GRAND CORRUPTION UNDER PRESIDENT MWAI KIBAKI’S WATCH
SCANDAL
DETAILS
ACTION TAKEN
Anglo Leasing
The scandal involves 18 security contracts where a 56.3 Billion Kenya shilling was stolen from the Kenyan taxpayers by "Ghosts" during the tenure of Daniel Arap Moi and Mwai Kibaki.
Money was said to have been wired back by ghost suppliers. Some civil servants charged in never ending courtroom saga. No politicians behind this arrested and charged.
Ken Ren
In the early 1970’s, a decision was made to enter into a joint venture with an American Company to establish a fertiliser processing plant at Mombasa, on the Kenyan Coast. The company was called Ken Ren Chemical and Fertilizer Company. The government was both a shareholder and a guarantor for the factory. The deal collapsed in scandal and the factory was never built. The company ended up in liquidation and embroiled in litigation in Europe. At the heart of parliamentary and public scrutiny, was the role of treasury, then headed by Mwai Kibaki, as Minister of Finance.
In 2007, the government set aside money to pay this debt
Artur Brothers
Following a public outcry resulting from a series of incidents involving the 2 alleged Armenians, including security breach at JKIA, during which they assaulted Customs officials using guns the 2 were subsequently deported in shady circumstances, apparently to escape justice.
President Kibaki instituted a formal inquiry headed by former Commissioner of Police Shadrack Kiruki and received report in August 2006. Todate, the Kiruki Report has not been made public.
Kroll Report
The 110-page report by the international risk consultancy Kroll, lays bare the extent of corruption perpetrated by the family of the former President Daniel Arap Moi through a web of shell companies, secret trusts and frontmen that his entourage used to funnel hundreds of millions of pounds into nearly 30 countries including Britain. The report says that relatives and associates of Mr Moi siphoned off more than £1bn of government money. The assets accumulated included multimillion pound properties in London, New York and South Africa, as well as a 10,000-hectare ranch in Australia and bank accounts containing hundreds of millions of pounds.
The report, commissioned by the Kenyan government, was submitted in 2004, but never acted upon. It details how: · Mr Moi's sons - Philip and Gideon - were reported to be worth £384m and £550m respectively; · His associates colluded with Italian drug barons and printed counterfeit money; · His clique owned a bank in Belgium; · The threat of losing their wealth prompted threats of violence between Mr Moi's family and his political aides; · £4m was used to buy a home in Surrey and £2m to buy a flat in Knightsbridge.
None
Safaricom (Mobitelea)
10% of Telkom (K) Ltd shares in Safaricom were irregularly transferred to Mobitelea Ventures without the consent of Treasury and that of the parent ministry according to the Fifteenth Report of the Public Investments Committee on the accounts of State Corporations 2007.
None
Goldenberg
Scandal involves a Diamond and Gold scam by Kamlesh Pattni during the tenure of Daniel Arap Moi where the tax payer was robbed of Kenya shillings 70 Billion. Commission of Inquiry established to investigate established extent of loss suffered and apportioned responsibility. It also recommended that a list of persons named be subjected to further investigation.
Former Finance Minister G. Saitoti resigned in Feb 2006 following publication of the report. However, in July 2006 the High Court made a decision which effectively dashed hopes for prosecution of those involved in the Goldenberg scam. The ruling quashed Bosire commission’s findings, remarks and decisions and made order of prohibition directing AG prohibiting the filing and prosecution of criminal charges against Prof. Saitoti. Curiously the AG did not appeal the court’s decision even though he had observed that the “judgment had turned well known and settled principles of constitutional, administrative, criminal and legal jusrisprudence topsy turvy” and that contrary to well settled principles of judicial review, the judges ruled that they had power and jurisdiction to review, re-evaluate, correct and substitute the factual findings of the Bosire Commission as if [it] was a trial court and they were the appellate court…”
12-million shilling lawyers
In February 2006 the Solicitor General, Mr. Wanjuki Muchemi, paid 6 lawyers (Dr. Gibson Kamau Kuria, Mr. Waweru Gatonye, Mr. Njoroge Regeru, Ms. Lucy Kambuni, Mr. Kioko Kilukumi and Mr. Fred Ngatia) Sh 72 million (Sh 12 million each) as legal fees in November 2005 to handle a case arising from the constitutional review crisis. The case lasted only 5 days. Mr. Muchemi did not follow procurement regulations in order to retain the 6 lawyers, and on November 7-8, 2005, after an objection was raised in writing by the Accounts Controller, Mr. Charles Mubweka, gave his authority to effect payment in the absence of the supporting documents, including the minutes of the tendering committee of the State Law Office
Sanctioning the appointment of outside counsel and approving the fees; and a copy of the Local Service Order issued as required by the regulations. The Attorney General subsequently defended this procurement in Parliament in June 2006.
