Scandals that Have Rocked Kenya from Jomo to Uhuru

Kenya under
democracy has transformed from “a moderately corrupt society to a pervasively
corrupt society”.

This is in a
report by the Africog which adds that corruption has moved stepwise from “petty
or bureaucratic” to “grand or political” and eventually to state capture.

With this
shift, the state has become a “zone for personalised appropriation”.

Jomo Kenyatta’s Maize Scandal

The report; State Capture: Inside Kenya’s Inability to
fight Corruption details how politics and corruption have always been
intimates in Kenya since independence.

“Little wonder
that the first commission of inquiry appointed after independence, the 1965
Chanan Singh Maize Commission of Inquiry, was triggered by a corruption scandal
involving Paul Ngei, the then Minister for Marketing and Cooperatives.”

The report
highlights that Ngei had permitted his wife Emma Ngei, through her company Uhuru
Millers of Kangundo (commonly referred to at the time as Emma Stores) to
directly buy maize from farmers, bypassing the Maize Marketing Board, which he
chaired.

“This was
despite the fact that the law did not allow Kenyans to buy maize straight from
farmers which would be (cheaper than buying from the government). Worse still,
Ms Ngei was permitted to buy 2,000 bags of maize, but she refused to pay for
them, marking payment demands as ‘return to sender’. She refused to remit the differential
between the farmer’s and the government prices to the Board, which too was
against the law.”

The report
notes that the widespread speculation in maize by well-connected individuals,
combined with official failure to import more maize in time led eventually to a
national shortage.

President Jomo
Kenyatta then appointed a commission of inquiry to investigate the cause of the
maize shortage.

“Ngei, because
of his relationship with Uhuru Millers (owned by his wife) was briefly
suspended from the Cabinet, but was later reinstated,” notes the report.

With this,
the scandal that is unga politics began.

“Maize, then,
before and since has had a long career in both politics and corruption.”

This was
among many other scandals which hit the Kenyatta senior government.

With his
failure to uphold the rule of law, the report notes that that first scandal set
the tone for future graft where the politically connected rig the system to
benefit themselves, their relatives and their cronies.

“When they
are outed, they resort to inconclusive methods of investigation such as
commissions of inquiry, task forces or inept prosecutions.”

Moi’s State Capture

The reports
highlights notes that the first corruption scandal encompassing major
characteristics of state capture was the Turkwel Gorge hydro-electric power
project between 1986 and 1991.

Many aspects of
the process of contracting for this project entailed rigging and repurposing legal
processes for the benefit of President Daniel Moi and his cronies.

According to
an internal European Commission Memorandum of March 1986 written by Achim
Kratz, the then Commission’s delegate to Kenya, the contract price for the
project was more than double the amount Kenya’s government would have paid
under an international competitive tender.

The memo
stated that the government knew that Spie Batignolles, the French contractor’s
price was extortionate, but hired them nevertheless, “because of high personal
advantages”.

“Those “personal
advantages” were millions of dollars paid to President Moi and to the then Minister
of Energy, Nicholas Biwott.”

Moreover,
companies associated with people close to Moi and Moi’s family were
sub-contracted to execute many elements of the Spie Batignolles contract.

The study
says that some of the lessons learnt from the Turkwel Gorge saga on repurposing
state institutions and lawful processes to extract regime and personal gain
would be applied with a vengeance to the first unambiguous case of state
capture: the Goldenberg scandal.

“Goldenberg
and other post-1992 state capture scandals marked a watershed in corruption
politics: that is, “a shift from a politics of state-led control” to “a
politics of competitive aggression, the principal victim of which has been the
state itself”.”

In this
dispensation, politics “has become a pursuit of ever faster forms of
enrichment”.

“These
scandals challenge both the theory of democratic consolidation and the supposed
‘curative’ effects of democracy on political corruption.”

Notably, Kenya
under democracy has transformed from “a moderately corrupt society to a
pervasively corrupt society” and corruption has moved stepwise from “petty or
bureaucratic” to “grand or political” and eventually to state capture. With
this shift, the state has become a “zone for personalised appropriation”.

The most
infamous scandal under Moi was the Goldenberg which led to Kenya losing an
estimated Ksh 158.3 billion which was transacted with 487 companies and
individuals.

Goldenberg
International, jointly owned by Kamlesh Pattni who now runs a church and the
then director of the special branch, (Kenya’s secret service) James Kanyotu, oversaw
the deals that defrauded Kenyans.

“The total
cost of the scandal is unknown, but some estimates are that up to 10% of Kenya’s
GDP was lost.

Kibaki’s Goldenberg scandal

The study
notes that the scandals have been in successive governments and in 2003, when President
Mwai Kibaki succeeded Daniel arap Moi, he quickly set up a commission of
inquiry into the Goldenberg scandal.

But his
government was not immune and at the same time he was setting up to investigate
Moi, his cronies were busy siphoning monies out of Kenya under the Anglo
Leasing scandal.

The 2003
Anglo Leasing scandal was a series of security related scandals involving 18
state security contracts. All these were collectively worth about US$770
million (Kshs 55 billion).

“Thirteen of
the eighteen contracts were made under President Moi while the other five after
2002, under President Mwai Kibaki. The true identities and whereabouts of the
companies remained unclear. Though the immediate investigation that blew open
the scandal involved the Anglo Leasing and Finance Company, in truth the
scandal involved many more companies owned by the same set of individuals:
Deepak Kamani; Anura Perera; Amin Juma; Merlyn Kettering and Ludmilla
Katuschenko.”

The Public
Accounts Committee (PAC) investigating the scandal was ironically chaired by
Uhuru Kenyatta.

Uhuru’s Eurobond Scandal

Less than a
year after he was elected president in March 2013, Uhuru Kenyatta went to the international
money markets to issue Kenya’s first sovereign bond worth US$2.75 billion.

This was done
in two tranches. The first issue raised US$2 billion (Kshs176 billion at the
time) and the second another US$815 million (Kshs 74 billion) for a total of
US$2.8 billion (Kshs 250 billion).

The government
said that the money would be used to reduce official borrowing from the
domestic market which would spur private investment by lowering interest rates.

“According to
an analysis by economist, David Ndii, the government executed two transactions
from the offshore account into which the US$2 billion had been credited. It
paid off a pending loan of US$604 million (Kshs 53 billion) and then
transferred US$394 million (Kshs 35 billion) to the exchequer. That left
US$1.002 billion (Kshs 88 billion) in that account. The government has never
accounted for this money.”

The study
says, “When inconsistencies were pointed out the government responded with both
lies and insults. The lies were that up
to Kshs 120 billion had been used partly to pay pending bills to road
contractors and partly for budget support. But as Ndii points out, the
recurrent budget for the 2014/2015 financial year was funded by domestic
revenues: the government raised Kshs 1.106 trillion in revenues, of which Kshs
229 billion was transferred to the counties. That left Kshs 877 billion for national
government functions. The national government’s recurrent budget for that year
was Kshs 897 billion, a mere Kshs 20 billion more than the revenue, reflecting
no inflow of the Kshs 120 billion as claimed. According to this logic, the
national government required only Ksh 20 billion more than what it had earned
through revenue, so there was no way it could have used the Ksh 88 billion from
the bond.”

The scandals
are just a few of those that managed to hit the headlines on an international
scale. Many more have happened and being investigated under Uhuru.

However, a lot remains to be seen on his resolve to right the wrongs that have been meted against Kenyans by consecutive governments starting with his father’s.

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