John Githongo: “Wheels Come Off Kenya’s Embedded Corruption Networks”

From today’s East African, “As thieves fall out, wheels come off Kenya’s embedded corruption networks”:  a must read about the turmoil being caused by the current political environment in which recent scandals are coming much more quickly to light and senior civil servants suspended.

In the meantime, the Business Daily reports “Hidden files expose rot at Lands ministry”, with 12,000 supposedly missing files discovered stashed in the offices of senior civil servants, with another 30,000 still unaccounted for.

Uganda: “Angry Donors Threaten Aid Cut”

From The Observer in Kampala: “Angry Donors Threaten Aid Cut”.

The World Bank Country Director, speaking “on behalf of the donors” funding 30 percent of Uganda’s budget, spoke to key government ministers at an event at which Museveni was expected to attend, after the media was asked to leave. While praising economic progress, she said that the donor group was upset by the failure to make serious progress against corruption to the point of evaluating punitive measures. She also noted the threat posed by high population growth, at 3.2% leading to propulation projections of 100 million by 2050.

Related story at The Standard from Nairobi and The Guardian.

In 2005 The New Vision reported on a confidential World Bank report coauthored by Dr. Joel Barkan, Senior African Governance Advisor.

The reports adds, “Since the Bank cannot weight in explicitly on Uganda’s political process, this is the only mechanism at its disposal [lowering aid levels] to signal its concern. Conversely, the continued provision of high levels of budget support, especially when such support can be diverted into classified budgets and used for political purposes, indirectly involves the Bank in the political process”.

“To continue budgetary support at present levels risks embarrassment to the Bank, especially after it has been warned, not only by this report, but in what is common knowledge and discourse among leading members of the diplomatic community in Kampala,” the report says.

Visiting US Diplomat speaks on corruption, prosecution of post-election violence

The Standard covers Deputy Assistant Secretary of State Karl Wykoff:

The US continued to pile pressure on the Coalition Government for urgency in the implementation of key reforms and decisive action against corruption.
. . . .
Speaking just a day after the second anniversary of the signing of the National Accord, Mr Wyckoff said: “It is important to note that some significant progress has been made-particularly with respect to the constitutional review process and the interim electoral commission, but much more must be done to implement reforms with a much greater sense of urgency.”
. . . .
Wyckoff also reminded Kenya that suspects of post-election violence must be held accountable if Kenya is to avert future occurrence of skirmishes.

“The culture of impunity is critical…. it is critical that perpetrators of the violence be brought to justice,” said Wyckoff.

He further called on the Government to be proactive in protection of witnesses of post-election chaos.
. . . .
Wyckoff, who has been in the region for two weeks conducting extensive consultations in Nairobi and Addis Ababa, Ethiopia, on a wide range of issues, called on the coalition partners to hold a referendum that would not disintegrate the people.

“We urge the coalition leaders to work together to support a new draft constitution and to work towards the holding of a timely referendum, which will help unite the country,” he said.

“Where Are the Global Anti-Corruption Leaders?” asks former GE General Counsel

In The Atlantic, Ben W. Heineman, Jr., the illustrious former general counsel of General Electric, pens a strongly worded criticism of the state of corruption in global business and the state of developed world commitment to combating it.

Of the recent BAE settlement, Heineman notes the years of stonewalling and denials, and the decision by the British government not to pursue the massive bribery case involving BAE sales to Saudi Arabia after key Saudi officials threatened to diminish terrorism cooperation–but also motivated Heineman says by an underlying reason: to protect British jobs and trade. He notes that only after the US initiated its own prosecution did the British act, and says that in spite of the “technical” nature of the charges to which BAE pled, “BAE would not pay $450 million for technical offenses”.

The BAE and Siemens cases are symbols of pervasive corruption across the globe and lack of senior leadership making anti-corruption an international imperative. Bribery and extortion in public sector activities–especially in the developing world–distorts competition, erodes legitimacy and rule of law, impedes economic growth, thwarts building of institutional infrastructure, injures the poor and supports criminals and terrorists who pose a threat to world order. Corruption thus directly and seriously implicates foreign policy, national security, economic, developmental and humanitarian concerns.

. . . .

The BAE and Siemens settlements are cases in point. If these iconic developed world companies had such widespread issues, it is reasonable to think that they are hardly alone. Although both Germany and the U.K. have had laws prohibiting foreign bribery by their multinational corporations since at least 1999, there had been little national enforcement prior to these cases. In both BAE and Siemens, the U.S. (which has a history of strong enforcing laws against foreign bribery) was deeply involved and helped push the companies to a major resolution because of their dependence on the U.S. market. . . .

. . . .

