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Shady, secret deals raise questions of accountability in military spending


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There has been reluctance to subject procurement and contracts to financial analysis

Saturday March 21 2020

While secrecy and stealth remain cardinal elements of military establishment and operations, limited scrutiny of Defence expenditure has seen millions either stolen or wasted, past audits and experts who spoke to Nation Newsplex say.
Recently, former Sports Cabinet Secretary Rashid Echesa was arrested by the police and is being investigated in a case whose profile stands between an interesting high-level con game and a mega arms scandal. Two institutions of power – the Office of the Deputy President and the Defence Headquarters– have been adversely mentioned in the police investigations and the political whirlwind that ensued.

State security or defence procurement in Kenya is cited alongside presidential privilege as some of the main ways through which wealthy and connected people are allowed to accumulate, concentrate and exercise power in completely unaccountable ways, in a report, State Capture: Inside Kenya’s Inability to Fight Corruption, by the Africa Centre for Open Governance (AfriCOG).

In the 2014/15 report, the ministry could not explain to Mr Ouko why it paid over Sh185 million for two excavators, over four times the market price of Sh40 million.

In many countries, the head of state is also the Commander-in-Chief of the armed forces, more often than not having a more hands-on relationship with the Defence ministry than with other ministries. However, Mr Wachira Maina, the author of the Africog report, told Newsplex that beside the ministry being key to the President’s exercise of power, it is also under the firm grip of the presidency because it receives a huge budgetary allocation that is insufficiently audited, thus offering ‘lucrative’ opportunities for corruption and plunder of public resources.

The ministry was allocated Sh121.6 billion in the 2019/2020 financial year, which was 4.3 per cent of the national budget.

The world’s arms market is a lucrative frontier for quick money, with politicians occasionally manipulating situations from the shadows, according to Mwenda Mbijiwe, a security expert and former officer with the Kenya Defence Forces (KDF). “Arms dealers are always looking for high-ranking politicians to influence the government’s tendering process in their favour, while in other cases the government officers involved in the negotiations ask the supplier to inflate the price so they can get a cut,” he says, adding that the arms supplier who allegedly parted with Sh11.5 million as part of a bribe to secure an arms deal was gullible because he was acting in a culture that pervades the market.

Nothing can explain some of the heavy losses the taxpayer has incurred through procurement better than a defective or cannibalised process.

Between 2007 and 2009, Kenya shipped in seven faulty military aircraft that have never taken off the ground since they were bought for Sh3.5 billion, compared with the Sh4.6 billion spent by the Judiciary in the same period. When Auditor-General Edward Ouko flagged this wastage in the 2015/16 report, it did not raise much of a public uproar, maybe because the Kenyan taxpayer is used to losing tidier sums and also because the workings of the military have a long history of confounding civilians.

A source at the Kenya Armed Forces Ordinance Corps, which acquires stores and distributes ammunition, confirmed that lately there has been enhanced secrecy in the procurement of arms and a number of classified cases are handled exclusively by the Directorate of Military Intelligence (DMI).

Newsplex reached out to the Defence ministry and the Kenya Defence Forces, two weeks before publishing this article, for answers to questions relating to their arms procurement processes but they did not respond. A statement issued by the ministry on February 17, after some politicians allied to Deputy President William Ruto accused it of complicity in the fake arms deal case, reads: "We have an elaborate procurement process that ensures transparency and accountability of any procurement process as guided by the Public Procurement and Assets Disposal Act (2016)." Some of the values of the Act include maximising value for money, good governance, integrity, transparency and accountability. Any violation of this Act that leads to loss of money is supposed to be flagged by the Auditor-General.

Progressive laws

The 2010 Constitution as well as progressive laws in public finance that empowered the Auditor-General gave the public unfettered access to all government accounts. This, Mr Maina explains, went against a long history of the Defence ministry providing the Auditor-General only with the information they deemed fit, under the guise of national security, a practice that was supported by the law. Through the Public Audit Act no 34 of 2015, Parliament, in several sections, handed back to the State the power of choosing which pages of the military and security agencies’ account books the Auditor-Generals can see.

However, the court struck off the sections in 2018, with Justice Chacha Mwita ruling that “… these sections were to curtail powers rather than enhancing the authority of the Auditor-General”.

Ms Sheila Masinde, acting executive director of Transparency International Kenya, the organisation that took the case to court, told Newsplex that the question that arose was how the Office of the Auditor-General can independently perform its functions if it has to consult with authorities to be audited beforehand and involve public entities in choosing who audits them through the vetting of auditors.

With such efforts by the State to continue shielding the Defence ministry from financial scrutiny, some government accountability crusaders doubt if the ministry puts all its account books on the table, even as the law says it should. However, Opiyo Wandayi, chairman of the parliamentary Public Accounts Committee, mandated to receive and act on reports by the Auditor-General, says that they haven’t had any challenges in supervising spending by the military since “the laws governing spending of public finances and oversight are very clear and what some people could be experiencing are just hang-ups.”

But even from what the ministry has allowed the Auditor-General to see alone, evidence abounds that the Defence ministry is prone to financial impropriety.

In the 2014/15 report, the ministry could not explain to Mr Ouko why it paid over Sh185 million for two excavators, over four times the market price of Sh40 million. The equipment had also never been used for the reason they were bought by the time the Auditor-General called them out.

In the same year, the ministry could not break down, as required by accounting standards, how some Sh74 million, a part of Sh80 million presented as military expenditure, had been spent.

Also, in the 2016/17 financial year, the ministry illegally bought liquefied petroleum gas from a merchant that was the 10th-lowest bidder, at Sh184 million, ignoring the advice of the Ministerial Tender Committee that the tender be awarded to the National Oil Corporation and Dash Energy Ltd, who were offering the same quantity for Sh100 million, resulting in a loss of Sh84 million.

And in the 2013/14 report, the Auditor-General queried some Sh20 million paid to officers on study tours at rates higher than those approved, resulting in overpayment.

However, not all claims and allegations of financial impropriety have been as credible as the queries raised in official audits. For instance, in 2017, five congressmen attempted to have Congress stop a Sh43 billion aircraft contract between Kenya a US company claiming to “have reason to question the propriety of the acquisition.” The ministry was vindicated when Congress cleared the deal that was also defended by the US Ambassador to Kenya Robert Godec saying “the process under way is transparent, open and proper.”