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Punish dam scam architects to stem entrenchment of impunity

Wednesday March 13 2019

Arror Dam

Residents of Kipsaiya in Elgeyo-Marakwet County demonstrate against plans to construct Arror Dam, on March 6, 2019. The individuals behind Arror and Kimwarer scam must be brought to book. PHOTO | JARED NYATAYA | NATION MEDIA GROUP 

JAINDI KISERO
By JAINDI KISERO
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When I grow up, I want to write a book with the title, The Audacity of Impunity.

Indeed, it is only in Kenya where public officials can release a whopping Sh21 billion to a bankrupt Italian contractor — for no work done — and still have the temerity to argue that that does not amount to corruption.

In other countries, the scandal over Arror and Kimwarer dams and the public resources at risk in the scam should have triggered shock waves of self-examination among leaders.

Here, it is business as usual, sloganised dismissal of actions and motives of investigative authorities and reluctance to look squarely in the mirror and concede that things have gone awfully wrong.

Steal and explain is the new mantra for our leaders.

RAVENNA

Indeed, impunity is why our leaders are just too quick to dismiss the ongoing investigations on the dams scandal, motivated by politics.

The fact that such a huge amount was paid without due diligence on the recipient is a non-issue to the political elite.

I insist that the officials did not conduct even rudimentary checks on the Italian company.

Last week, I took a look at corporate records of the concerned company, CMC Ravenna, and was astounded to discover that it had been in financial doldrums long before we paid them the billions.

Long before we contracted the company, it had knelt before its creditors for debt forgiveness under an arrangement known in Italian as ‘concordato preventativo’.

Had the officials done even a minor check on open source public records, they would have come across the Milan Expo tender manipulations probe and investigations on the firm’s activities by the prosecutors, Mr Paolo Filippino and Antonio D’Allesso.

Maybe then, they would not have released the payments.

STRIKES

In terms of the opportunity cost, Arror and Kimwarer dams are a big scandal.

Corruption and the large figures splashed in newspapers are clearly one the major reasons why strikes in the public sector have become too common.

The big amounts and the casual manner in which they are released to dodgy contracts is what feeds the mindset that the government has inexhaustible sources of money.

After seeing billions being released to such phantom projects, will teachers, nurses or lecturers ever believe the government when they are told that there is no money to pay them?

We must not forget that, if these two projects do not take off, the taxpayer will have been subjected to double tragedy.

What is the likelihood that Arror and Kimwarer projects will take off? Slim, to say the least.

The truth of the matter is, the government’s finances are in very bad shape. Our debt position has deteriorated precipitously.

DEBT SERVICE

We may well be still within the IMF debt-to-GDP sustainability ratios, as the National Treasury is always wont to say, but the ratio we should worry about is debt service-to-government revenues one. We are at 38 per cent — meaning that, for every Sh100 that KRA collects, we spend Sh38 on debt servicing and Sh45 on wages, leaving a mere Sh17 for recurrent and development expenditures.

Yet, at the current level of recurrent spending, we are clearly borrowing to pay for salaries, fuel and electricity in government offices.

Instructively, under the Public Finance Management Act, borrowing to pay salaries is illegal.

The fiscal space for funding development is narrowing by the day. And county transfers are not only being paid late, but also slowly being limited to salaries only.

But it is the external debt service that has become a total nightmare.

BUDGETING

As a matter of fact, we are at a point where, without refinancing some of our external debts, we may be forced to raid Central Bank reserves or print money.

As the Arror and Kimwarer dams scandal has amply demonstrated, the budgeting process has been reduced to a vendor-financed affair, where influential individuals push their pet projects for selfish personal gain.

That is how we have ended up with too many overpriced and expensively financed projects. It is why our external debt register is saddled with too many expensive commercial debts.

If you look at the wider African scene, the trend you will see is that of export credit agencies from the developed world colluding with government officials to saddle citizens with expensive dollar loans that are used to fund opaquely procured projects padded with kickbacks and backhanders.

The practice of allowing a foreign contractor to perform multiple roles — including designing, building and arranging financing for you — must stop immediately.

The individuals behind Arror and Kimwarer scam must be brought to book.

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