Another Shoe Dropping on Education Scandal? If the New Orleans Saints can go to the Superbowl, you never know what can happen!

Revised: Here is link from CapitalFM news covering US suspension of assistance for Kenya’s “free primary education” program pending an outside audit and “actual action” (my term).

Strangely “the big story” on the Daily Nation from midday today U.S. time with the Ambassador’s announcement of this funding suspension is not showing up readily now on the Nation website.

FBI charges 22 over alleged attempt to bribe African defense minister

http://news.bbc.co.uk/2/mobile/americas/8469117.stm

More details in the FT.

This is good news. People actually getting arrested–and before the fact, rather than years later. Note that this involved efforts to sell “small and light arms”. A good bit of State Department security assistance in places like Kenya is to combat traffic in this type of arms.

Also encouraging is the cooperation of UK authorities with those in the US.

Continuing Corruption Story on Primary School Funds

The Standard reports on the numbers disclosed in the Nairobi Star story mentioned in my last post.

via The Standard | Online Edition :: New Sh5.5b puzzle hits Jogoo House school funds.

And make no mistake about how badly needed these funds are. The reality remained during my time in Nairobi in 2007-2008 that even in the capital the public schools were treated by parents as a last resort. Classroom conditions were very poor even where the exteriors were brightly painted, sometimes by advertisers. And of course no electricity. These funds were certainly needed.

Corruption: Kenya’s Cancer

This is a Sunday dose of impassioned moralism. It may not be to your taste.

AFRICOG has come out with a December report on the Maize Scandal. The Star reports that the Public Education Scandal is about to explode, indicating that the amount of directly missing funds is roughly Sh5.5B, with millions taken each year of the program during the whole course of the program! We are talking here about the rich and powerful exploiting hunger and the poverty of children to line their pockets that much more thickly.

This is not a traffic policeman shaking down a middle class driver for lunch money or petty bureaucratic clerk in a postal service. I don’t claim to be an expert on the world–and I am not arguing abstract development theory. Even if people like Ha-Joon Chang, and to a lesser extent Jeffrey Sachs, are right that Westerners from developed nations tend to overemphasize the importance and explanatory role of corruption in overall economic analysis, I think it is still clear that in Kenya today corruption is a metastasizing cancer that will be the death of meaningful democracy if left untreated. The fact that there is no defined “cure” does not mean that we shouldn’t do our best to treat it.

It is a fool’s errand to have high expectations of the kind of people who steal bread from the hungriest and school funds for the poorest–the bottom line is that they just don’t really care about anyone other than themselves. They can be counted on to be immoral or amoral at best and are not going to be actually subject to moral suasion as opposing to pretending. They might on some occasions for whatever reason do things that are desirable–they may have traits like physical courage or resoluteness or articulation skills that prove useful. But they can never be trusted. Likewise, people that steal elections are not democrats–and as the insightful quote in Michaela Wrong’s It’s Our Turn to Eat points out, stealing an election is pretty much the ultimate form of corruption in a democracy: it takes away the very sovereignty of the voting public and steals the most from those who have no other form of power other than the vote.

So what is the treatment? It’s not Tweets, nor, for that matter, blog posts. “Name and shame” doesn’t work where there is no shame. What is required is accountability which means prosecutions and asset seizures. If non-Kenyan actors and institutions want to help they will stop playing Hamlet and decide to consistently be in favor, and act in favor, of this type of actual accountability. The policy of my country, the United States, has been over a period of years, so inconsistent as to be incomprehensible. Likewise the British. France has become a big donor to Kenya for whatever reason–and has spoken some good words, but I haven’t picked up on much in terms of action.

We have arrived now at one of those times when both the US and the UK have shifted some in the direction of expressing dissatisfaction with part of the Kenyan political class in government. We have been here before and they have always in the past “gotten over it” before anyone went to jail or lost his or her ill gotten wealth. Before there was always a distraction or excuse that arose. Some other priority involving some neighboring country perhaps. I certainly hope that those lessons have now been learned. The patient is obviously sick and candy or sugar pills will not take the place of medicine.

Impunity Wins Again under GNU?: Business Daily reports “Pattni Gets Last Laugh in Grand Regency Saga”

The Big Story in Nairobi’s Business Daily reports the “closing yet another window for recovering billions of public money lost through the fraudulent gold export scheme” Goldenburg.