AG defended these payments in parliament
Triton Oil
Triton Petroleum Ltd won the October 2008 importation tender for oil that was scheduled to be offloaded in December 2008. The company, though a small player in the oil industry with a market share of less than 1percent, had signed a Collateral Financing Agreement with KPC in July 2004. The company reportedly imported a consignment of 56,000 metric tons in October 2008 which fell short of the monthly requirement of about 80,000 tonnes. At the time, KPC was reportedly implementing an advanced computerised system on product accounting and stock movement within its network. The implementation was incomplete and the system could not provide live data. Triton, in collusion with KPC staff, appears to have taken advantage of this and come up with a scheme that allowed it to draw oil from the KPC system without paying for it. Further, KPC officers clandestinely released 126.4 million litres to the company without the consent of financiers. To achieve this, KPC staff reportedly falsified records to show that the stocks were still with KPC and misled the financiers that their stocks were intact while they had in fact already been released to Triton. KPC officials working in the operations department reportedly wrote letters to financiers (Kenya Commercial Bank, Glencore of the UK and Fortis Bank of France) providing them with false information to the effect that all was well and that the stocks were intact. Upon realising or suspecting the information supplied by KPC to be false, the financiers responded by directing that no more product be released to Triton. The regional fuel shortage prompted the KPC management to order an audit of oil stocks which was to include a reconciliation of amounts of stocks held in trust on behalf of respective financiers. It was found that stocks which ought to have been held in trust had been clandestinely released to Triton between November 2007 and November 2008. Once KPC informed the financiers that there were no stocks held in trust for them, One of the main financiers, KCB, moved to court and in late December 2008, Triton was put under receivership. By the time it went bust, Triton owed financiers KES 7.6 billion among them- KCB (owed 1.85b), Glencore (2.3b), Fortis of France (906m), and Emirates National Oil Company (2.5b). Its managing director Yagnesh Devani then reportedly fled the country. Media reports however suggest that officials at the Ministry of Energy were calling KPCs’ scheduling office directly with instructions to release fuel to preferred oil companies. Reports also indicate that oil marketers had for a long time complained of criminal activities taking place at KPC
Nothing
Ndung’u Report
Despite the limited time within which to carry out its work, the Ndung’u Commission carried out a thorough inquiry, documenting its findings in an impressive and extensive report. The Commission’s findings aim to reverse unlawful
actions and ensure land reform through creating an enabling policy and legal framework. At the heart of the Commission’s report was the recommendation that all titles for illegally acquired land. The Ndung’u team discovered more than 200,000 illegal or irregular title deeds created and registered between 1963 and 2002. The report was released only after almost a year of public pressure for the president to do so
In spite of Ndung’u Commission’s recommendations, Kibaki went ahead, in Nov. 2005, to issue title deeds to illegal settlers in Mau. He has since been blowing hot and cold in the efforts to restore Mau.
Last week, the Minister for Lands revoked some titles even as some ministers and prominent personalities tried to sell these illegally and irregularly acquired lands back to the government.
Maize
Hon. William Ruto, the Minister for Agriculture, came under fire in Parliament for his purported role in the scandal. Hon. Bonny Khalwale accused Hon. Ruto of flouting the Public Officer Ethics Act (POEA) by disregarding its provisions, in particular, Sections 12(4)C, 12(4)D, 17 and 19 and related regulations in the discharge of his duties. He has also been named in the Price Waterhouse Coopers probe. In one particular instance, he is alleged to have supported a company he was associated with to receive a contract to supply the NCPB with gunny bags. About 15 members of the current Parliament, some of them ministers and senior government officials, were implicated as having written letters to the NCPB to allocate maize to their associates, friends or constituents.
Government ordered audit of the maize scam by Price Waterhouse Coopers
The PM ordered 3-month suspension of Minister Ruto only for President Kibaki to nullify.
Big Fish, Small Fry
Between 2003 and 2008, KACC had prosecuted only 61 cases of which only 14 ended in conviction. A closer look shows that the hand of justice came heavily on the small fry while the “big fish” were easily left off the hook. One of the most prominent persons convicted was Dr Margaret Gachara, a former director of the National Aids Control Council, convicted in 27th August 2004 for abuse of office and corruption involving Sh 21 million and sentenced to only 1 year imprisonment. She was pardoned by President Kibaki on 11th December (three-and-a-half months later). Ketan Somiaia and his co-accused, the former General Manager of NBK were jailed for 2 years each for stealing Sh 1.4 million dollars. The 2 were released months later after an appellate decision in their favour. These 2 cases contrast with that of Cornelius Ayaga Seme, who was sentenced to 21 years imprisonment for forgery involving less than Sh 1 million.