More importantly, a 2009 report by Transparency International, evaluated the enforcement activities of 36 nations which had signed the 1997 OECD Convention on Combating Bribery of Foreign Public Officials and enacted national laws giving it effect. (Disclosure: I am on the board of Transparency International-USA.) That report concluded that only 4 out of 36 countries evaluated are actively enforcing the OECD Anti-Bribery Convention, with moderate enforcement in 11 other countries and little to no enforcement in 21 or more than half. Among the obstacles noted by the report were: antiquated bribery laws, outright political obstruction of investigations, lack of adequate funding for prosecutors or curtailing the powers of investigative magistrates.

This problem is in the developed world (!!), not in the developing world ,where anti-corruption efforts are infinitely more complex given the varying histories and cultures of individual nations. . . .

Heineman identifies committed global leadership, by someone such as the US Secretary of State or the President of the World Bank, as the necessary step to move the developed world to act.

Today’s Corruption News–Education Funds, Rift Valley Railroad, Maize & More

Kenya’s papers today feature lots of corruption stories.  The press should be congratulated for doing a better job of sticking with some of these issues, in some part I think due to the renewed energy and courage shown by civil society.  A certain level of moral support from the donor/diplomatic community probably helps as well.

The KACC has recommended charges against eight officials for a portion of the missing Free Primary Education funds headlines the Daily Nation. The downside of course is the KACC can only recommend–action is in the hands of Attorney General Wako, famously subject to a visa denial for travel to the US due to his record of de facto support for impunity, as announced in last fall’s “tweet” from the US Ambassador.

And speaking of the Attorney General and the Rift Valley Railroad concession scandal, the Daily Nation also reports that Wako, Head of Civil Service Francis Muthaura, Transport PS Cyrus Njiru and Finance PS Joseph Kinyua have been called to appear before Parliament’s Public Investment Committee to answer as to why they disregarded the Committee’s advise that the concession be terminated.  Again, it is positive to see the Parliamentary committee, like the KACC above, push forward in its advisory capacity–but frustrating to have to wonder whether impunity will nonetheless prevail.

And more on the outstanding maize scandal that we have written of previously from the Standard, with more here. PriceWaterhouseCoopers, after being hired at the instance of PM’s office, has issued a report said to recommend that the KACC re-open its investigation, and in particular look at high officials including the PSs in both the PM’s office and in William Ruto’s Ministry of Agriculture. The Daily Nation covers the PwC report here.

The coverage of the report on the maize scandal is a good example of why you have to read both major Kenyan daily papers–as well as the Star if you are in Kenya since it isn’t fully on-line yet.  The Nation may have a degree of journalistic polish that the Standard sometimes lacks (and perhaps less stories that are specifically messed up), but the Standard has a bit more “guts” in some cases–in this case naming the names of the officials in the PwC report rather than, for example “two permanent secretaries”.

Following up on another outstanding matter, the games going on to control the Kenya Airport Authority, the Standard reports that the President’s associate George Muhoho is finally retiring, next month, at the end of the irregular extension of his term granted him by fiat of the Minister of Transportation Ali Cherau Makwere, who’s election has now been voided.

Corruption and Geopolitics

The Economist has highlighted the ongoing competition in Africa, including in Kenya, between Iran and Israel: “A Search For Allies in a Hostile World“.  In the East Africa/Greater Horn region, Sudan is Iran’s key ally and Ethiopia is Israel’s.

With diplomatic battles approaching over sanctions for Iran’s nuclear program in the context of all of the existing competition for influence, resources and business opportunities, the leverage for existing African players to extract corrupt rents are likely to increase. The Kenya Publicity Tour to Washington last week invited the US to once again move away from a strong stand on corruption and move on with greater government to government support and incentives for investment without waiting to see actual reforms in light of the 2007 election debacle.

To date we haven’t seen accountability for the multi-year theft of public education funds that triggered first the UK and then the US to freeze a small amount of education assistance.  While the PM and others are pressing for the resignation of the Education Minister, the funds have gone missing each year of the first Kibaki Administration as well, as indicated in the report from Transparency International.  Removing the current minister (who presumably would remain a Member of Parliament and, if patterns hold, soon enough get another ministerial appointment in another agency) is not a substantive answer.

Likewise, action on the Rift Valley Railroad concession remains elusive and deferred.  And accounting for the “Internally Displaced Funds” associated with the “Internally Displaced Persons” from the post-election violence remains outstanding. And the bills continue to come due, literally, from the Anglo Leasing scandal (you may remember this as the scandal that was supposedly caught in time to prevent major loss to the taxpayers–doesn’t seem to be working out that way).

Key players, at least, in the US government supported Kibaki’s re-election in 2007 in spite of the corruption concerns. Is Kenya better off now? What US interests were actually advanced? In particular, how is the situation in Somalia better now than it was in the fall of 2007? Let’s “don’t get fooled again” and maintain a focus on helping Kenyans who share the values to which we aspire to build a stronger and more prosperous country–by maintaining a strong and steady focus on improved governance and fighting corruption. We have a bad record on the geopolitical gamesmanship in Kenya, in my estimation, and values aside, I don’t think it has worked very well.

