USAID Inspector General should take a hard look at Kenya’s election procurements supported by U.S. taxpayers

4292493510_a3a02344a7_o The successful prosecution of Smith & Ouzman, Ltd. and two of its officers by the U.K. Serious Fraud Office for paying bribes to Kenyan election officials to obtain contracts with Kenya’s Independent Electoral and Boundaries Commission (IEBC) should be a wake-up call in Washington.  Smith & Ouzman Chairman Christopher John Smith and Sales and Marketing Director Nicholas Charles Smith were sentenced last week and sentencing of the corporation is upcoming.

Ironically, perhaps, “capacity building” and procurement systems, along with the subsequently abandoned electronic results transmission system, were touted by U.S. Ambassador Ranneberger as features of the U.S. pre-election support in Kenya in 2007:

* “Developing the capacity of the Electoral Commission of Kenya (ECK) lies at the  heart of our strategy.  The USG funded International Foundation for Election Systems (IFES) has been providing support to the ECK since late 2001.  Activities focus on providing appropriate technology for more efficient and transparent elections administration while improving the skills of the ECK technical staff.  This support additionally includes capacity building and technical assistance to support election administration.  Technical assistance includes computerization of the Procurement and Supplies Department, which is responsible for printing and distributing election materials.  Assistance will also support implementation of the ECK’s restructuring plan, strengthening logistics capacity, and accelerating the transmission and display of results.”

From “Lessons for Kenya’s 2012 elections from the truth trickling out about 2007-New Cables From FOIA (Part One)” quoting a December 14, 2007 Ranneberger cable describing U.S. preparations for the Kenyan election.

For the 2013 election, I have a copy of one last minute USAID procurement through IFES for the Kenyan IEBC related to the failed electronic results transmission system; I would assume there were other USAID procurements involved for the IEBC.  Notably, the Supreme Court of Kenya found that the main cause of the failure of the electronic results transmission system and the electronic voter identification system appeared to be procurement “squabbles” among IEBC members. “It is, indeed, likely, that the acquisition process was marked by competing interests involving impropriety, or even criminality: and we recommend that this matter be entrusted to the relevant State agency, for further investigation and possible prosecution.”   “Thoughts on Kenya’s Supreme Court opinion” April 13, 2013.  See also, “Why would we trust the IEBC vote tally when they engaged on fraudulent procurement processes for key technology?”, March 24, 2013.

For a detailed narrative and links on the U.K. Serious Fraud Office case, see Corruption Watch-UK/Trial Monitoring: “Chickens come home to roost: the Smith and Ouzman African bribery case”:

The most serious allegations relate to 7 contracts with the IIEC in Kenya between 2009-2010, worth £1.37 million, where S&O made unusually high commission payments of between 27% and 37% of the contract price. Part of prosecution’s case was that the commission of £380,859 over 18 months paid to the agent, Trevy James Oyombra, was exorbitant, and clearly designed to include payments for officials.

The contracts in Kenya included ballot papers and voter ID cards for By-Elections, 18 million voter registration cards, Referendum ballot papers, and other products relating to elections, such as card pouches, OMR forms, ultraviolet lights. It was a feature of several of these contracts that the S&O subcontracted out the printing work to other companies, in one case to a Chinese company that delivered the goods for less than half the cost of the contract price.

This raises questions about whether S&O were compliant with procurement rules and whether it compromised the security and integrity of the electoral process by subcontracting.

Additionally, on several contracts, S&O delivered significantly less papers than they were contracted to do raising the question of whether the integrity of the electoral process was compromised. It was also a feature of some of these contracts that prices were inflated significantly after award of contract. In all the contracts, the alleged bribes were paid for by the Kenyan tax payers, as the cost of commission was reflected in the contract price.

The specific contracts were as follows:

  • June 2009 – Shinyalu and Bomachoge By-Election. S&O were to provide voter ID cards, and ballot papers – although in the end they provided only 142,000 papers against the 200,000 ordered.
  • January 2010 – 18 million voter registration cards. Once S&O had been awarded the contract they subcontracted the production of half the forms to another company.
  • March 2010 – contract for electors’ card pouches which S&O subcontracted to a Chinese company who delivered them for less than half of the contract price.
  • May-July 2010 – three different By-Election ballot paper contracts (South Mugirango, Matuga and Civil By-Elections) – where the contract price in each case was increased substantially (sometimes by 50%) after award of contract to permit bribes to be paid. The agent advised S&O against providing “chicken” to visitors to their factory in 2010 as there were other officials not from the IIEC who he said they shouldn’t give “the wrong picture” – undermining the defence’s argument that the company was just doing things the “African way”.  Significantly the company again delivered less quantities of ballot papers than were required in each of these three contracts – in the case of the Civic By-Elections some 40,000 less than ordered.
  • July 2010 – a contract to provide 14.6 million Referendum Ballot Papers in which S&O worked out an uplift per ballot paper to factor in the bribery.
  • July 2010 – 1.5 million OMR correction forms and 1000 nomination forms in May.
  • July-December 2010 – ultra violet lights and other Parliamentary and Civil Ballot Papers.

