President Kenyatta warns of conspiracy to undermine investor confidence

President Uhuru Kenyatta says there is a conspiracy to talk down on the success of the Sh250 billion Eurobond and, in the process, undermine investor confidence in the country.

Speaking during the Jamhuri Day celebrations at the Nyayo Stadium, President Kenyatta praised Kenya’s Eurobond as the best ever in Africa but said some people want to denigrate it and cautioned that the sword of justice would cut both ways.

“Ours was one of the best issues ever on the African continent. It was oversubscribed. Yet some of us contrived to talk it down, undermining the credibility of our institutions and investor confidence in our country,” he said.

“Yes, I agree that those entrusted with public positions must be held to account.  If found guilty, the maximum punishment must be meted out. But the sword of justice cuts both ways,” he said. “If you make accusations and fail to prove them, you will also be held accountable.”

He then warned: “Kenyans want to see those who rob them of their hard-earned money prosecuted, their ill-gotten gains frozen and reclaimed, and jail terms handed out. That is the standard I will uphold. 

“Together, we can ensure that it is achieved and that no Kenyan — regardless of position — is immune to accountability.”

INTERNATIONAL DIMENSION

President Kenyatta spoke as the spotlight on Eurobond took an international dimension and questions asked on the projects the government spent the loan on.

The Sunday Nation has learnt that UK’s Serious Fraud Office seems to be aware of the matter as the National Treasury grappled with the list of the projects which they promised to release this week.

“The ministries are working on the list of projects financed by releases from the National Treasury. Likely to finish next week,” said the National Treasury Principal Secretary Kamau Thugge in an e-mail conversation.

The statement runs counter to claims by, among others, Cord leader Raila Odinga who accused the National Treasury of  “cooking projects”.

“I have been the Prime Minister of this country. I know how money is spent by government. The Treasury Cabinet Secretary has given CSs three weeks to compile projects the money was used on but before the money leaves the Treasury, the project is known. I think the ministers are now cooking projects,” Mr Odinga said.

Saturday, when the Sunday Nation sought a comment from SFO, they were non-committal on whether they are investigating the matter.

“I can neither confirm nor deny SFO interest in this matter. For guidance, we do not comment on the assistance we provide to our international partners,” responded SFO Press and Communication Officer Jina Roe.

SFO’s involvement, if at all, could be because most of the transaction advisers to the floating of the bond are in the UK, though others have their headquarters in the US, Ireland and Germany.

TANZANIA EUROBOND

SFO were instrumental in cracking the Sh61 billion Tanzania Eurobond scam after Standard Bank reported itself to them to whittle down the consequences of crime and punishment.

Standard Bank, together with JP Morgan, Barclays Bank and Qatar National Bank, were the lead managers in the Kenyan case.

According to UK media reports, Standard Bank has agreed to pay more than $33 million (Sh3.37 billion) in fines — $25.2 million (Sh2.6 billion) in penalties, $500,000 (Sh51 million) in costs to the SFO, plus a separate $7 million (Sh715 million) payment to the Tanzanian government. It also agreed to pay $4.2 million (Sh429 million) to settle related civil charges by the US Securities and Exchange Commission.

But the Nairobi-based East African investment banking unit of South African lender Standard Bank was not involved in the Tanzania Eurobond scam.

In Nairobi, the British High Commission spokesman, Stephen Burns, said Kenya had not formally sought their assistance.

“No accusations of unlawful activity within UK jurisdiction have been made,” said Mr Burns.

The US Embassy, on the other hand, had not responded to the questions we sent to them more than a week ago concerning the matter.

Questions have also been raised over inclusion of Qatar National Bank (QNB) at the last minute in Kenya’s Eurobond saga with the Treasury claiming that the fact that they planned to raise an Islamic bond known as Sukuk was the main reason.

In addition, there have emerged accounting queries about when the first Eurobond proceeds amounting to Sh88 billion (payment for syndicated loan of Sh53 billion plus transfer to the Exchequer Account of Sh35 billion) were received.

While the Sh88 billion was available towards the end of June 2014, the loan repayment is reflected in 2014/15 financial year while the Exchequer transfers are reflected in the financial year 2013/14 yet the two took place on the same day.

Auditor-General Edward Ouko had also on October 24, 2014, in a letter to Dr Thugge, questioned the anomaly.

“This is an anomaly in accounting terms because it breaks the fundamental accounting and financial management principal of matching revenues and expenses that requires that money received and spent must be accounted for in the financial year to which they belong,” the Auditor-General said.