How brokers and MPs conspire to rip off Kenyans

The Sh28 billion Moi Referral and Training Hospital controversy has exposed how tenderpreneurs, public servants and politicians conspire to steal from Kenyans.

The saga, which has sucked in Deputy President William Ruto, ODM leader Raila Odinga, hospital director John Kibosia and businessman Herbert Ojwang, is being investigated by Parliament’s Public Investments Committee.

Mr Ojwang claims he brokered a deal in which a Chinese company was to upgrade the hospital at a cost of Sh17 billion but was edged out by the DP who ordered instead that a new facility be built at a cost of Sh28 billion. He claimed the extra Sh11 billion expenditure was unnecessary.

Mr Ruto has admitted involvement in the saga, saying he cancelled the upgrade because the Sh17 billion was too much to spend on an upgrade and could build a new hospital.

He also accused Mr Odinga of dragging his name into corruption scandals, saying the project was conceived during his time as PM.

In a tape presented to the PIC, Mr Ojwang reels off a list of those who were to get a cut from the hospital deal. It includes names of who is who in Kenya’s political and tender broking worlds.

Even though no money has yet been lost in the project, investigations show that watchdog committees are helpless in stopping many of the deals pushed by brokers.

PATTERN OF IMPUNITY

Investigations into the operations of the Public Accounts and Investments Committees, show a pattern of impunity in which once the tenderpreneurs steal the money, they use their political connections to frustrate efforts to take action against them.

Indeed, it is as a result of this that the Ababu Namwamba-led Public Accounts Committee was recently disbanded as it investigated questionable deals after some of its members were accused of taking bribes to protect those under scrutiny.

When Rarieda MP Nicholas Gumbo was elected chairman of the reconstituted PAC a fortnight ago, he appeared to be well aware of the task ahead of him.

“I want to look at this as a new beginning for the committee,” he told the media immediately he trounced his colleague, Suba MP John Mbadi to the post. “We have a huge task to restore the credibility and image of the committee. Our constant endeavour shall always be to be above suspicion like the proverbial Caesar’s wife.”

Mr Gumbo’s statement is predictable. It draws from a template his predecessors have referred to. But many expect business as usual. That Parliament, for as long as they can remember is a house of deals, where tenderpreneurs call the shots, making oversight an exercise in futility.

PAC’s recommendations are routinely ignored by the Executive. Allegations of bribery to doctor reports, the kind that saw the disbandment of the Namwamba team, are legion.

Dr Boni Khalwale, then Ikolomani MP, was the chairman of the committee five years ago. As members compiled its report at a secluded resort in the Coast, a group of suspicious fellows arrived. They appeared burdened by heavy briefcases.

CONSCIOUS

Dr Khalwale was conscious about their business. He hurriedly summoned members, convened a news conference and abandoned the committee’s itinerary on that day.

“We were discussing the irregular award of a printing of currency notes contract that saw the country lose Sh1.8 billion of taxpayers’ money,” says Dr Khalwale, now the Kakamega senator. They (suspicious fellows) had come to bribe the PAC not to expose the malfeasance.

“Their plan aborted,” he told this writer. A couple of years earlier, the then PAC chairman Omingo Magara (now chairman, Centre for Multiparty Democracy) also beat back an attempt by gutsy mandarins to have him conceal their role in swindling the public purse.

Yet with tragic irony, Khalwale and Magara’s effort may have come to naught, so to speak. Yes, they isolated corruption, exposed sleazy bureaucrats and asked the government to close all avenues of corruption. But not much happened.

So, what happens upon realisation that your hard work is all in vain? Perhaps more dramatic, do you expect a corrupt government to easily expose itself, take action against itself, and summon all its energies to close all avenues it uses to steal money from its own people?

For MPs known to savour the frills of corruption – oscillating between rent-seeking and cash-for-questions — these questions are weighty.

The fragrance of a bribe cannot be that foul. Thus, it wasn’t surprising that the PAC headed by Namwamba failed to resist the taste of a financial sweetener.

“None of these committees have been clean,” a long-serving MP told this writer, and sought that his comment be treated as “anonymous” for he didn’t want to antagonise colleagues. “We have direct bribes, lack of quorum owing to bizarre absenteeism, deceitful alteration of eventual reports, and committees avoiding accounts perceived controversial.”

“In (Kenya) Parliament, business is tied with politics; it is always about making deals. As a result, oversight bodies are compromised from the word go”, according to lawyer Bobby Mkangi, one of the key brains that drew up the 2010 Constitution.

ALLURE OF CORRUPTION

Indeed, as noted above, the Khalwale and Magara teams may not have bent to the allure of corruption. Yet, in the final analysis, they suffered the same fate as the Namwamba group — futility.

The report on the so-called Hustler’s Jet is yet to be slotted for debate more than a year since it was tabled in Parliament. And this is not an isolated incident, it is the norm.