More Corruption Headlines

VOA features a story datelined Washington entitled “Kenyan Activist Demands War on the Corrupt“.

The Standard says “KACC goes for big shots in war on vice“.

No specific news on some of the current/recent matters we have followed in the first two months of this blog: missing Public Education funds; Grand Regency sale; Rift Valley Railroad deal; ECK, etc.  A lot less news lately about Mau Forest land, too. But the President has, according to the VOA story, ordered a fresh look at corruption and called a meeting, at which the PM will also speak.  It would appear that the revived US and British attention to the Public Education matter has generated a need for some new optics from the Government of Kenya.  In the past this would suggest that the time is approaching for the donors to move on and get over it–perhaps we will be wiser this time.

Security and Corruption

The Business Daily has it right:

It may be passing off as an ordinary security problem in which the police are taking a whacking for sleeping on the job.

But the repeat discovery of a large stock of arms in a private residence in Narok is a reflection of the grim realities of our economy.

Kenyans should be deeply worried that someone has been able to move such large amounts of dangerous weapons without detection by the country’s rather elaborate security machinery or with its tacit participation.

If indeed it is true that the arms moved without the knowledge of the police, it is largely because our security apparatus has not moved with the times.

The truth is that lucrative but illicit trade in illegal substances such as arms, counterfeits and drugs has to be oiled by large sums of money.

Unless and until the Kenyan government is less corrupt, Kenya will be a place to do business for terrorists and international criminals of other types, and for illicit weapons trade and money laundering. There is a great opportunity in that the interests of Western donors and of Kenyan citizens converge here, as ordinary Kenyans are both victims of criminality and bear the costs of inflation associated with the illicit funds. The change necessary is for the donors to take the long view and get serious about consistent action over a period of years to fight the criminality instead of swinging back and forth among alternative competing priorities.

In the meantime, a new Senate report indicates that funds representing the fruit of corruption in Africa, as well as other parts of the world, continue to enter the US in spite of the post-9/11 crackdown on money laundering.
__________
With its own issues would Kenya really send troops to Somalia as suggested by Foreign Minister Wetangula?

Oops! What Gene Sperling had to say about Kenya’s Education program under the Coalition Government

Now that the US has–very appropriately in my book–moved to join the UK in suspending budgetary assistance for Kenya’s “free” public education program pending accountability for the corruption that has now come to light going back to the early days of the first Kibaki administration–it might be worthwhile to also ask ourselves how we got duped, too.

Here is Gene Sperling, writing in Huffington Post as Director of the Center for Universal Education at the Council on Foreign Relations. (and former National Economic Advisor to President Clinton) in September 2008 after spending a week in Nairobi (excerpts with emphasis added):

And in a bright spot, one area where this coalition government seems truly united is on education. Kenya made international news in 2003 by eliminating the terrible practice of charging even poor parents fees for each child they send to school – a practice that denies tens of millions of your people – especially girls – an education in much of the developing world. The announcement of free education by President Kibaki brought 1 million new children into school in one week! Since then, enrollment has gone from 5.9 million to over 8 million. Now Kenya is taking the pioneering step of eliminating fees for secondary school – even though it will cost the government ten times the amount to cover the cost of secondary school as opposed to primary school. While parents still face the expenses of boarding, uniforms, and travel, the abolition of fees has again led to a surge in enrollment.

While President Kibaki and his first Education Minister George Saitoti – both of the PNU – deserve great credit for pushing the elimination of fees, the Orange Democratic Movement seems just as committed. When I met with Prime Minister Odinga in his Nairobi office, he told me that the same education goals were in the platforms of both parties because “we all agree that education will be the ultimate engine of Kenya’s economic growth.”

The Ministry of Education has garnered international respect through both excellent civil servants like Permanent Secretary Karega Mutahi and Basic Education Secretary George Godia as well as their decentralized and transparent system for dispersing funds to local school districts. Rather than hold the money in the Ministry of Education, Kenya ensures that every shilling gets to the local level by depositing a per-child grant of 1,020 Kenyan Shillings (approximately $15 USD) to local banks accounts for each school. The headmaster is then required to post the amount received in plain view (which I saw firsthand in school after school that I visited) and work more closely with parent committees on how to spend the money that anything I had witnessed in the United States.

While Kenya is stepping up to the plate with serious reforms and the financial commitment to replace lost school fees – including for 4,000 secondary schools – they cannot do it alone. The overwhelming funds needed are for teacher salaries – which typically make up 80% of school budgets. What Kenya most needs from the international community is help with the recurrent costs that would come with hiring the 47,000 new teachers that current Minister of Education Sam Ongeri says Kenya needs to handle the additional three million students while focusing on quality.