption globally, which constitute an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States. The Magnitsky Act has since been invoked against senior army personnel while the former Inspector General of Police has been publicly designated under Section 7031(c) of the FY 2019 Department of State, Foreign Operations, and Related Programs Appropriations Act for human rights abuses.

Elsewhere in Africa, five Congolese officials of the DRC’s electoral commission and one from the Constitutional Court had visa restrictions placed on them and were publicly designated for electoral fraud. Together with military officials, they have also been identified as having undermined democracy by violating Congolese citizens’ rights to peaceful assembly, and freedom of expression. Other publicly designated officials include Kenya’s former Attorney General Amos Wako, Cameroon’s Inspector General of the Cameroonian Gendarmerie, Colonel Jean Claude Ango, Malawi’s former Minister of Home Affairs, and current Special Advisor on Parliamentary Affairs, Uladi Basikolo Mussa due to involvement in significant corruption (a charge that Wako has denied). Exiled former president of the Gambia, Yahya Jammeh is also designated in an undated notice.

Since October 2019, Tanzania’s opposition politician Tundu Lissu and the Justice for All South Sudanese movement have retained a Canadian firm in the area of human rights abuses. Amsterdam & Partners offered its services to the embattled Bobi Wine after the torture the state subjected him to in 2018.

During their press conference, Robert Amsterdam denounced Uganda’s history of political violence and the use of $500 million worth (his figure) of US weaponry in carrying out that violence, saying the West cannot ignore it any longer.

The question is how closely multinational commercial interests are aligned with the long-term interests of the political movements, parties and individuals they now support.

The language of the Executive Order implies that to be actionable, the violations must be a threat to American global interests. By implication, if those interests can be secured by means other than sanctioning human rights violators, then violators need not be sanctioned. Yet in order to end impunity African opposition politicians and activists are clamouring for sanctions on serving officials like foreign minister Sam Kutesa cited in the Patrick Ho bribery case.

In an interview with Aly Khan Satchu in October 2018, Amsterdam described his firm’s work as “litigation in global markets” around both political and commercial matters. He portrayed foreign investor and domestic governance issues as being intertwined.

The question is how closely multinational commercial interests are aligned with the long- term interests of the political movements, parties and individuals they now support.

Amsterdam described the Chinese Belt and Road Initiative (BRI) as predatory lending and neo- colonial, a choice of phrase that would appeal to post-colonial Africa and Asia. He said that the initiative had “prohibited the growth of representative democracy…and given some autocrats a new lease on life.” [Amsterdam video @9:48] Explaining that China uses its surpluses from exporting manufactured goods to “colonise” the rest of the world. Amsterdam warned that “the debt trap is very real”.

He mentioned Hambantota, the port that Sri Lanka lost to China as a result of a debt default in 2018. In the same year, the Auditor General revealed that Uganda too has contracted loan agreements with China that surrender sovereign immunity over territory in the event of default.

The phrase “predatory lending” had been used earlier by the sixteen U.S. congressmen who wrote to the Secretaries of State and the Treasury in August 2018, demanding action to disrupt what they described as China’s bid to dominate the global economy. What is of concern to the Congressmen is that 23 out of 68 BRI countries are said to be at risk of debt distress. Defaulting BRI countries are expected to seek IMF bail-outs, meaning a portion of America’s investment in the IMF (the largest shareholding) would be transferred to China.

The portrayal of Uganda’s governance deficits and Western foreign political and commercial interests as organically related issues is not convincing. The exit plan being signaled for President Museveni is less about human rights abuses about which the world has known for over 30 years and more in aid of preserving existing power and trade relations between Uganda and the United States.

In his latest interview (Al Jazeera, November 2019) Kyagulanyi appealed to the international community and international investors, in particular, to hold the Ugandan administration accountable for human rights abuses and corruption. He urged them not to focus only on business relations but to be united with Uganda by values such as “democracy, respect for human rights…zero tolerance of corruption”. Ugandan activists are aware of the debt-trap and welcome sanctions.