Electoral officials at the IIEC were on several occasions described by the agent, Trevy, as trying to make money before they left the IIEC and went back into government. The agent described the officials at on stage as anxious and “broke”, and “they are desperate for the chicken”. The agent also said that officials told him that S&O needed to “be discrete since all peoples eyes and the government intelligence are watching their every move even on the phone to ensure transparency”.

The Kenyan officials named in court as recipients of payments were as follows: IIEC: Kenneth Karani (chief procurement officer); David Chirchir (IIEC Commissioner); James Oswago (IIEC Chief Electoral Officer); Dena; Kennedy Nyaundi (Commissioner); Gladys Boss Shollei (Deputy CEO); Issack Hassan; Hamida, Tororey and Sang.

Several of these officials are still in government: David Chirchir is current Energy Minister in government, and Issack Hassan is the current Chairman of the Independent Electoral and Boundaries Commission (IEBC) which took over from the IIEC.

The scope of the successfully prosecuted bribes to Kenyan officials, in particular the Kenyan Interim Independent Electoral Commission, now Independent Electoral and Boundaries Commission, was such as to suggest the corruption was not unique by time or geography.

Although USAID, as referenced in the State Department cable quoted above, has provided millions for the operations of the Electoral Commission of Kenya and its successors on a regularized basis since embedding IFES in the Electoral Commission of Kenya, ECK,  in 2001, I do not know whether there was any direct U.S. funding, or U.S. funding through a “basket” administered through UNDP or otherwise, implicated in the specific acquisitions involved in the prosecution.  At the least, given the level of U.S. funding for the Kenyan elections through this time period, the U.S. indirectly underwrote the ability of the Kenyan election officials to corruptly overpay for those things the U.S. was not helping to pay for.

The time period during which the offenses at issue in this U.K. prosecution occurred was 1 November 2006 through 31 December 2010.  Also during this time, for instance, IFES awarded  a more than $3.4M competitive procurement for USAID to Smith & Ouzman for polling booths for Sudan’s National Election Commission for 2010 elections.  Although there may be nothing at all irregular, it is worth noting that Smith & Ouzman has generally been identified as a “printing company” and its election related products and services marketed on that basis.

From a 2008 IFES election materials “buyer’s guide”:

Smith & Ouzman, Limited

Brampton Road
Eastbourne, Sussex BN22 9AH
UNITED KINGDOM
Contact: Christopher Smith, Managing Director
Tel: +44 1323-52-4000
Toll Free: 0800-298-2911 (UK only)
Fax: +44 1323-52-4024
elections@smith-ouzman.com

Providing the Ballot — Supporting Democracy Worldwide Smith & Ouzman, Limited, has been established for more than 60 years and is the globally trusted name in security printing, providing tailored secure ballot solutions to electoral commissions and authorities from Afghanistan to Zimbabwe, and many places in between. Our team of professional staff has considerable experience in election projects and ensures that ballot papers incorporate devices to protect against electoral fraud and are packed for distribution directly to polling stations. Smith & Ouzman, Limited is the company that provides you with security, integrity and reliability. ● Election Experience Afghanistan, ballot papers; Benin, indelible ink; Botswana, ballot papers; European Union, ballot papers, postal ballots; Ghana, equipment; Kenya, ballot papers, registration forms, voters cards; Kosovo, ballot papers, registration forms, postal ballots; Malawi, ballot papers, UV lamps; Mauritania, ballot papers; Namibia, ballot papers; Nigeria, ballot papers; Somaliland, ballot papers, indelible ink; Tanzania, indelible ink, security envelopes; Uganda, ballot papers, indelible ink; United Kingdom, ballot papers, poll cards, registration forms, postal ballots; Zambia, ballot papers, indelible ink; Zimbabwe, ballot papers.

