Ex-ministers among 15 to be charged with masterminding scam

At least 15 individuals, including former Cabinet ministers, will be arrested and charged this week in connection with the Anglo Leasing scandal, the Sunday Nation can reveal.

Sources at the Ethics and Anti-Corruption Commission (EACC) and the Office of the Director of Public Prosecutions (DPP) said the individuals feature in three case files that investigators have been working on jointly.

The files touch on contracts involving the procurement of security material for the Postal Corporation of Kenya (PCK), security equipment for the police and early warning systems for the Meteorological department.

On Saturday, EACC chairman Mumo Matemu told the Sunday Nation he was confident “the commission had finally unlocked the Anglo Leasing puzzle” twelve years after its details were tabled in Parliament by then Ntonyiri MP Maoka Maore.

“For the first time we have put a face to the Anglo Leasing scam which has been of public interest for over a decade. At least now Kenyans can see who misused the office,” Mr Matemu said.

The Sunday Nation has established that a sitting senator, former permanent secretaries, retired politicians, directors of supply companies, senior government officials and players in the private sector are among those to be taken to court over a scandal that saw Kenyan taxpayers lose billions of shillings in the scam.

Anglo Leasing involved government tenders —  many linked to security contracts — with some involving inflated costs, ghost companies and payments made for work that had not been done.

Cases linked to the scandal have over the years been in and out of court in Kenya and in Europe but have not been fully concluded.

The key individuals mentioned in the past in connection with the scandal that rocked the Narc administration of Mwai Kibaki that came to power in 2003 are businessmen Mr Deepak Kamani, Mr Annure Pereira, Mr Amin Juma, Dr Merlyn Kettering and Mrs Ludmilla Katuschenko.

CONTRACTS

There were 18 Anglo Leasing-type contracts, but the specific files investigators have been poring over to enable prosecution are the broadband network (for PCK), Vsat broadband spectrum (PCK) projects, equipment for the Kenya Police and the National Early Warning Security System (NEWSS) multi-channel security telecommunication system for the Administration Police and for the Meteorological Department.

When the scandal broke in 2003 Mr David Mwiraria, a close ally of President Kibaki, was the minister for Finance. His permanent secretary was David Magari who was charged and acquitted by the High Court.

Apart from Mr Mwiraria, Mr Chris Murungaru was the minister for Internal Security with Mr Dave Mwangi as his permanent secretary.

At the height of the scandal, Mr Mwiraria, Mr Murungaru and then Justice and Constitutional Affairs minister Kiraitu Murungi were forced out of government by President Kibaki. However, they returned after three months of investigation.

The Vsat project was under the Transport ministry when former Vice-President and UDF party leader Mr Musalia Mudavadi was the minister. However, when the scandal broke out in 2003, he had lost an election and was neither an MP nor a minister.

The NEWSS project was signed when Mr Chris Obure was Finance minister. The senior government officials and the businessmen mentioned have over the years denied any wrongdoing.

On Saturday, Mr Maore told the Sunday Nation the time had come for the truth to be unearthed and for Kenyans to know who “ate their money” in this mega scandal.

“The good thing about truth is that it does not corrode even with the passage of time. The time has come to face the law,” Mr Maore said in a telephone interview.

In a statement to the newsroom, Mr Matemu said the remaining two files would be forwarded to the DPP later this month.

“The commission is currently addressing issues raised by DPP through the joint teams in respect of two other files which will similarly be re-submitted within two weeks to ODPP in accordance with section 35 of the Anti-Corruption and Economic Crimes Act,” said Mr Matemu.

NARROWED DOWN

Several witnesses and suspects recorded their statements with EACC, and investigators narrowed down on 15 who are alleged to have been directly involved in the scam.

According to a source close to the investigation, the individuals are said to have made boardroom decisions to purchase unnecessary equipment costing taxpayers billions of shillings. The 15 are also alleged to have colluded with foreign companies in purchasing the equipment in an unprocedural manner.

For example, EACC was investigating how police equipment was supposedly purchased yet there was no documentation for the users.

“The need for something is generated by the user department. In this case there was no protocol observed and policy makers were procuring things even without the knowledge of those who are said to use them,” a source conversant with the investigations told the Sunday Nation.

He added: “Another thing is some of these procurement deals were being done without the approval by Parliament, and the whistle-blower there was MP Maoka Maore who raised the alarm that due diligence was not being followed in purchasing the equipment. Mutula Kilonzo (who died in 2013) then baptised it ‘Anglo Fleecing’ and that is when the case caught the public eye.”

Last year, the ghosts of the scandal that former Ethics permanent secretary John Githongo called a “skunk”, returned to haunt the Jubilee Government.

President Uhuru Kenyatta made a decision to pay a Sh1.43 billion debt linked to two Anglo Leasing companies — First Mercantile Securities Corporation and Universal Satspace Corporation — which had obtained a court ruling in London that required the Kenya to make payments for the contracts.

There were fears that failure to pay the money would have crippled Kenya’s bid for the Eurobond in the international market and exposed the country’s assets abroad to seizure. The decision provoked a chain reaction leading to the conclusion of the three files.

There have been earlier attempts to prosecute Anglo Leasing suspects that did not prosper for lack of follow through.

The Kibaki Government went ahead to settle contracts associated with Mr Pereira among them the Spanish naval ship.

In 2011, the Cabinet of then President Kibaki resolved to set up a team to open talks with countries willing to help in resolving the matter.

The government sought to recover close to Sh11 billion. Then, the government resolved to do asset tracing, recovery and restitution of the funds to Kenya. Some of the contracts were executed in Switzerland, from where Kenya sought Mutual Legal Assistance.

In December, the Sunday Nation got in touch with the Office of the Attorney-General of Switzerland (OAG) to ascertain the details of the Mutual Legal Assistance which EACC is depending on for its case.

The spokeswoman Jeannette Balmer declined to comment on the issue, citing confidentiality rules, but referred us to a statement posted on their website.

In the statement OAG said that they “have successfully identified and frozen several bank accounts in Switzerland. Financial transfers were assessed and the results of the comprehensive cash flow analysis of cross-border links led the OAG to request mutual legal assistance from various states. England, Scotland and Jersey have already provided the OAG with a considerable amount of useful information.”

The OAG said they had instituted criminal proceedings on the individuals concerned and passed the information they have to the Attorney-General Githu Muigai.

“The OAG has previously granted mutual legal assistance to Kenya, providing the Kenya Anti-Corruption Commission with documents on Swiss links to the Anglo Leasing affair and on the associated funds that were identified in Switzerland,” said the statement.