However, in his interview with Sachu, Amsterdam seemed to be suggesting that perpetrators be given a Get Out of Jail card. Apart from floating the idea of an easy exit for Museveni, he stated that sanctions would only “hand over” countries to China (because Chinese foreign policy does not enforce its anti-foreign bribery laws). He gave Myanmar as an example. Sanctioned for the Rohingya genocide, Myanmar allegedly fell profoundly under Chinese influence.

He is again at odds with African activists when he advises his clients to avoid the U.S. Foreign Corrupt Practices Act by denominating their foreign contracts in currencies other than dollars to avoid the New York-based SWIFT money transfer system. Corruption, some of the proceeds of which pass through the SWIFT system, costs the African continent billions of dollars a year. The US Department of Justice recovered $30 million from Vice President Teodorín Obiang in 2014. France recovered (and confiscated) $35 million from him in 2017.

Uganda’s corruption circles are at least as big as Equatorial Guinea’s. There are over 100 ministries and statutory agencies and many more presidential appointees. Museveni himself is rumoured to have stashed away $5 billion in illicit earnings. This figure is difficult to confirm but following the recent ‘#fishrot’ disclosures in which the Namibian Minister of Justice is filmed soliciting a bribe of $200,000 in return for allocating fishing rights to an Icelandic firm, Samherji, it is possible that during Museveni’s thirty years at the helm – when he oversaw the country’s privatisation programme – he amassed a lot of wealth.

An easy exit for Museveni in the interests of a “smooth transition” could jeopardise the hoped for recovery of stolen funds. Robert Mugabe estate includes $10 million in cash, not an insignificant amount in a country where child delivery in hospitals is done by candlelight and a unit of blood costs $120.00, the equivalent of a doctors’ monthly salary or just over two month’s pay for a teacher.

Service delivery default or debt default?

More divergences of interest can be expected post-Museveni. A key issue for Ugandans in the inevitable transition will be the status of Uganda’s foreign debt. By 2021 debt servicing will have risen to at least 65 per cent of revenue (Auditor General 2018).

In the event that the NRM regime is dislodged in the 2021 elections, expectations for more and better service delivery will be high as they were in post-apartheid South Africa. South Africa elected to pay the apartheid debt and as a result, twenty years later, 40 per cent of the population lives below the poverty line. Access to social housing, electricity, running water and other services in the quantities and to the standards promised during the anti-apartheid struggle is still limited for at least half the population. An easy exit also implies the inheritance of unsustainable debt, whether or not contracted in return for bribes, and regardless of whether it was put to developmental use or stolen. Without a debt audit carried out by an independent body, the repudiation of illegal, illegitimate and odious debt, and the recovery of misappropriated funds, the new government will not be able to meet service delivery expectations without taking on yet more debt. Service delivery will be the casualty. Zimbabwe cleared its debt to the IMF circa 2016. However latest statistics show undernourishment in Zimbabwe is 51.3%, up from 50.9% in 2016 when the IMF debt was cleared.

Post-Mugabe Zimbabwe discovered that it was unable to get new IMF financing without clearing the $5 billion owed to the African Development Bank and World Bank, and without securing financing commitments from development partners to whom money is owed.

Uganda’s corruption circles are at least as big as Equatorial Guinea’s. There are over 100 cabinet ministers and many more presidential appointees, in addition to Museveni, who is rumoured to have stashed away $5 billion in illicit earnings.

The legal status of the Museveni debt, and therefore the obligation to repay it, has been challenged by Dr Kizza Besigye on the grounds that it is odious – contracted at a time when the government was waging war against the people of Uganda. There is ample legal precedent for repudiation of odious debt. To the extent that payment of the Museveni debt would force the State to continue to default on its obligation to meet the basic needs of its citizens, it is illegitimate. As in Zimbabwe, undernourishment in Uganda has been rising for over a decade. Infant and maternal mortality remain high.

