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Nothing new about Uhuru, just a facade

Sunday June 3 2018

NYS scam

Latest scandal to rock Jubilee’s administration is the recent NYS scam. PHOTO | FILE | NATION MEDIA GROUP 

WACHIRA MAINA
By WACHIRA MAINA
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President Uhuru Kenyatta is on a mission impossible. Over the next four years he must build 500,000 affordable houses; revive manufacturing; provide healthcare to all and ensure food security.

These, the ‘big-four’, are the quadruplets he promised Kenyans in his second term. He won’t deliver any; forget all four. Even though these four are more grounded than the pie-in-the-sky wishes of his first term - a laptop for every child and double-digit growth- the President’s best-laid plans have already been scuppered by corruption. President Kenyatta faces three problems, all of his own making.

One, he failed, from the get go, to grasp the dangers of corruption and, by omission, let graft become policy. Any policy target that he now sets becomes an opportunity for procurement; every procurement, a profiteering moment. Each service the government buys is a kickback break. Where the President sees the ‘big-four’ as vital to his legacy; the corrupt only see oodles of cash.

Two, Mr Kenyatta’s anti-corruption actions lack imagination. When fresh scandals break he resorts to his predecessors’ methods: Outrage, hardline speeches and theatrical arrests. Then, as the scandal slips from the front pages to the classifieds, those arrested are quietly released, just as it was in 1991.

ETHICAL REFORMS

Three, instead of focusing on the ethical reforms that anti-graft policy needs, the defaults to ICT, mainly Ifmis, which, in the mouth of its purveyors, is the missing magic wand. This faith has beguiled him to over-sell Ifmis, a World Bank favourite that had already cost Malawi US$32 million in 2014; that is, long before the same system was rigged by the NYS in 2016 and again in 2018.

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Technology, Mr Kenyatta forgot, creates efficiency, not honesty.

It is best to begin with why and how corruption has scuttled the ‘big four’. If the Sh9 billion NYS money is lost — the government seems clueless — Mr Kenyatta has lost 12-months worth of NHIF cover for 1.5 million Kenyans, that is, the population of Mombasa and Nakuru combined.

But corruption subverts the ‘big four’ in even more direct ways. Already, the maize production targets for the year, 2.76 million bags, have created a feeding frenzy.

An audit of the National Cereals and Produce Board, NCBP, ordered by the Ministry of Agriculture has revealed that Sh3 billion set aside for farmers has gone to brokers and political insiders.

BIG FOUR AGENDA

That crooks are able to re-purpose the ‘big four’ to illicit ends, reveals a basic point: Government priorities are market signals. Every crook knows if something is important to President Kenyatta, it will be in the budget. What has a budget has procurement. The ‘big four’ budget is now the only game in town. Expect future audits to reveal scams across the ‘big-four’ value chain: In seed supply; fertilizer delivery and the purchase of strategic stocks.

Should Mr Kenyatta deliver on some or all of the 500,000 ‘affordable houses,’ look out for inflated land purchases; run-away architects’ fees; varied and then larded building contracts; over-priced materials and, at the end of that chain, extremely costly ‘affordable’ housing.

That brings us to the second problem, Mr. Kenyatta’s return to the practices of his predecessors’. Kenyans now know the drill that follows any headline grabbing scandal: An extravagant brouhaha of outrage, followed by dramatic, made-to-order-for-TV arrests. If the media loses interest, the accused are quietly released. If media interest persists, bungled prosecutions follow and the court acquits the accused.

This script was first written by President Daniel arap Moi after the 1990 murder of Dr Robert Ouko. Mr Ouko, Moi’s minister for Foreign Affairs, was murdered for investigating corruption in high places. The principal suspects, according to Scotland Yard, were Mr Moi’s trusted advisers, Mr Nicholas Biwott, Cabinet minister, and Mr Hezekian Oyugi, PS for Internal Security.

They were arrested but never prosecuted.

GOLDENBERG

That same script was in play in Goldenberg, a complex scandal cooked up by Kamlesh Pattni in which Sh100 billion was lost in four perhaps more, sub-scams: One, fictitious gold and diamonds exports to non-existent companies abroad; Two, cheque-kiting rackets in which bills of exchange were used as unauthorised credit; Three, a T-Bill trading scam in which Pattni’s bank, the Exchange Bank, colluded with the Central Bank to manipulate the financial system and, finally, a pay-to-be-a-credit-worthy-customer scam arranged by the CEO of Exchange Bank in which the Central Bank paid US$2 million to get bank statements showing it had US dollar deposits that it did not actually have. Arrests were followed by indictments: 22 years later no one has been jailed.

