Tag Archives: scandal

UK Cuts Education Aid Once Again in Lastest Round on Kenyan Education Scandals (Updated)

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Update, June 16: The Irish Times reports that the U.K. will “push hard” for return of its share of stolen education aid funds.

The country’s finance minister Uhuru Kenyatta said the names of officials investigated had been given to the police, but analysts said the chances of prosecutions were low.

“Handing over reports to the criminal investigations department of the Kenyan police force is a good way of shelving investigations,” said Mwalimu Mati, chief executive officer at the corruption watchdog Mars Group Kenya. “It is hard to see how such a discredited police force can bring about justice when they are still investing in Anglo Leasing and Goldenberg.”

The Goldenberg scandal, which cost the country over 10 per cent of GDP, dates back to the early 1990s. It saw the government of Kenya pay out hundreds of millions of dollars of public money in a bogus gold export scheme. No government officials have been prosecuted for their part in it.

Despite coming to power in December 2002 on a strong anti-graft platform, President Mwai Kibaki has failed to stamp out corruption in east Africa’s largest economy. Kenya has slipped down the rankings of Transparency International’s 2010 corruption perceptions index, falling to 154 out of 178 countries.

Last year the government said it could be losing $4 billion, nearly one-third of the national budget, to kickbacks and other forms of corruption.

“Kenya is good at talking about corruption cases,” Teresa Omondi, the deputy executive director of Transparency International – Kenya, said, “but not at prosecuting anyone in them. The fact that no stringent action is ever taken means there is a risk of us hearing about all this again next year.”

“UK cuts education aid by Sh300m”, Daily Nation:

The government was on Tuesday put under pressure to rein in corruption within its ranks, with the United Kingdom announcing a Sh300 million education budget cut.

British High Commissioner Rob Macaire said that they will continue funding education, but only through non-governmental channels until the Ministry of Education adopted prudent financial management systems.

This year, the British Government has allocated Sh1.3 billion to fund various educational programmes through these channels.

“It is shocking that civil servants in trusted positions in the government would steal such an amount of money.

“We share in the outrage of Kenyans about this, because there is UK taxpayers money involved too,” Mr Macaire said.

He was responding to fresh investigations by Treasury over a Sh4.2 billion fraud in the Education ministry.

“This should not be allowed, neither tolerated,” he said, adding that the culprits should be prosecuted.

So far, the Department for International Development (DfID) has supplied 320,000 children in slums with textbooks in 1,100 selected schools.

Mr Mike Harrison, deputy director at DfID, said unless financial transactions are electronic, they would not fund the ministry.

“We need some concrete proof that the financial management in the ministry are turned around.

“Electronic money transfer will have to be at the heart of the system unlike today where paper transfer is easily doctored.”

.  .  .  .

See, “Treasury audit reveals Sh5.8bn fraud”, Daily Nation.  “Education and Medical Services staff probed over Sh 6.2bn loss“, The Star.

“What are your views on corruption?”

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[From “Envoy Predicts Free and Fair Election”, The Standard, December 18, 2007–an interview with U.S. Ambassador Michael Ranneberger nine days before the Kenyan election]

Q: What are your views on corruption?

A: Lots of people look at Kenya and say lots of big cases have not been resolved because of Anglo Leasing and Goldenberg. I always point out that we have lots of corruption even in the US. These cases take a lot of time to bring to justice. We had the famous Enron case. It took over four years to resolve in a system that works efficiently, yet only a couple of people were convicted. These things take a long time.

There has been substantial effort to fight corruption in Kenya and the award the country won for Civil Service reform [from the World Bank] is a pointer to that effect. The fact that the Civil Service is more professional than ever before is progress as are the new procurement laws recently put in place and the freedom of the Press to investigate and expose corruption. More, of course, needs to be done.

The economy has grown by 7 per cent. How much of that has actually trickled down to the people will again be determined by time.

A career diplomat, Ranneberger has been in Kenya for close to one-and-a-half years, and has served in Europe, Latin America and Africa.

This was a full page “exclusive” feature interview in The Standard nine days before the 2007 Kenyan election. “Envoy predicts free and fair election”, December 18, 2007.