Legally, if the Museveni debt can be shown to be odious or that it was contracted with the lenders’ knowledge or expectation that the government lacked the capacity to manage or repay it and was in any case inclined to steal it (as with the Mozambique tuna bonds), a case can be made for repudiation.

There are several examples of debt being successfully repudiated. In 2007 Norway established the precedent for repudiating debt which is neither illegitimate nor odious on the grounds that “repayment may be subject to broader considerations of the equities of the debtor-creditor relationship” (UNCTAD).

The Tsarist debt owed by Russia was significantly reduced after payment demands were repudiated. The German and Prussian debt used to colonise Poland was repudiated in 1919. Commercial loans made by the Royal Bank of Canada to fallen dictator Tinoco were repudiated by Costa Rica. Germany repudiated Austrian debt in 1938, and the Franco–Italian Conciliation Commission ruled that Italy was exempt from debt incurred during war waged by a previous regime (1947). (Source: The Concept of Odious Debt in International Law, UNCTAD.)

Debt mismanagement continues in Uganda. The long-awaited health insurance scheme – the National Minimum Healthcare Package (NMHCP) – was tabled in Parliament in August 2019. The maternal health component of it will be financed under the World Bank’s Health Systems Strengthening Project through a loan of $130 million even though $45 million was wasted when the first attempt to design the NMHCP scheme in 2003 came to nothing. The World Bank’s evaluation stated the reasons stemmed from failures within the World Bank itself, including unrealistic design timetables, lack of a monitoring and evaluation (M&E) framework, and little appreciation of the political economy of the reform programme.

There are tens of projects such as these dating back to the initial Economic Recovery Programme of 1987 for which loans were contracted, commissions were paid, disbursements often not completed, some money stolen and outputs only partially delivered, if at all.

The recovery of public funds lost in this way provides ample scope for alliances between opposition groupings across Africa. It remains to be seen whether Ugandans will be able to leverage the West’s new-found willingness to put the well-being of her citizens on the table and negotiate agreements that will prioritise service delivery over investor interests after Museveni’s departure. The pressure on them to do the opposite will be massive.

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.

Martha Karua: Corruption Has Been Legalized and Sanctioned

By The Elephant More than 200 people, among them senior government officials, principal secretaries and CEOs of state agencies, have been arrested, arraigned in court and charged with diverse criminal offences as a result of President Uhuru Kenyatta’s renewed war on graft.

On 22 July 2019, the Director of Public Prosecutions (DPP) ordered the arrest of and proffered charges against 28 senior government officials, among them Henry Kiplagat Rotich and Kamau Thugge respectively the Cabinet and Principal Secretaries of the National Treasury, the Principal Secretary of the Ministry of the East African Community, the Managing Director of the Kerio Valley Development Authority, a state corporation, and the Director of CMC di Ravenna, an Italian company. According to the DPP, investigations have established that the charged officials flouted procurement rules and abused their oath of office in awarding or otherwise ensuring that CMC di Ravenna secured the contract for the construction of the Arror and Kimwarer dams. The contractual amount is in the region of $600 million.

Prosecuting corruption in Kenya: A troubled past

From Kenya’s independence in 1963 to the establishment of the Kenya Anti-Corruption Authority in 1987, the duty to prosecute government corruption fell on the Office of the Attorney General (AG) who simultaneously happened to be the government’s chief legal advisor and chief legal defender. Requiring an office to prosecute its chief client yielded predictable results. Despite damning reports by the office of the Auditor and Controller General, as well as independent reports of the Parliamentary Public Accounts and Investment Committees, the AG remained resolutely intransigent towards bringing charges against government officials of any stripe, and outrightly protected senior government named in the reports.

In the Goldenberg scandal – an export compensation scam under the Daniel arap Moi regime that is estimated to have cost Kenya 10 per cent of her GDP – the AG at the time (and current Senator for Busia County), Amos Wako, failed to initiate proceedings for four years after the scandal came to light, and was only moved to do so by a suspension of International Monetary Fund (IMF) aid and the combined pressure of the Law Society of Kenya, donor nation governments and an increasingly outraged and assertive public.

