We need to clear the questions around this Eurobond matter
What you need to know:
- This year’s Auditor General report is where you will find all movements of money in and out of the Consolidated Fund during the relevant period when the Eurobond transaction happened.
- The National Treasury and the Central Bank of Kenya shouted from the rooftops that all the net proceeds of the sovereign bond were paid into the Consolidated Fund.
- The Auditor General elected to focus on an audit of the Ministry of Water to determine whether the money was indeed received and spent there.
The Eurobond saga refuses to go away. I have just looked through the recently published report of the Auditor General to see his findings on this raging controversy.
As we all know, the Auditor General is the single source of truth on matters to do with government accounts. He is the final word on both how government revenues are received and how the money is spent.
This is the constitutional office responsible for auditing the financial statements of all public funds.
Also, this latest report is especially critical because it covers the whole period of the Eurobond transaction from June 2014 to the end of June 2015.
This year’s report is where you will find all movements of money in and out of the Consolidated Fund during the relevant period when the Eurobond transaction happened.
What are the findings of the Auditor General on the Eurobond in his latest report? I invite readers of this column to grab a copy of the report and go to page 3, paragraph 9.
Perhaps the most significant thing is the fact that the Auditor General has issued what accountants and auditors call a disclaimer of opinion on the accounting for the receipt and expenditure of the Eurobond revenues.
Auditors usually use the term disclaimer of opinion when the numbers in the accounting documents they are looking at do not add up.
The Auditor General was not satisfied that the Eurobond money was received and spent.
We must not forget that the Auditor General has access to all documents and accounting records at both the Central Bank and the Treasury. He sees all the money in the bank.
Granted, there are circumstances where an auditor will issue a disclaimer of opinion on the basis of what is called scope of limitation, which, in this case, would imply that he was not given the documents and was not able to see all the records on the receipts and expenditure from the Consolidated Fund.
In the current case, the Auditor General did not issue a scope of limitation. Here is how the Auditor General puts it: “Investigations into the use of funds related to the Eurobond are still ongoing and the net proceeds of the amount are yet to be ascertained.”
Whichever way you look at it, the findings of the Auditor General are damning.
PAID TO CONSOLIDATED FUND
In the first place, we must remember that both the National Treasury and the Central Bank of Kenya shouted from the rooftops that all the net proceeds of the sovereign bond were paid into the Consolidated Fund.
Is it not the height of irony that almost 26 months since the Eurobond transaction was concluded, the Auditor General is still investigating the matter to establish whether the money was received into the Consolidated Fund and how it was spent?
In trying to determine whether the Eurobond money was spent by ministries, it would appear that the Auditor General elected to focus on an audit of the Ministry of Water to determine whether the money was indeed received and spent there.
On page 222 paragraph 409 of the report, the Auditor General finds that the ministry was unable to give a list of the projects it funded using money from the Eurobond proceeds.
I do not want to shout theft at this point in time, but in the light of the findings of the Auditor General, all indications are that this controversy will not die soon.
When you look at the trends in emerging markets, you will see that international debt markets have become the new frontier for corruption.
The Tuna bond controversy, where the political elite in Mozambique hid $1 billion from the proceeds of an international debt issue immediately comes mind.
But the case I find even more intriguing and revealing is what happened in Malaysia. There, a State corporation charged with the mandate of building a new city was allowed to raise Eurobonds worth $3.6 billion.
It was to turn out later that only a portion of the proceeds of the Eurobond was received in Malaysia and that nearly 50 per cent of the proceeds ($1.6 billion) was diverted to offshore accounts and shell companies in Saudi Arabia and Abu Dhabi — all linked to well-connected operatives in Malaysia.
And, since the transactions were facilitated by big Wall Street investment banks and because some of the stolen money was invested in the US, authorities in America recently seized cars, luxury properties, and private jets. Some of the money is said to have been used in the making of the film, The Wolf of Wall Street.
We need to settle this Eurobond matter once and for all.