This writer trawled through two decades of parliamentary oversight reports, and the subsequent analysis dampens any hope Kenyans may have in the PAC and PIC

Why? A number of reasons explain the vanity: Political partisanship, bribery and unethical practice at the hands of oversight MPs, sloppiness and tardiness in the operations of oversight committees, non-implementation of PIC/PAC recommendations, inability of MPs to interrogate and analyse money matters, and frustration at the hands of the Executive.

MPs have grabbed every available chance to shield themselves and their corrupt allies from scrutiny, sought bribes, and whitewashed State sleaze.

“There are … allegations of rampant horse-trading in these committees where MPs agree to do one thing or another to further their personal business or other vested interests” according to a Africog report, Public Participation and Parliamentary Oversight.

Most of the scandals that have struck this country — Goldenberg, Ken Ren Fertilizer and Anglo Leasing — would have been avoided had Parliament taken its oversight role seriously. For instance, as far back as the early 1980s, the PAC had isolated “export compensation” as the avenue through which crooks were swindling the taxpayer. They earned big from fictitious exports and goods ineligible for compensation.

But the PAC headed by Adams Karauri merely swallowed a lame excuse offered by the Treasury mandarins — that the fraud arose from the “failure to observe the relevant provisions of the operative Acts of Parliament”.

In a report tabled on December 23, 1987, Karauri’s group simply “noted that recoveries are being made from companies which were illegally compensated”. The culprit companies were never mentioned nor corrupt bureaucrats sanctioned. Five years later, Goldenberg struck and Kenya lost up to Sh150 billion.

The curse of the Namwamba team — “confidential” withdrawals of Sh2.8 billion by officials in the Office of the President — appears horrific. But there is a pattern to this. As early as 1994/5, mandarins operated two “special accounts” at the Central Bank of Kenya in breach of the Constitution.

The PAC headed by Michael Wamalwa recommended that the accounts be closed. Strangely, it declined to order the prosecution of those who created and operated them.

There were tricks akin to the Sh10 billion “computer error”. But PAC merely labelled them “misposting” and/or, Exchequer receipt by error”.

GOVERNMENT OBSTINANCY

Inexplicably, the oversight committees never investigated or made a follow up to these “errors”.

Mwai Kibaki, the PAC head in the late 1990s, and Raila Odinga, a member of the PIC during the mid-1990s, kept lashing out at the government’s obstinacy to parliamentary oversight. “The committee noted with grave concern that some of its recommendations take too long to be implemented while others are not implemented at all,” Kibaki told Parliament.

But when both partnered in power in 2007, they did little to facilitate the implementation of oversight reports. It was business as usual.

Interestingly, Kibaki (then Leader of Opposition) and Raila (then MP, Langata), Michael Wamalwa (then leader, Ford Kenya) may have used their positions in the PAC and PIC to sway the course of their respective committees’ focus.

There appears to have been an attempt by the Kibaki committee to avoid the mention of Ken Ren, the scandal in which his office, the Treasury, had in 1978 committed the country to a deceitful contract with foreign cons who promised to establish a fertiliser factory.

Either by design or omission, the subsequent reports hardly delved into this scandal.

The Sh100-million factory was never built. Kenya is now repaying Sh5 billion after the International Arbitration Court slapped the country with a huge bill following the non-payment of compensation to the banks that lent the money swindled by the foreign cons. The last tranche of repayment, Sh2.5 billion will be made at the end of next month.

INVESTIGATE HIMSELF

“Having been a long-serving member of the Executive, and given that many of the corrupt incidents were done at the hands of the Executive, it was difficult for him to investigate himself. He did nothing,” says Khalwale whose PAC eventually lifted the lid off Ken Ren.

Had Parliament, PAC and PIC been serious in uncovering Ken Ren, it would have summoned Kibaki, Charles Njonjo (the then Attorney-General) and Daniel arap Moi (whose government failed to launch a defence against compensation claims). Even when Kenya won $3 million (Sh285 million) compensation at the International Arbitration Court, the Kanu government failed to claim the award.

In hindsight, Ken Ren may have given the Anglo Leasing architects the idea to invade the public vault. Anglo Leasing is an eerie copy of Ken Ren only for the huge sums involved in the former.

In 1999, Odinga, a member of PIC, salvaged the career of Treasury Permanent Secretary Charles Mbindyo. PIC had agreed to have Mbindyo barred from holding public office after he was adversely mentioned in a scandal that cost the country millions.

During the drafting of the report, Odinga marshalled PIC members Mwangi Githiomi (chairman), Matere Keriri and John Sambu to reverse the earlier agreement. In the final analysis, PIC rescued Mbindyo — at least until Goldenberg hit him.