Notwithstanding the said pressure, Wako used a variety of guises to impede the prosecution, including attempting to oust the jurisdiction of the High Court in the matter, numerous adjournments, withdrawing charges altogether and then being compelled by foreign pressure to reinstate them. The Minister of Finance at the time was never so much as charged and to date nobody has ever been convicted.

In the Goldenberg scandal, the AG at the time (and current Senator for Busia County), Amos Wako, failed to initiate proceedings for four years after the scandal came to light, and was only moved to do so by a suspension of IMF aid and the combined pressure of the Law Society of Kenya, donor nation governments and an increasingly outraged and assertive public.

Kenya then moved to break the prosecutorial monopoly of the AG. The Kenya Anti-Corruption Authority (KACA) was established in 1987 by the amendment of the Prevention of Corruption Act (Cap. 65) but was hampered by legal, administrative and budgetary constraints that appeared deliberate. Its first director, John Harun Mwau, was appointed 10 years after the establishment of KACA, for instance, and was shortly thereafter sacked by the president at the recommendation of a tribunal of inquiry after the director had obtained warrants of arrest against high ranking officials of the Treasury as well as the Kenya Revenue Authority.

It is noteworthy that Mwau was not conventionally qualified for his post nor was the process of his appointment subject to a transparent recruitment process. Indeed it is believed that the appointment was a quid pro quo in return for his dropping out as a presidential candidate. Nonetheless he was fired just as he appeared to make progress.

As such, whereas his successor Aaron Ringera was undoubtedly well qualified for the post, being a well-respected High Court judge, his appointment was nonetheless greeted with scepticism. Justice Ringera took office in 1997 and by 2000 KACA had been declared unconstitutional by the High Court before any of the cases it had instituted had been, the court finding that the existence of KACA infringed upon the constitutional powers of the offices of the Attorney General and the Commissioner of Police for two main reasons: first, that Justice Ringera, being a judge and simultaneously the head of an organ of the Executive, offended the doctrine of separation of powers; and second, that under section 26 of the Constitution (as it then was), the AG had the exclusive power to prosecute. The cases that KACA was handling were handed over to the AG. These cases were either not continued or ended up being dismissed by courts.

The demise of KACA led to widespread civic and international outrage. Following the general elections in 2002 – widely believed to be the first truly free elections of their kind in Kenya’s history – Mwai Kibaki was elected president on a broad reform mandate, key to which was fighting corruption. He established KACA’s successor, the Kenya Anti-Corruption Commission (KACC) in April 2003 by way of the enactment of the Anti-Corruption and Economic Crimes Act. Exactly one year later, in April 2004, KACC was to face an acid test following the coming to light of what would prove to be the new administration’s nemesis, the Anglo Leasing Scandal (Anglo Leasing).

Anglo Leasing was a government procurement scandal in which a diverse array of fraudulent entities were secretly and unlawfully awarded large security contracts, and subsequently failed to deliver goods or services or grossly overcharged for them. In total it was estimated that there were at least 18 such contracts with a total value of $721 million.

The scandal reached the highest levels of government and was well-documented by the whistleblower John Githongo, who was then the Permanent Secretary for Governance and Ethics. Githongo was a former Executive Director of Transparency International in Kenya and was widely regarded as a person of integrity. Indeed his appointment was intended by Kibaki to signal his seriousness in the fight against corruption. Githongo’s report implicated the president himself, his vice president as well as various cabinet ministers and permanent secretaries.

The consequences were limited. The newly established KACC cleared three cabinet secretaries of obstructing the investigation using the novel and startling legal innovation that the whistleblower was not an investigator as defined by law. Far from playing the role of an independent prosecutor, KACC either did not investigate the most culpable, or when it did, it resorted to technicalities in order to defeat the very purpose it was formed to serve.