The newspaper has reviewed the reporting of the Central Bank of Kenya and discovered that it has written off Sh1.5B that remained due from a loan secured solely by the former Grand Regency Hotel.

The Business Daily reveals that the Cockar Report–delivered to President Kibaki but yet to be made public–concludes that the sale process was “flawed”, “secret” and “hasty”. The price received appears to reflect a gross undervaluation in that it could have been realized 13 years earlier–who thinks this hotel in downtown Nairobi was worth the same in the early 90s as in the late 00s?. Further, it appears that the Cockar Reports identifies a bidder who would have paid significantly more than the Libyan firm Laico–in fact an amount that would have paid the debt to the CBK in full!

The context: “Another commission, headed by Justice Samuel Bosire, concluded in a 2006 report that Kenya’s economy could have lost a total of Sh158 billion in the Goldenberg Scandal through a web of transactions that involved 487 companies and individuals.”; “Mr Kamlesh Pattni, who was named as a key player in the scam is understood to have surrendered Grand Regency to CBK in a ploy for amnesty from prosecution in the Goldenberg cases.”

Kudos to Business Daily Africa for diligence and solid reporting. Let’s hope they follow-up (in spite of the pressure I am sure they will receive not to).

Since I was working in Nairobi while this was ongoing, I can say that it was an open and obvious scam just from the basic issues that are apparently identified in the Cockar Report: secrecy, haste and an inexplicably low price.

The next question: Why? (in other words, who benefited?). Was this just a charitable impulse to transfer wealth from the Kenyan public to a group of private Libyan investors? Hard to imagine! What reason would the CBK have for selling to Laico for an amount that left a deficiency on the Pattni loan of Sh1.5B if another bidder was willing to pay the full amount and the hotel was probably worth even more? This would benefit neither the creditor nor the debtor. Did the buyers really pay more, in cash or other interests–just to someone else? Why the “haste” after so many years? Certainly the rumors at the time where that the dealmaking was wrapped up in the non-transparent financing of election expenses.

And why do we not have answers now?

As far as Pattni himself goes, it was interesting to see Pattni seem to spend quite a lot of money on his own Parliamentary campaign in Nairobi while getting few votes–and also see his “party” active elsewhere.

A basic rule of financial fraud that I have observed over many years is that if you want to steal and maximize your chances of keeping a whole lot of it if you get caught is that you should steal so much that you have plenty to spread around to “buy peace” afterwards. Sort of “the audacity of greed”.

Vendor Raises Red Flag Over Voter Registry–Business Daily

See important story in Nairobi’s Business Daily Africa reporting on concerns raised by a major UK-based prospective vendor on the tender for software and services for electronic voter registry. In 2007 the ECK voted not to use the technology purchased to report the vote tallies from the constituencies to the central headquarters at the KICC (and the Kreigler Commission essentially let the ECK decline to produce their records regarding this crucial decision made just before the election.) Key Returning Officers turned off their cellphones to drop out of contact at the crucial times. A successful election does not require a $400M project with controversial new technology.

Another Scandal–Business Daily reports looting of Pyrethrum Board

Business Daily:  How Top Managers and Farmers Joined Hands to Loot Parastatal:

“Years of cronyism, official blind eye to looting of farmers’ assets and a veil of monopoly that sneered at every rule in the book are responsible for plunging the State-owned Pyrethrum Board of Kenya (PBK) into oblivion, records show.

A forensic audit adopted by Parliament in February this year, internal audit records and communication between the board’s management and top government officials also suggest that the prosecuting arm of the government may have delayed corruption cases, tacitly abetting a decade-long plunder of the corporation’s resources.  .  .  .”

Githongo to Speak at CSIS Friday: “Prospects for Political Reform”

The African Center for Security Studies and the Africa Program at the Center for Strategic and International Studies will host “Prospects for Political Reform in Kenya: A Discussion with John Githongo, Kenyan anti-corruption campaigner, Moderated by William M. Bellamy, Director of ACSS and former Ambassador to Kenya”

Friday 10:30am-12:00pm at CSIS

Public Event, but RSVP to CSIS Africa Program at africa@csis.org

Space is Limited!

Worth reading Githongo’s June speech in Senegal upon receiving ACCS’s  “African Visionary Award”  here.

Britain willing to help Kenya try graft cases/Daily Nation

Daily Nation – Britain willing to help Kenya try graft cases.

“Help try cases” means provide evidence from ongoing investigations.  These corruption matters would still have to be handled by Kenyan judges and prosecutors.