According to the  IFES 2012 and 2013 Annual Reports, Smith & Ouzman was a corporate donor to IFES.

“The West” is not a Country either–the U.S. and U.K. do not have the same interests in Kenya

The Star reports that:

President Uhuru Kenyatta is set to hold talks with UK’s Prime Minister David Cameron during his three day visit, the first to a western capital since his election.

Human rights activists in the UK are reportedly organising to hold demonstrations to protest what they say is a ‘hypocritical manner’ manner in which the British government has made a U-turn against in its stand towards the Kenyan government.

In the U.K., unlike in the U.S., the Kenyan election stirred a significant discussion in the national legislature, in this case the House of Commons. Here is the link to the Hansard or transcript from March 20.

The biggest difference in interests is that Kenya, a British colony within the lifetimes of current political leaders, is important to the British economy. Kenya is not very important to the U.S. economy. It might be someday, and the U.S. would notionally like to be more engaged economically in East Africa, and not only because the Chinese are; nonetheless, as of today the level of trade and investment is not a higher order immediate interest for the United States.

Further, in the global system that the U.S. has helped create, the U.S. does not really have the same relationships to even the largest companies that may be headquartered in the U.S. as the British and some other European nations still have with their business champions. Not to say that the State Department doesn’t want to sell Boeing v. Airbus, but there is no American equivalent of BAE, for example. Further, it is British rather than American companies that are the key players in Kenya in banking and finance, tea, horticulture, tobacco, printing, public relations consulting, etc.

As of the last few years, roughly 60% of the roughly 5,000 Americans living in Kenya, according to the State Department, were connected to missionary work. The British, not as much as far as I know. Moreover, there are perhaps five times as many British passport holders in Kenya as Americans.

The United States has a reported official established presence of more than two dozen federal agencies in Kenya, so we do have interests, but they are heavily weighted toward “global” security matters, along with international crime/drugs, etc., and what we might call diplomatic and security logistics. In other words, it is convenient for people to locate in and transit out of Nairobi to support a variety of functions that don’t relate uniquely to Kenya. Its an easier place to fly in and out of and has lifestyle appeal, along with being a locus of the same type of thing for people in other agencies, from other governments and international organizations. It is not that this geographic interest doesn’t matter, its just that it really is not of first order importance. A lot of the aid programs that we conduct in Kenya could easily be moved to other countries that are even more in need if less convenient, for instance.

When al Qaeda wanted to attack Americans and U.S. interests in East Africa, they bombed our Embassies in Kenya and Tanzania–not some critical infrastructure or something or someplace else that the Embassies are there to protect.

Kenya is a tourist destination with direct flights of modest duration from the U.K., but still no U.S. direct flights. In the U.S., Kenya is on the tourism “map” along with other various other locations in Africa, but at a much lower relative level; the British are Kenya’s greatest source of tourists. The British newspapers cover Kenya in a completely different way, and to a much greater extent, than American papers.

I have referred to Kenya as Americans’ favorite African country, but this is within the context of the whole “Africa is a Country” perception problem. It was one of the British princes who had the bad form to be quoted to the effect that “Americans don’t do geography”. The British still know their way around their former empire and distinguish Kenya from its neighbors much more readily than do Americans.

Certainly the British MPs wax eloquent about the key importance of training the British military in Kenya, noting that this was said to have played a major role in allowing Britain to mount its Falklands Islands operations some thirty years ago. Of course, realistically, the UK military in this century is primarily derivative and it is hard to see that the world would be so much different if the British had to train in one of the other former colonies–the U.S. for instance–instead of in Kenya. Military training in Kenya is surely good for British political and military morale, but i think it is the economic issues that really make Kenya uniquely important for the UK, whereas for the U.S. the scales tip overwhelming to the “security” direction.

Obviously the International Criminal Court is another area of difference. The British are members, along with other Western European nations, whereas the U.S. is with the Chinese and Russians in standing outside (whether we are nominally favorable or nominally derogatory seems to depend on which of our parties is in power but we seem to have a fixed commitment to stay out). In this sense, the election of Uhuru Kenyatta and William Ruto is in one particular respect inconvenient for the British in a way that is not as challenging for the United States, but given the ordinary primacy of the specific over the general, and the immediate dollar or pound over longer term security in democratic politics, it is not really surprising that the UK has been more aggressive and quicker in seeking publicly to “get right” with Uhuru Kenyatta following his elevation to the Kenyan Presidency than has the United States.