In what is likely to exert a chilling effect on the exposure of government scandals, Githongo has recently had judgement entered against him personally in the amount of $270,000 for defamation in a suit brought by Dr. Christopher Murungaru who as Minister of Internal Security at the time of the coming to light of Anglo Leasing, was perhaps the leading figure under investigation in the scandal. This is the latest in a long series of legal setbacks which Githongo has faced since doing Kenya the immense service of bringing Anglo Leasing to light.

The Executive: Questionable tactics

Prosecution is no easy task. Prosecuting economic crimes such as corruption is even more so. These crimes tend to be characterised by a high degree of sophistication in terms of commission as well as concealment. Payments to those concerned, for instance, may be in the form of ‘commissions’ by shadowy organisations to multiple offshore jurisdictions, which are hard to trace and whose illegality is difficult to prove.

Unlike other crimes, a disproportionate amount of evidence tends to be in the hands of those who are already suspects. Gathering such evidence takes a great deal of time and expertise, involving teams of professionals applying specialised forensic techniques. The suspects themselves tend to be wealthy and powerful. They are able to hire large teams of lawyers who take advantage of every legal loophole, technicality, adjournment, appeal and delay in their client’s favour. They are able to apply pressure to witnesses and even to those working within the prosecution. Cases are likely to drag on for a long period of time and a government that wishes to see quick results in the war against corruption would be ill-advised to rely on prosecution as its primary and most visible strategy.

The DPP and the Directorate of Criminal Investigations (DCI) have conducted much of the war on corruption as a drama played out in the public eye. Press releases are issued and persons high and mighty are arrested with great fanfare. These persons are arraigned in court in vast numbers, and when bail is granted, the DPP cries foul. One of the major reasons that inform opposition to bail by the DPP is that the accused may interfere with investigations. This then implies that investigations were incomplete at the time suspects were arrested. This working methodology appears to essentially be a public relations exercise that fundamentally undermines successful prosecution. Unlike other crimes, a disproportionate amount of evidence tends to be in the hands of those who are already suspects. Gathering such evidence takes a great deal of time and expertise, involving teams of professionals applying specialised forensic techniques.

Furthermore, those accused are often skilled political operatives, with established relationships within media. Charismatic and often able to appeal to ethnic loyalties, they can use the media as a tool to gain public sympathy and scuttle efforts at holding them accountable. In addition, early engagement of the media by the DPP as part of political theatre is likely to expose strategies and information prematurely, forewarning the accused. It must also be acknowledged that media organisations are corporate profit-making entities with interests of their own that may or may not align with the public interest.

Take for example the second National Youth Service (NYS) scandal. At one point there were 30 accused persons on one charge sheet in one case. Each was represented by at least one lawyer, and frequently by a team of lawyers. Each individual had to be put on their defence separately; each called and cross-examined their own witnesses. This takes about four days per witness. No country in the world can conduct a speedy trial, or even a fair one, under such circumstances. Even a matter as basic as a courtroom was a problem: there exists no courtroom in Kenya large enough to conduct this case, which had to be held in a ceremonial hall.

Unwieldy prosecution strategies have in the past been used as a guise under which the government appears to prosecute corruption while simultaneously taking steps to guard the prosecuted from legal culpability. During the Goldenberg scandal, the Attorney General, against the advice of his own Director of Public Prosecutions, framed more than 90 counts in one charge despite clear evidence that this would invalidate the charges, which is precisely what happened.

Given the difficulty of corruption investigation prosecution, cases should be restricted and prioritised based on pre-established criteria. Such criteria would include prosecuting the most senior figures, establishing judicial precedent and the probability of a successful outcome, for example, by targeting offences such as tax evasion that are relatively easier to prove.

Moreover, strategies such as plea bargaining and summary proceedings have proven useful in other jurisdictions as a means of shortening litigation and also gathering evidence of criminal activity that would otherwise be unavailable or require an enormous expenditure of surveillance and forensic resources.