Disparities do not relate only to sentencing. Some accused persons are favoured even during prosecution. For example, Dr. Mohammed Abdi Isahakia, a former Director General of the National Museums of Kenya ( and until last week the PS in OPM) was discharged from offence of stealing Sh 2.6 million from NMK ostensibly because 3 crucial witnesses had left the country and that Dr. Isahakia had offered to repay (and had offered a cheque in restitution)
Dr Gachara was jailed for 3 months for stealing Sh 21 million
Dr Isahakia was later appointed PS and is now at the centre of another corruption and abuse of office scandal
KPLC
On November 5th 2001, KPLC published a tender in the press for the supply of treated wood poles. Although the tender did not go through the KPLC’s Central Tender Committee, a contract for the supply of 37,500 treated timber poles worth over US$ 1.2 million (C&F - Cost and Freight) was awarded, by Samuel Gichuru, to a South African company called Treated Timber Products (PTY) about a year later, in November 2002. The poles were of medium size, but different lengths: 9.8m, 11m, and 12.2m. Following the execution of the contract, Treated Timber Products was given Local Purchase Order (LPO) No. 715985.
It was the practice of KPLC to deal with foreign companies through local agents. This is not in and of itself remarkable. What is unusual is the fact that the local agents who dealt with KPLC were often related to management or politically connected. In this 2002 importation of treated timber poles, the local agent for Treated Timber Products according to the Musyoka Report was a Mr. Kinyua Gichoki, who was the brother of the KPLC Human Resource Manager, Ms.
Bilha Gichoki. In November 2003, KPLC invited tenders for the supply of 75,999 wood poles, through local press advertisements, which stated the required dimensions and quantities as follows: 10m (47,837 poles); 11m (6,482); 20m (20,324); 14m (1,256); 15m (100) bringing a total of 75,999 poles.
Only four suppliers were recommended for financial evaluation, namely: H.K. Builders and General Construction Limited (fronting for Treated Timber Products); Gilgil Telecommunications Industries, Riveton Limited and Primia Investment Limited. The CTC ruled that Treated Timber Products was the only company that had met the technical compliance parameters, even though at this stage it and the other three bidders had passed that stage of evaluation, and were only to be assessed on their financial bids. This amounted to an irregular disqualification of all but Treated Timber Products. The relevant CTC Minute No. 46/04 records that the lowest bidder was Riveton Limited which bid Ksh 382,948,099 inclusive of VAT. Despite this, the CTC awarded the contract to Treated Timber Products at a cost of Ksh 467,607, 930 exclusive of value added tax (VAT – which in Kenya at that time was 16%). Thus KPLC was committed to pay Ksh 542,425,198.80.
The Managing Director, Mr. Oduor, later objected to the award to Treated Timber Products, on the basis that the bid was in excess of the KPLC’s budgetary provision for the purchase of poles of Ksh 386,700,200 inclusive of VAT for the year 2003/04. Apparently because of the collapse of the previous tender attempt, the KPLC management, worried about an impending shortage of wood poles, approached the CTC afresh for authority for “stop-gap” procurement. On March 11th 2004, the CTC discussed a presentation by management on this option which involved buying 23,625 wood poles, of various dimensions, directly from Treated Timber Products. Management had according to this presentation, secured a commitment that the poles would be sold at 2001 prices. This would result in a saving of 37% compared to a purchase at the prices quoted during the aborted 2004 tender. The CTC records its go-ahead in Minute No. 82/05 of the same date for the purchase of 23,625 wood poles at a total cost of South African Rand 10,234,998 (C&F). Again this was subject to the approval of the Directorate of Public Procurement for single sourcing. 11 days later, on March 22nd 2004, the Permanent Secretary in the Ministry of Finance declined in writing to approve the stopgap procurement. Instead he directed KPLC to uphold its earlier CTC award but to negotiate the quantities to fit within the available budget of Kshs. 336 million. The contract that was signed and the orders placed with Treated Timber Products were inexplicably inflated. Thus, despite the CTC approving an order of only 45, 950 poles Treated Timber Products was somehow contracted to deliver 69,575 wood poles in batches between May and November 2004 with an extended delivery date of February 2005. Subsequently, there were other single source procurement from TTP whose local agent was now a company called Fourways Company Limited, reportedly owned by then MP Sammy Weya. The poles supplied were also found not to have met KEBS standards. Similar scams were also noted in the procurement of cables and transformers. It was estimated that close to Sh 2.5 billion was lost through these schemes
None. Mr. Nyoike, the Energy PS who was said to be at the centre of the scam is still in office.
Isaiah 65:17-Look! I am creating new heavens and a new earth, and no one will even think about the old ones anymore