Graft lords have learnt to change with times

Corruption, unemployment, the cost of living and inflation, tribalism and negative ethnicity, and terrorism, insecurity and crime.

These are the five issues our opinion pollsters find to be of greatest concern to Kenyans daily.

Separately, the private sector has consistently placed corruption at the top of its constraints to business.

This provides useful context in a country headed into a competitive election.

We are probably aware of different corruption typologies – ways to classify graft – from systemic-endemic vs sporadic-opportunistic; petty corruption, grand-political corruption and looting; even retail vs wholesale. Add to this recent debate about corruption as a legal vs moral issue.

But, we suspect this misses the point.

Looking at 2017 and the future, we seem to be at the point where we need to be thinking around a “corruption and socio-economic crime” perspective that also speaks to theft such as assets or funds misappropriation, occupational fraud such as financial statement falsification, fast-evolving cyber crime, and transnational crime around human, drug and wildlife trafficking and money laundering.

Is Kenya entering the age of the fully-fledged criminal business enterprise – network or cartel - and a new era of state capture?

Here are four “out of the box” perspectives to ponder, from a national government perspective but no less relevant to counties.

First, networks and cartels today find it easy to predict, influence and align with the State’s public policy cycle, and government’s public financial management cycle.

Former Chief Justice Willy Mutunga had said “corruption has its own Vision 2030”.

This “vision” works alongside our “5-3-1” political-business-public service cycle.

This cycle – “homecoming” in year one; “building war chest” in the middle years and a final year of “electoral spending” – provides many “project opportunities” around the demand and supply sides of the graft equation.

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Indeed, transitional moments – from one administration to the next – are the best time for this; witness Anglo Leasing in Narc’s first year; multiple mega-projects under Jubilee, and earlier, the multi-party transition moment that gave us Goldenberg.

Business and public service will then align with this cycle.

GRAFT DURING PROCUREMENT

Post-election, the key policy moment available to networks, is the five-year medium-term plan – as aligned to the winning party’s election manifesto.

By way of illustration, ministerial estimates (“resource bids”) in the past two years of the current Jubilee administration have exceeded Treasury ceilings (“resource ceilings”) by at least 50 per cent.

Then there is the procurement process, with pet projects or budgets secured.

Here is a perspective on procurement, which the Ethics and Anti-Corruption Commission last year estimates made up 50 per cent of all corrupt transactions.

Its own 2005 survey of procurement officers and suppliers found that 13 per cent of the former and 23 per cent of the latter were aware of instances of external procurement influence, mostly by politicians and senior civil servants.

The same survey found that seven per cent of suppliers had access to the procuring entity’s “budget” prior to tender submission, while another six per cent had access during bid submission.

Even more shocking, 46 per cent of suppliers admitted to knowing rival bidders owned directly or by proxy by public officers.

Think about these as “operations-level” networks, rather than the earlier “mega-networks”.

The second unusual perspective essentially builds from the first.

Networks reflect a critical part of our political economy.

In 2002, the language around corruption focused on dealing with an economic environment that was too closely linked to State largesse.

By 2004, Kenya had turned to legal solutions as the answer to graft.

By the time the Truth, Justice and Reconciliation Commission report was released in 2010, we had moved towards institutions and the challenges of implementation.

CARTELS' STATEGIES
In the past four years, the narrative has changed again.

While legal and institutional solutions are still part of the solution (by example, the recently enacted Anti-Bribery law), we are now speaking to the questions of procurement and our Integrated Financial Management Information System.

The third unusual perspective we would like to offer is what the criminal enterprise looks like.

What is worrying is that these networks and cartels – whether or not they are formal structures – will, increasingly have “fit for purpose” organisational models built around four pillars.

First, loopholes in policy, law and regulation, not simply in design but enforcement or implementation.

Second, a “winner takes all” shared values and culture.

Third, flexible structures, staff and skills that include public servants and parastatal officers as “contacts”.

Fourth, the agility to efficiently exploit existing processes, systems and technology to their advantage.

Remember, if “civil enterprises” can be structured around these four pillars, so can “criminal networks”.

Is there evidence that the perspectives above make sense?

Let us get down to numbers and think of a fourth perspective that explains this unhappy prognosis.

POST-ELECTION

We will use the Auditor-General’s assessment of spending “misdemeanours” since Kanu’s final 2002/03 fiscal year.

In 2002/03, total spending misdemeanours, in real 2014 terms, worked out at Sh18 billion.

In Narc’s five-year term, the total was Sh100 billion, or Sh20 billion a year.

Coming to the Grand Coalition, the total comes out at Sh200 billion, or Sh40 billion a year.

Fast forward to Jubilee’s first two years where the total is Sh106 billion. What does this mean for trends going forward?

In sum, shouldn’t we be thinking not just about the expectedly highly-competitive election, but post-election, in terms of networks and cartels?

Is Kenya ready to take the war not just on graft, but increasingly integrated criminal enterprise, to the next level?

Is the continued rush towards new projects helping the war on corruption and wider economic crime?

Finally, will parastatals be the locus for future “networking” in a difficult post-election fiscal environment? The omens are troubling.

Maybe these are the deeper, more uncomfortable questions we need to ask ourselves in August.