The President

Prosecuting corruption amounts to locking the stable door after the horse has bolted. Prevention is by a huge margin the better strategy, a large responsibility that lies with the Executive headed by the President. That we are experiencing corruption at all means that the Executive has failed to stop it and must now rely entirely on prosecuting those whom it has allowed to raid public coffers.

The Executive does not appear to have a coherent professional strategy to fight corruption. In the recent past, buildings on riparian land were brought down in a flurry of activity. Now there is sudden silence. This work has not been completed. Also forgotten is NYS 1, in which the central figure is now a governor. There needs to be a demonstrated professional understanding of corruption in Kenya and its underlying causes that drives the war on corruption; absent that the process will appear ad hoc and susceptible to being interpreted as a platform to selectively seize and exploit the weaknesses of political opponents. The Executive does not appear to have a coherent professional strategy to fight corruption. In the recent past, buildings on riparian land were brought down in a flurry of activity. Now there is sudden silence.

Furthermore, the close relationship between the presidency and prosecutorial agencies is problematic. Factual independence of prosecutorial agencies from members of government is crucial towards the effectiveness of prosecution as an anti-corruption strategy. Components of factual independence include stable and widely applied legal foundations for the prosecution of crimes. As such, prosecutions ideally should emanate from an independent office exercising a constitutional and legal mandate independently, rather than following directions from any one office, however well meaning. Trust in the war on corruption and the legitimacy of the ruling regime as a whole could be undermined if it is perceived that those closely aligned to State House are unlikely to be prosecuted.

The blame game: The Judiciary

The Judiciary has been accused of granting bail with alarming ease to the high and mighty, while simultaneously denying the same benefits to ordinary citizens. Chicken thieves are subject to incarceration while those who have stolen millions roam this land free and unburdened.

The President himself, on the occasion of his Jamhuri (Republic) Day speech on December 12 2018, accused the Judiciary of granting “ridiculously low bail terms”. The Judiciary has been accused of misunderstanding the presumption of innocence and equating it with a presumption of virtue, being divorced from the aims of society in general and in particular being insensitive to the scourge of corruption. Indeed political actors have not shied away from accusing the Judiciary of outright collusion with accused persons. Individual judges have also been mentioned adversely in social media in ways ranging from the mildly disturbing to the downright scandalous.

It is germane to the President’s comments on “ridiculously low bail” that in the preceding week, top officials of the Kenya Pipeline Company (KPC) and the National Health Insurance Fund (NHIF), including Joe Sang, the Managing Director of KPC and Geoffrey Mwangi, CEO of NHIF, had been charged with abuse of office leading to the theft of billions of shillings. They were released on a bail of Sh2 million each. In July 2018, top officials of the Kenya Power Company, including the CEO Ken Tarus, his predecessor Ben Chumo and senior managers were similarly charged and released on bail terms of Sh1 million.

Where the Judiciary has been criticised for giving bail, no evidence has been proffered of the compelling reasons against it that the Judiciary ignored. Suspects have presented themselves to police stations and have attended court proceedings voluntarily. The purpose of bail is to secure attendance, not to act as some sort of premature punishment prior to conviction by its denial.

Conclusion

While it is still too early to pass definitive judgement on the effectiveness of this new wave of prosecution against corruption there is a key historical hurdle that Uhuru Kenyatta’s administration will have to overcome. The prosecution or lack thereof of Anglo Leasing suspects in a scandal that was enormously well-documented leads us to the inevitable presumption that that those crucial to the campaign of the next general election in 2022, either by dint of being sufficiently wealthy and willing to fund the election campaign or perceived as being able to guarantee key ethnic loyalties, will not be successfully prosecuted and that after the dust and fanfare settles those most culpable will not be held accountable. Shifting the blame to other institutions has already begun and is likely to continue. 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.

Martha Karua: Corruption Has Been Legalized and Sanctioned

By The Elephant

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. Follow us on Twitter.