Interestingly, it was almost the same time Mbindyo’s name was featuring in the Goldenberg rip-off. In fact, the PAC and PIC appeared to be reading from different scripts.

While Odinga and the PIC moved to unhook Mbindyo, the PAC was loudly mentioning him, vice president George Saitoti, administrator Karuga Koinange Koinange and minister Musalia Mudavadi in the Goldenberg scandal.

In the case of Wamalwa, he found himself embroiled in a scandal involving businessman Ketan Somaia. The PAC had accused Somaia of failing to deliver on a Sh300 million arms contract.

Wamalwa, being the then PAC chairman, claimed the businessman, owner of Dolphins Ltd, failed to honour the summons three times. But, it now emerges, without the knowledge of his PAC members, he dispatched a letter to Somaia asking him not to appear. Somaia’s lawyers would later use the letter to prove that the businessman had been cleared of wrongdoing in Kenya.

But the chicanery transcended individuals. Despite the obvious corruption in State corporations, oversight bodies excitedly gave positive reviews for questionable managements of KPTC, KPC, KNTC, Turkwel Gorge.

“The committee noted that this was a clean report and commends the chief executive for the efforts made during the year under review,” PAC said about KPLC’s 1995 accounts.

KPLC’s financial health was “clean” and therefore “no further action required”, it said.

Yet KPLC was in financial tatters, its fortunes sustained by a brazen media and Parliament that appeared to conceal the financial rot from the public eye. And in the case of KPTC, a number of PIC reports used to commend the then managing director Kipng’eno Arap Ngeny “for the efforts being made” to ensure the corporation met its mandate, defying the apparent heavy weight of the financial mismanagement that would leave it on its knees.

It was the same case with KARI, even when it was losing chunks of land to powerful individuals. But perhaps more theatrical was a PAC 1995 observation that the scandal-ridden NSSF had streamlined its system “to avoid overpricing” on its projects.

Self-interest is reflected in sessions. Turnout varies based on the sensitivity of the matter in question and the profile of the bureaucrats being investigated — and perhaps the inherent opportunity to make a killing.

For instance, on April 28, 2014, when the PAC discussed accounts of the Judiciary, the session was near house full — 19 out of 27 members. But the preceding sitting that looked into the accounts of the office of the Deputy President, Ministry of Home Affairs, drew just 10 members.

ONLY NINE MEMBERS

Only nine members discussed accounts of the Ministry of Cooperatives on April 16, 2014. However, 21 attended the meeting that looked into Anglo Leasing and the public debt.

The attendance was dismal during discussions of accounts of Ministry of Gender, Children and Social Development. Ministry of Energy and Petroleum, Judiciary, Ministry of Transport and Infrastructure, Kenya Airports Authority and Lapsset were key attractions, on average drawing 20 members.

“It is shameful, very disappointing that Parliament can go this low,” says Magara.

PAC’s “lack of bite undermines the realisation of the full benefits of the audit function”, according to Free for All? Misuse of funds at the Electoral Commission of Kenya, a report by Africog.

Going through the various oversight reports, one is left with a feeling that the watchdog committees are mere conveyor belts of State deceit. They run and publish statements by accounting officers without even attempting to establish their veracity.

The same Parliament that whines about non-implementation of its reports has failed to come up with legislation to force the government to implement the recommendations. “It’s a clear case of the lack of political will,” says CMD’s Magara. “Those who are supposed to lift the stone are instead sitting on it.”

OLD HABITS

“The major question lingering in the minds of many Kenyans is: Can we trust Parliament to deliver this country from corruption now that it’s accused of practising it?” CMD once questioned in a report. And Prof Mkangi sums it, thus: “Our style of politics is our undoing.

We have adopted, and choose to stick with, a legislature laden with old habits. It is a product of corruption and tribalism, which is why we have lawmakers engaged in blind partisanship — such leads to the so-called tyranny of numbers”.
Game of musical chairs

CMD recommends that “every individual MP must … have good working knowledge of public finance, its processes and procedures and be able to know when the system is not working and what should be done to remedy this”.

“We need a total revolution. What we are seeing is a game of musical chairs,” says Magara.

According to Prof Mkangi, “We must create the will and guts to effect a wholesome change in elected leadership, we have got a long way to go. 

Let us put (MPs) on their toes. If something is not right, let’s not tire of pointing it out. We must also change our attitudes; we must become revolutionists who see beyond tribe and money. If Parliament fails, it means we have failed, and so we must start with changing how we vote. Let us begin by bringing in clean leaders.”

Some of the MPs interviewed for this report claim that the “eating” happens because Kenya lacks a specific leadership and integrity code for legislators.

They say that for parliamentary oversight to be effective, the PAC and PIC must cooperate with the Ethics and Anti-Corruption Commission. They must play complementary roles in information gathering and investigations.

This is because the commission has the requisite investigative and analytical expertise that MPs lack.