Kenya - Corruption
Corruption in Kenya is pervasive and entrenched. Kenya is ranked amongst the world's most corrupt countries. Transparency International’s (TI) 2016 Global Corruption Perception Index ranks Kenya 145 out of 176 countries, six places lower than 2015. Lack of political will, little progress in prosecuting past corruption cases, and the slow pace of reform in key sectors were reasons cited for Kenya’s chronic low ranking. Corruption is an impediment to FDI with local media reporting on allegations of high-level corruption related to health, energy, ICT, and infrastructure contracts. There are many reports that corruption often influences the outcomes of government tenders in Kenya, and U.S. firms have had limited success bidding on public procurements.
According to the PricewaterhouseCoopers (PwC) Global Economic Crimes Survey 2016, 72 percent of the firms in Kenya reported incidences of asset misappropriation compared to the global average of 64 percent. Bribery was the second most prevalent form of economic crime in Kenya with 47 percent of the firms reporting incidents, representing the third highest rate of incidence globally. Finally, procurement fraud was the third most prevalent economic crime reported in Kenya, with 37 percent of the respondents having experienced procurement fraud in the last two years, against a global average of 23 percent.
The 2013 Ibrahim Index of African Governance ranked Kenya 21 out of 52 countries on quality of governance, an improvement of four places from 2012. Transparency International’s 2013 Global Corruption Perception Index ranks Kenya 136 out of 177 countries, a marginal increase from 139 of 176 in 2012. Kenya still ranks third among the five EAC countries, better than Burundi and Uganda. The Corruption Perceptions Index measures the perceived levels of public sector corruption in countries worldwide. Lack of political will, little progress in prosecuting past corruption cases, and the slow pace of reform in key sectors were reasons cited why Kenya is still ranked amongst the 31 lowest-scoring countries.
The Daniel arap Moi dictatorship undertook the systematic destruction of what used to be Africa’s economic showcase from the 1960s through the 1970s. Through craven policies and unprecedented levels of theft of public funds, public land, forests, recreational parks, school playgrounds, and buildings. The authoritative British newsletter Africa Confidential, put Moi’s external bank holdings at US$3billion in 2000. He denied it publicly but insisted that he could not vouch for his siblings who, together with Moi’s supreme confidante Nicholas Biwott had been often linked to major corrupt deals in Kenya.
In the so-called Goldenberg scandal the Moi regime bolted with an estimated $1billion from its own Central Bank (12percent of the nation’s GDP at the time) setting off a spiral of inflation, economic stagnation, unemployment, and rampant crime, a ruined agricultural sector, and decaying public services.
In 1997, the IMF suspended Kenya's Enhanced Structural Adjustment Program due to the government's failure to maintain reforms and curb corruption. A severe drought from 1999 to 2000 compounded Kenya's problems, causing water and energy rationing and reducing agricultural output. As a result, GDP contracted by 0.2% in 2000. The IMF, which had resumed loans in 2000 to help Kenya through the drought, again halted lending in 2001 when the government failed to institute several anticorruption measures. Despite the return of strong rains in 2001, weak commodity prices, endemic corruption, and low investment limited Kenya's economic growth to 1.2%. Growth lagged at 1.1% in 2002 because of erratic rains, low investor confidence, meager donor support, and political infighting up to the elections. In the key December 2002 elections, Daniel Arap MOI's 24-year-old reign ended, and a new opposition government took on the formidable economic problems facing the nation.
A 2001 report entitled ‘Initiatives against Corruption in Kenya – Legal and Policy Interventions, 1995-2001’ by the Centre for Law and Research International (CLARION), a non-governmental organization in Kenya, notes indications of “a variance between policy pronouncements and the realities in the body-politic”. According to the report, “exposure of selected political scandals by the government has become more of a public relations gimmick than an in-depth desire by the system to fight corruption”.
The report observed that: "Owing to increased public debate and pressure, coupled with concern from the international community, the Bretton Woods institutions and bilateral donors, the government, notably from 1997, in policy pronouncements at least, showed intentions of undertaking legal and other public policy reforms that would address corruption. The government took several steps towards this end, including the establishment of the Anti-Corruption Squad, the Kenya Anti-Corruption Authority (KACA), and the publication of a number of legislative proposals on corruption. These initiatives or intended initiatives created the impression in the minds of Kenyans that corruption would for the first time be more decisively tackled."
By 2005 the government was committed at the senior civil servant level to pushing ahead with important institutional and systemic reforms, some of which were beginning to have an impact in terms of closing off avenues used for corrupt activities. But the political leadership remained utterly unwilling to transparently and aggressively root out high-level corruption within its ranks. This lack of will on the part of the leadership in turn threatened further progress on the longer-term institutional front. The old corruption networks may be frozen, but they had yet to be named, shamed, and dismantled. Other reporting indicates they are chomping at the bit to get back into business - when the time is right again.