Confronted by the Anglo-Leasing scandal in 2004, Mr Mwai Kibaki, who came to power in 2003, re-played the script. Anglo-Leasing was a Sh62 billion, eighteen contracts scandal forged by companies owned by the same faceless individuals and then shielded behind secrecy clauses. Twelve case-files were sent to the Attorney General Amos Wako. Dramatic, prime-time-TV arrests followed. No one was jailed.

When President Uhuru Kenyatta encountered his first NYS scandal in 2016, he, too, dusted up the capture-release methods perfected by Moi and Kibaki. Spurred by media spotlight, Parliament asked Mr. Edward Ouko, the auditor general, for a special audit. Mr. Ouko’s report chalked up the loss at Kshs 1.8 billion, twice the amount initially suspected. Of this, Kshs. 1.3 billion was paid to 11 companies controlled a little known former hairdresser, Ms. Josephine Kabura. That, too, was followed by dramatic arrests, albeit of minions. None served time.

This last week, government has staged another series of made-for-TV arrests. Given the antecedents, no Kenyan takes this stuff seriously.

The arrests will be followed by dilatory hearings; adjournment will follow adjournment; evidence will disappear; prosecutors will be shuffled mid-stream; witnesses will disappear and, eventually, the cases will collapse in a welter of recriminations and buck-passing in which the judiciary will be abused and calumniated.

TECHNOLOGY

With the country distracted by NYS, the crooks are probably already cobbling together the next big ‘big-four’ scam.

And so to the President’s third problem: His abiding faith that technology can fix ethical failure. In his first term, Mr Kenyatta thought he could improve financial probity by making it mandatory for government to make all its payments through the Integrated Financial Management System, Ifmis. Ifmis has been hyped and over-sold by donors — especially the World Bank — since the mid-1990s.

In practice, it has proved less tractable and more problematic than the sales pitch says, offering few of the benefits claimed and aggravating many of the problems it was to solve.

Mr Kenyatta did not probably know Ifmis had such a history but Treasury should have. The President sold to us all its advantages and none of its vulnerabilities.

And yet, the very year Mr Kenyatta became president, 2013, Ifmis had spectacularly failed in Malawi. As Mr Kenyatta demanded the public payments system go digital in 2015 and 2016, crooks in Malawi had already used Ifmis to filch US$32 million from the government in Cashgate, the biggest financial scandal in Malawi’s history.

Cashgate was eerily similar to the two NYS scams that followed it. Did the Kenyan crooks have the Malawi blueprints? Cashgate even had an Ann Ngirita equivalent, one Victor Sithole, an accounts assistant in the Ministry of Environment, who set off the investigation when, on a routine traffic stop in September 2013 in Lilongwe, the police found US$300,000 stashed away in the boot of his car.

FRAUDULENT ORDERS

As in the first NYS scandal, ‘Cashgaters’ hacked IFMIS; made fraudulent orders; raised payments and transferred the money into the bank accounts of 16 companies that they owned.

Baker Tilly, a British audit firm, conducted a forensic audit. Its report reads like an investigation of the second NYS scam. The auditors found “funds transferred between unrelated companies,” “individuals withdrawing funds from unconnected organisations” and “inflated prices paid to companies with limited or no trading history,” “no evidence of goods supplied” and “very large cash withdrawals.”

They suspected the people receiving “these funds” — the Ngiritas and the Josephine Kaburas of Malawi — were not “ the ultimate beneficiaries” of the money.

RESET GOALS

The conclusion one must reach will discourage Mr Kenyatta’s supporters. By hesitating when he should have been bold, Mr Kenyatta allowed graft to seep into the sinews of his administration. He is now unable to undo this institutionalised perfidy.

If the president wants a legacy he must reset his goals away from the blue-sky ‘big four’ to the big boring one: Corruption. He will have to pay the price of past indulgence: He must now be twice as bold as he should have been in 2013. He must sacrifice corrupt friends and allies.

He must follow the money, not stage-manage arrests and allow crooks to keep the cash. Above all, he must support rather than skewer the judiciary. This is a hard ask. But Mr Kenyatta has done what many thought even harder: Matched and checkmated his perennial rival, Mr Raila Odinga. He doesn’t have an excuse for inaction any more and he has only 1,460 days remaining.

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