Only stiff sentences can curb graft

What you need to know:

  • Relevant institutions need to be adequately resourced and trained to investigate and prosecute corruption and fraud.
  • Punishing corruption may remove the incentive and discourage rationalising in favour of corruption, but it does not remove the opportunity.
  • Technology can and should also be used to more effectively monitor transactions, for example through data analytics.
  • The government and regulators must implement strong anti-money laundering measures so that even where the opportunity to defraud exists, the opportunity to extract, transfer and enjoy the proceeds of the crime is removed.

Corruption has probably been the most discussed topic in Kenya in recent months. It appears to have become so prevalent, so insurmountable that many are considering surrender as the only remaining option.  

So, is there a silver bullet against corruption? Has anyone successfully fought this “sugar” that Pope Francis advised against when he visited Kenya?

“Corruption” has been defined in various ways, largely pointing to dishonest or fraudulent conduct. Most people will rightfully recognise bribery, fraud, embezzlement and abuse of office as corrupt practices. Many will, however, debate whether jumping a queue is corruption or simply bad behaviour.

In reviewing how other nations have tackled corruption, the USA may be a good place to start. The Foreign Corrupt Practices Act (FCPA) is probably the best known US anti-corruption initiative.

Enacted in 1977, it became even more ominous in 1998 when its anti-bribery provisions were amended to include foreign firms and persons who cause corrupt payments within the US.

The US government and regulators have not been shy in fining entities that violate the FCPA with one company having been fined $800 million (Sh82bn) in 2008.

Ten years after the FCPA and following public dissatisfaction with anti-fraud measures in the UK, the UK government in 1987 enacted the Criminal Justice Act.

This Act created the Serious Fraud Office (SFO) and gave it powers to investigate and prosecute serious or complex fraud and corruption.

The UK Anti-bribery Act of 2010 was later passed to deal specifically with bribery. Kenyans will be familiar with the work of the SFO as relates to at least two recent cases that have made headlines locally.

FIGHT CORRUPTION

More recently, the 18th Communist Party of China National Congress of 2012, resolved that there was a severe need to fight corruption. Since then, over 100,000 corruption cases have been prosecuted.

Where the US has used huge fines as punishment, China has handed down harsh jail terms. In 2013, for instance, China dissolved the Railways ministry and sentenced its former minister to death, later commuted to a life sentence.

Whereas the three nations above cannot be said to have eliminated corruption, they are doing much better than Kenya if various surveys are to be believed. So can we say that laws, institutions, huge fines, and jail terms are the panacea?

Kenya does not have a shortage of anti-corruption laws or institutions. The Prevention of Corruption Act of 1956, the Public Officer Ethics Act and the Anti-Corruption and Economic Crimes Act of 2003as well as the Ethics and Anti-Corruption Commission Act of 2011 have sought to address corruption in the public sector.

The last two Acts established the Kenya Anti-Corruption Commission (KACC) and the Ethics and Anti-Corruption Commission (EACC) respectively. The Office of the Auditor General, Asset Recovery Agency, Police, Director of Public Prosecution and the Judiciary are also major players in this war.

To prevent the private sector from facilitating corruption, the Proceeds of Crime and Anti-Money Laundering Act came into effect in June 2010 and the Financial Reporting Centre (FRC)was set up to ensure compliance to this Act.

The Central Bank of Kenya, the Capital Markets Authority and the Insurance Regulatory Authority have also all issued guidelines aimed at combating especially money laundering and terrorism financing.

With the laws in place, the relevant institutions should perhaps now deliver the large fines and harsh jail sentences. This will ensure that corruption is punished and will no doubt help deter it.

To achieve this however, relevant institutions need to be adequately resourced and trained to investigate and prosecute corruption and fraud.

ANTI-CORRUPTION CULTURE

But maybe and even more important for the Government, individual institutions and Kenya as a whole is the instilling of an anti-corruption culture. A culture that will stop individuals from making the poor decision that is corruption.

Institutions need to have in place values-based programmes that measure and reward desired behaviour. They should put in place compliance systems that address the connection between values, behaviours and decision-making.

The opportunities to be corrupt must also be removed wherever possible. Fraud occurs where opportunity meets incentive and rationalisation.

Punishing corruption may remove the incentive and discourage rationalising in favour of corruption, but it does not remove the opportunity.

Fortunately, technology today allows the government and companies to institute internal controls that minimize the opportunity for fraud.

Technology can and should also be used to more effectively monitor transactions, for example through data analytics. Finally, the government and regulators must implement strong anti-money laundering measures so that even where the opportunity to defraud exists, the opportunity to extract, transfer and enjoy the proceeds of the crime is removed.

John Kamau is a Senior Manager at PricewaterhouseCoopers Limited