KENYA: A Corruption Suspect’s Best Friend? The Law

By IPS Correspondents Reprint | | Print |

Darren Taylor

NAIROBI, Feb 22 2006 (IPS) - Kenya’s government will find itself hard put to reclaim public funds that have been misappropriated in a string of corrupt deals linked to state officials and businesspeople, say legal and banking sources in the East African country.

These sentiments were voiced as the administration claimed it was taking action to track down stolen money.

“We’re freezing and recovering all assets purchased with the proceeds of corruption. We’ll freeze bank accounts and prosecute implicated individuals,” Justice Minister Martha Karua noted recently, saying officials had identified buildings and land for repossession.

However, Albert Mumma, a highly-regarded lawyer, says that under Kenya’s Economic Crimes Act assets allegedly acquired by means of corruption can only be confiscated once a myriad of legal processes has been followed – and the state has proved beyond doubt that the cash or property concerned was obtained through graft.

“This would take a long, long time to prove,” he told IPS. “We would be sitting in court hearings for years.”

Such statements are bound to dampen the spirits of Kenyans who had hoped the current hue and cry about graft would lead to swift recovery of stolen funds.

The Kenya Bankers Association (KBA) notes that altering legislation to streamline asset seizure would probably be a lengthy and complicated process that frustrated attempts to regain lost wealth still further.

KBA official Joseph Wanyela also claims it would be difficult to trace illegally-acquired money deposited in Kenyan banks as there is currently no law which supersedes the confidentiality clause binding these banks to their customers.

In addition, legislation was required to define how persons who unknowingly bought property from those who obtained it through graft, should be treated.

“Surely they would have to be compensated?” Wanyela asks. “The government must not act without thinking otherwise it may open itself up to law suits.”

Previous asset recovery efforts have been described as “half-hearted” by a former chair of Kenya’s Law Society, Ahmednasir Abdullahi.

In 2003, shortly after President Mwai Kibaki came to power, the government announced that it had contracted an international firm of forensic accountants and investigators, Kroll Associates, to find money plundered under the former regime.

Less than a year later Kiraitu Murungi, then minister of justice, revealed that Kroll had traced almost a billion dollars to banks in Switzerland, Luxembourg, Austria, the Netherlands, Italy, the United Kingdom and the Gulf States. He pledged to recover the cash.

It was also reported that Kenya intended to ask for South Africa’s help in establishing whether illegally-acquired funds had been used to buy property in that country.

However, “No request for help in tracing any money invested in South Africa has ever been made to us by the Kenyans,” said a spokesman for the South African High Commission in Kenya, Izak Barnard.

During a meeting in the capital of Nairobi in 2005, Murungi struck a different note on the matter of tracing looted millions, saying “The contradiction in transition anti-corruption strategies is whether…scarce resources should be invested in digging up the rotten past or in creating a better, corruption-free future.”

He has since become one of two ministers to lose their posts over investigations into Anglo Leasing and Finance Limited, a fictitious firm that was nonetheless awarded contracts to supply a system for producing passports that could not be forged – and for building police forensic laboratories.

A report into the matter by former permanent secretary for governance and ethics John Githongo prompted the resignations of Murungi, since moved to the energy portfolio, and his counterpart at finance, David Mwiraria. The document was leaked to the media earlier this year.

The British Broadcasting Corporation has also broadcast a tape recorded by Githongo on which Murungi is allegedly heard asking the former secretary to slow investigations into Anglo Leasing in exchange for lenient treatment of his father in connection with a bank debt.

Education minister George Saitoti has also resigned, over a separate scandal known as the Goldenberg affair. This scam involved the manipulation of an export compensation scheme in the early 1990s that resulted in at least 600 million dollars being looted from government. It takes its name from the company at the heart of the saga: Goldenberg International, owned by Kamlesh Pattni.

A commission of inquiry into the Goldenberg affair that was instituted by President Mwai Kibaki soon after he came to office has found that Pattni and various government officials colluded in the fraud, which involved the fictitious export of gold and diamonds.

According to Pattni, a substantial portion of funds stolen through the export compensation scheme was used to bankroll the Kenya African National Union ahead of the 1992 general election, which saw the party sweep to victory amidst claims of vote rigging.

The fate of other funds is less clear, however.

“A lot of money was siphoned out of the country by the Goldenberg scheme, but we were unable to trace it,” commission chair Samuel Bosire has concluded. As investigations into this matter continue, Saitoti and 19 other persons implicated in the scam have been asked to surrender their passports.

Githongo says that the networks of corrupt officials and businesspeople which thrived under former president Daniel arap Moi continued to operate after Kibaki came to power at the end of 2002.

He also claims that Kibaki was aware that the dealings with Anglo Leasing were suspect, but did not take action.