During previous days The Standard had been running new revelations about corruption in the Kibaki administration from documents from exiled former Kenya Anti-Corruption Commission chairman John Githongo. Rumor had it that Githongo wanted to be able to return to Kenya and might want to be able to return to government after the election, although I had no knowledge one way or the other about whether that was true. Githongo’s personal adventure trying to address corruption in the Kibaki administration is the subject of Michela Wrong’s It’s Our Turn to Eat. Wrong rightly noted in her book that stealing the election was the ultimate corruption.

Ranneberger has somewhat reinvented his public persona in Kenya the last couple of years, in that he now openly criticizes and challenges Kenyan politicians and is outspoken against corruption. Readers of this blog will know that I agree with him, now, on corruption and that corruption is nothing new. I wish him “happy trails” as he completes his tenure in Nairobi and moves on.

The latest in the Rift Valley Railroad saga–how business is done in Kenya

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New status in Rift Valley Railroad saga: Transcentury connections win the day.

Jaindi Kisero in The East African

“High-profile Kenyan investment house, Transcentury Ltd has earned a guaranteed position of chair of the board of the newly restructured Rift Valley Railways Investments, under a new deal struck with wealthy Egyptian private equity firm, the Citadel Group.

Rift Valley Railways runs the 1,200-kilometre metre gauge between Mombasa and Kampala under a 25 – year concession. The arrangement is spelt out in a new shareholders agreement with Citadel, which has been seen by The EastAfrican.

Hammered after months of lengthy negotiations, the agreement is largely viewed by insiders as representing a tactical retreat by the wealthy Egyptian equity fund to accommodate the interests of the politically- influential local shareholders of TransCentury.”

Working on(or over?) the Railroad–“What is emerging as one of Kenya’s most infamous privatisation scandals” and “the new scramble for Africa”

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In the category of: Now They Tell Us—

The Daily Nation is replete with stories and commentary on the Mombasa-Kampala railroad and the various claims and disputes among the parties to the Rift Valley Railroad concession, granted in 2005 for a term of 25 years and reporting about the original “wheeling and dealing” that set up the current failure of the operation.

Today’s installment asserts “Future of Rail Firm to be Decided Wednesday” at a meeting between the Kenyan and Ugandan governments and feuding shareholders.

When Kibera slum dwellers uprooted the railroad tracks during the 2008 post-election violence, it seemed to be taken by some from the West as confirmation of a violent and uncontrollable nature of the Opposition, as well as perhaps by some as consistent with certain ethnic stereotypes–and was said to be be a major international incident due to reduced supplies to Uganda, Rwanda and Burundi. Unfortunately, it would appear that even greater property damage has been done–albeit more genteelly and more discretely, by better dressed people with a lot more money–over a period of years in the privatization. I say nothing in defense of vandalism here, but just simply point out that some forms of property destruction get condemned while others get financed.

How plan to privatize railways became Kenya’s public sector reform nightmare; Desire to save face traunched the reality that Kenya and Uganda were handing over a national asset in a fundamentally flawed deal

The World Bank extended a Sh6 billion loan to pay off the sacked workers. But, despite all these concessions, Mr Puffet turned up with an empty pocket on November 1.

According to experts who have been involved in such deals, it would have been possible to detect that Mr Puffet did not have money right from the start if the due diligence conducted was thorough and if the Treasury had demanded for guarantees that the money is available.

To save the situation, the governments and the International Finance Corporation (IFC), which is owned by the World Bank, hastily amended the contracts by introducing two legal devices that would enable Mr Puffet to raise the money required in 30 days before he could be handed over the railway.

Mr Puffet and his financial adviser from PWC, Mr Vishal Agarwal, started by knocking on the usual doors looking for the cash at firms such as major private equity shops and investment houses, but many could not touch the deal — despite the world then being awash with excess money — because either the window to close the deal was too short, or they were put off by the political risk and the shareholding squabbles that plagued Rift Valley Railways (RVR).

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Another Scandal–Business Daily reports looting of Pyrethrum Board

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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.  .  .  .”