Tag Archives: public records

Grand railroad corruption: Kenya’s Daily Nation drops expose of grossly inflated pricing and alarming details from “secret” SGR contracts

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A vital “must read” from the Daily Nation confirms that in spite of Kenyan president Uhuru Kenyatta’s promise to release the contracts for the truncated Standard Gauge Railroad project, the Government of Kenya has been withholding the documents concerned about meeting public records obligations. It is said that Kenya signed the undertakings with Chinese state-owned corporations rather than the Chinese State as such, and that the documents include secrecy provisions that the lawyers are interpreting to conflict with Kenyan law as to the Governments obligations to its own citizens for public contracting.

The story details item after item of hugely inflated prices for components such as generators, supplies, machinery and equipment:

This explains how Kenya ended up paying two times more for a diesel train than what Tanzania negotiated for an electric train. A comparison of the costs shows that Tanzania is building an electric rail at half the price of Kenya’s diesel SGR line.

TANZANIA’S FASTER

At $1.92 billion, which translates to about Sh192 billion at current exchange rates, for the 422 kilometres, Tanzania’s line is not just cheaper; being electric, it’s designed to support a maximum speed of 160km/hour for passenger trains and 120km/hour for freight.

This pales in comparison to Kenya’s line, whose passenger trains have a maximum speed of 120km/hour with freight hauliers doing 80km/hour at best.

Kenya opted for diesel-powered engine that can be upgraded into electric in future.

It is the results of this greed and negligence that taxpayers are now paying for.

OPERATION COSTS

Currently, the revenues generated from the passenger and cargo services on the track cannot meet the operation costs, estimated at Sh1.5 billion a month against average sales of only Sh841 million.

Meanwhile, Kenyans transporters who have allegedly been hurt by Kenyan restrictions intended to forcibly subsidize the non-competitive costs of the Chinese-operated SGR, are seeking the contracts in court. Likewise, the civil society coalition Okoa Mombasa has filed a formal records request as a precursor to a suit if the documents continue to be withheld.

Readers may remember previous reporting of a leaked Auditor General documents indicating that Chinese firms may have been given a security interest in Kenya Port Authority assets and property to secure the loans for these inflated costs. From Maritime Executive in December 2018:

Kenya runs the risk of losing control of the Port of Mombasa if it should default on loans from state financial institution China Exim Bank, according to a new report from Kenya’s auditor general. The terms of a $2.3 billion loan for Kenya Railways Corporation (KRC) specify that the port’s assets are collateral, and they are not protected by Kenya’s sovereign immunity due to a waiver in the contract. 

KRC accepted the multi-billion-dollar loan in order to build the Mombasa-Nairobi standard gauge railway (SGR), with construction services provided by China Roads and Bridges Corporation (CRBC), a division of state-owned conglomerate China Communications Construction Company (CCCC).

“The payment arrangement agreement substantively means that the Authority’s revenue would be used to pay the Government of Kenya’s debt to China Exim bank if the minimum volumes required for [rail] consignment are not met,” auditor F.T. Kimani wrote. “The China Exim bank would become a principle over KPA if KRC defaults in its obligations.”

In addition, any dispute with China Exim Bank would be handled through an arbitration process in China, not in Kenyan courts. The auditor general expressed concern that the port authority had not disclosed these arrangements in its financial statements. 

The Auditor General’s term expired before publication of a final report and has been left vacant, conveniently for freedom of action and ability to avoid disclosure by Kenya’s political officials.

The more information that comes to light the more it would appear that the uneconomical nature of the “white elephant” megaproject was baked in from early stages and does not look to be readily resolvable without exterior finance, renegotiation, write down or other intervention.

Meanwhile, The Star covers a report by the Tax Justice Network that Kenya’s financial sector is well designed to hide corruption as the second most secretive in Africa:

Kenya’s financial sector is the among most secretive globally, according to a new report  by Tax Justice Network.

The sector has been ranked the second most rigid in Africa after Algeria and among the top 30 in the world in the latest Financial Secrecy Index of 2020.

The annual index by Tax Justice Network (TJN) has scored Kenya’s secrecy rate at 76 per cent, meaning the country is a fertile market to stash ill-gotten private financial wealth and other illicit financial flows (IFFs).

It took a village to get Secretary Clinton’s public records–but the lack of a culture of legal compliance within the State Dept saddens me 

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The release this week of the report by the Office of the Inspector General for the State Department regarding Email Records Management at the Office of the Secretary debunks for anyone who did not have enough background to know better the various arguments that Secretary Clinton’s use of a private email system from a server in her home in New York was remotely plausibly compliant with public records requirements applicable to all public business in the State Department.

As a State Department public records requestor for the material involving my work in Kenya, it is certainly dispiriting to see how these obligations have been addressed.

Kudos to the Office of the Inspector General of the State Department for solid and challenging work in vindicating the public interest by investigating and reporting to the rest of our government and the public regarding failures of senior leadership at the State Department to adhere to applicable standards for public records.  Thanks to private litigants, the courts and the OIG, we can say that in some senses “the system worked” and we are getting much of the information that we are entitled to as Americans about the work being done in our name.

