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Ouko all set to give Eurobond clean bill of health after probe

Monday April 15 2019

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Auditor-General Edward Ouko is likely to give the controversial first Eurobond a clean bill of health after his team reportedly returned home empty-handed from an international probe.

A credible source, who was in the exit meeting for the final report that is being prepared to be sent to Parliament, says Mr Ouko will generally give the transaction a ‘clean bill of health,’ clearing the cloud of uncertainty that has been hanging on the transaction that saw Kenya raise Sh280 billion in total in two loans in 2014.


“I was in an exit meeting recently and I can assure you he (Ouko) found nothing,” the source told the Nation.

Mr Ouko had told Parliament in 2016 that he had secured appointments with institutions in the United States and the United Kingdom, which had been involved in the transactions, and was set to send his special audit team to seek answers on how money moved from the lenders into accounts and if it eventually made it home to Nairobi.

The Treasury had also written to the Federal Reserve Bank of New York to provide Mr Ouko with the audit evidence he needed.


But when he sent his team and what the findings from the trips were remain a closely guarded secret.

However, the Nation has now established that the auditor is working on a final report on the deal that put him at loggerheads with the government after he raised an audit query.

And as he prepares to report his findings, his office and the National Treasury are reported to have disagreed on how these should be presented.

The Treasury wanted the Auditor-General to prepare a special report on the Eurobond alone for presentation to Parliament, while the auditor wanted to include his finding in his consolidated annual report in line with audit practice.

Mr Ouko told the Nation he was finalising the report and would submit it to Parliament “as soon as possible”.


"The Eurobond Report is part of the 2016/17 Consolidated Audit Report, which is being finalised, and will be submitted to Parliament as soon as possible,” Ouko said, but did not comment on his findings.

The Nation could not independently verify the contents of the report, which is closely guarded. In the past, legislators have attacked his office when a report leaks before it is tabled in the House.

On December 1, 2015, ODM leader Raila Odinga made the first claims of the Eurobond scandal after an apparent failure by the government to account for the whereabouts of Sh100 billion that was part of the money borrowed from the international market.

 In 2016, Mr Odinga said: “I have been in government. Therefore I have my contacts and I get information, so whenever I blow the whistle, I have properly investigated and know exactly what has transpired.”

The audit query on the Eurobond had tainted Kenya’s inaugural loan from the international markets and the Auditor-General's refusal to give it clearance did not help matters.

Treasury then hired a private auditor, PKF Kenya, to conduct a special audit of the loan, giving it a clean bill.

The release of the report is expected to close the chapter of a long-running audit query that nearly cost him his job.


In his query, Mr Ouko had sampled a few ministries in his trail of the Eurobond billions and said he could not clear the transaction since he was not satisfied with the audit evidence he received.

He would later on send his men to New York and London to carry out an independent investigation on the transaction. His probe would cover all the banks involved, among them JP Morgan and the Federal Reserve Bank of New York, actions that attracted the wrath of State House.

At the heat of the moment, President Kenyatta took the war back to the auditor’s office, warning him and his men that he was wasting his time following the money trail to New York.

Things got out of hand when the bad blood between the government and its auditor went to court on issues Mr Ouko argued were malicious. Mr Ouko was accused of using over Sh1 million on his iPad while overseas and that he had allocated members of his family official cars.

He would sue the President and Parliament as he fought to stop the Head of State from signing a recommendation from the National Assembly to investigate him.

He survived the petition, albeit bruised and a marked man. But should he clear the Eurobond, he would give the government the much needed confidence to secure a third Eurobond this year.

Kenya is readying itself for an international roadshow to raise another Sh250 billion this year.

Besides the Eurobond, the government will also borrow Sh37 billion from a consortium of international banks as a syndicated loan, bringing the total foreign debt to Sh287 billion.

With the third issue, Kenya will have borrowed Sh730 billion in the last five years. Last year, the government raised another Sh202 billion from a Eurobond.