For years the crucial State OIG sat vacant, and when I submitted my “hotline” complaint to the controversial Acting OIG early in the Obama Administration about issues related to interference with democracy assistance agreements to support the failed Kenyan election, the complaint was shunted to the State Department’s Africa Bureau itself without any protection for me as a reporting source or any apparent investigation.  So this new investigation and report shows progress.

Now, however, there needs to be some serious soul searching within the State Department as to why so many people ducked out, took a pass or actively facilitated an “opt out” by “the corner office” of clear requirements regarding the records of how the public’s business was being conducted.

And why it has taken so long, so much public expense, and so much outside legal intervention to get to the public basic facts of how the State Department operated throughout the last administration.

The State Department has been America’s most prestigious employer.  This is embarassing and needs to be fixed.

It is all made worse, not better, by the fact that many people like me expect to have no competitive morally acceptable alternative choice in the next American presidential race than the very same politician who put us all through all of this as Secretary of State.

Secretary Clinton, what is the problem, here?  Are your friends, advisors, subordinates afraid for some reason to help you understand and navigate your basic legal responsibilities in conducting public business?  If so, why?  Is that not something you can fix if you make it a priority?  Is it not something that is dangerous not to fix if you are to be president?

It astounds me that you seem to have thought somehow that this whole alternative record keeping system would remain secret.  That was surely magical thinking.  Aside from the law and compliance issues, how could the brilliant, accomplished and loyal people around you fail to burst that bubble?

Your country, and our democratic friends, need you to “straighten up and fly right.”

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John Wesley

Hillary Clinton, Scott Gration and “public private” e-mail at the State Department

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The news in today’s New York Times that Secretary of State Clinton did not use a government e-mail account during her service in office, but rather handled her official e-mail communication through one or more “private” accounts is a disappointment. Cabinet level officials are not entitled to simply exempt themselves from the full demands of government records and freedom of information laws.

This is one of those areas where we need to “walk the talk” if we are going to provide effective leadership on open governance and rule of law.

One of the things that makes this especially disappointing is that this problem came up prominently in the Bush Administration where a large number of officials in the White House were using a non-government system through the Republican Natiional Committee. The company I worked for at the time was involved in dealing with the mess of trying to recover public records involved in White House e-mail over a period of years. It appears likely that Mrs. Clinton will be the only candidate for president next year with much actual foreign policy experience, which many voters might consider to have quite a lot of weight in light of our experiences with inexperienced presidents over the past fifteen years. Unfortunately, this public records situation seems to be a case where readily available learning from past problems was not applied.

A couple of other points: first, it seems quite striking that Ambassador Scott Gration was severely criticized by the State Department’s Office of the Inspector General, in the lead up to his resignation, under Secretary Clinton, for his use of insecure private e-mail accounts; second, if the Secretary of State was during her four years in office not using an official e-mail account at all, it seems to strain credibility to think that this mode of operation was not understood and effectively acquiesced in by a whole lot of other people in government.

Based on the reporting it appears that the records have been identified and preserved and will be available. I also recognize that the way that most of us use e-mail is a difficult match with the requirements of government records and freedom of information laws and that there will inevitably be issues, challenges and disputes in certain areas. Nonetheless, if we are to have a system based on the rule of law and a government “of laws, not of men”, the highest federal officials are no more entitled to simply opt out of the system than are, say, the members of a local school board.

OIG Inspection Embassy Nairobi Kenya August 2012:

He has willfully disregarded Department regulations for the use of commercial email for official government business, including front channel from the Assistant Secretary for Diplomatic Security against such practice, which he asserted to the OIG team he had not seen. (This topic is addressed later in the report.)

Freedom of Information Series (Part Eleven): Better to Learn More Lessons from Kenya’s Last Election After the Next One?

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Back last May I had checked in with the State Department’s Freedom of Information Office about the status of outstanding documents from my 2009 FOIA requests regarding the 2007 Kenya elections.

At that time the FOIA Office wrote me that State Department documents about the IRI and USAID Exit Poll had finally been received from the Africa Bureau, presumably including the U.S. Embassy in Kenya, in addition to just the Central Records in Washington. (From what I had been told by the FOIA Office previously, the Africa Bureau did not respond for well more than two years following my original FOIA submission.) The estimated additional time to review and release documents was six months, to November 30, 2012.

November 30 came and went with no documents. i wrote to request release on an expedited basis due to the new elections upcoming but got no response. Checking back I was eventually given a new date of May 2013, after the new Kenyan elections.

A lot of people in a variety of capacities in the U.S. government, or otherwise funded by U.S. taxpayers, are working on matters involving the March Kenya elections. Likewise, from other donor governments and international organizations. And of course Kenyans who bore the actual effects of the disaster in the last elections have the most at stake in the new elections. Why further delay disclosing and addressing the documentary record from 2007?

Impunity for election fraud in 2007 makes the 2013 Kenya elections riskier. Even though there will be no accountability now, Americans and Kenyans should at least know as much as possible about what happened.

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