A 2008 Freedom House report noted that corruption was a serious problem in Kenya, including high-level corruption in government. The report states that: "Corruption continues to be a very serious problem threatening Kenya’s nascent democracy. Political parties, nongovernmental organizations (NGOs), and the press, as well as some official bodies, have unearthed examples of government corruption and malfeasance. The 2006 report by anticorruption campaigner John Githongo was merely the most serious of a number of credible reports of high-level corruption. Transparency International’s 2007 Corruption Perceptions Index ranked Kenya 150 out of 180 countries surveyed. Respondents to the 2007 Kenya Bribery Index stated that they encountered bribery in 54 percent of their interactions with public and private institutions."
Corruption is an impediment to FDI. US Transparency International’s Global Corruption Barometer 2013 found the police, the judicial system, the registry and permit service, and the land service to be the country’s most corrupt institutions. Bribes, extortion, and political considerations influenced the outcomes in large numbers of civil cases. Local media reported on allegations of high-level corruption related to energy, airport construction, and infrastructure contracts awarded to foreign firms that allegedly did not comply with public procurement laws.
According to a PriceWaterhouseCoopers (PwC) report, about one in three Kenyan business leaders reported procurement-related fraud in the past two years. Four out of every 10 Kenyan CEOs reported being asked to pay bribes to win a tender or get business. Asset misappropriation remains the most common economic crime in Kenya, affecting 77 per cent of businesses. Accounting fraud affects 38 percent of firms, procurement fraud 31 percent, bribery and corruption 27 percent, and cybercrime 22 percent of firms.
The law provides for criminal penalties for official corruption; however, the previous and current government did not implement these laws effectively, and officials often engaged in corrupt practices with impunity. Despite many scandals no top officials were prosecuted successfully for corruption during the year. The World Bank’s most recent Worldwide Governance Indicators indicated that corruption was a severe problem. Official-level corruption often came in the form of land seizures and conflict of interest in government procurement.
The 2006 Witness Protection Act calls for the protection of witnesses in criminal cases and the creation of the Witness Protection Agency, and it outlines the agency’s powers, functions, and management. The Witness Protection Agency became operational in 2011, first under the Attorney General’s Office but later as an independent agency. Limited funding and technical expertise, inexperienced staff, and a lack of public awareness of its duties hampered the effectiveness of the agency. It also faced the challenge of gaining witnesses’ trust in the agency’s ability to provide them adequate protection. The media and the agency reported that witnesses often recanted their statements, went into hiding, or ultimately refused to testify. The agency suspected witness intimidation. Protection services were most often given to witnesses in organized crime, corruption, 2007 post-election violence, and murder cases.
The law requires that all public officers declare publicly their income, assets, and liabilities every two years. Public officers must also include income, assets, and liabilities of their spouses and dependent children under the age of 18. Officers must declare this information to their responsible commission (e.g., the Parliamentary Service Commission in the case of members of parliament). Information contained in these declarations is not readily available to the public, and requests to obtain and publish this information must be approved by the relevant commission. Any person who publishes or otherwise makes public information contained in public officer declarations without such permission may be subject to five years in prison, a fine of up to KSh 500,000 ($5,780), or both.
The Leadership and Integrity Act of 2012 requires public officers to register potential conflicts of interest with the relevant commissions. The law identifies interests that should be registered, including directorships in public or private companies, remunerated employment, securities holdings, and contracts for supply of goods or services, among others. No public officer declarations of wealth or conflicts of interest were challenged in public, although this information is not publicly available. The law required candidates seeking appointment to public office (nonelective) to declare their wealth, political affiliations, and relationships with other senior public officers. This requirement is in addition to background screening on education, tax compliance, leadership, and integrity, which was generally implemented.
The nature of corrupt business practices makes it difficult to say with any certainty that Chinese firms more readily pay bribes and engage in other corrupt activities as part of their normal business practices in Kenya. The rumor mill places a Chinese firm at the heart of the July 2004 last-minute cancellation of the award for a second landline phone license. As the story goes, when it became clear that the consortium which included both Chinese interests and relatives of President Kibaki would not win the tender, it intervened with Minister of Communications Raphael Tuju (who joined Kibaki on his trip to China) to have the tender cancelled. Tuju never sufficiently explained his actions, and probably exceeded his legal authority in intervening in the tender process. In April 2004, Chinese firm ZPMC won a controversial tender to supply eight gantry cranes worth $20 million to the port of Mombasa. The tender had twice been postponed by Cabinet ministers believed to have interests in companies competing in the tender. The good news, at least, is that ZPMC delivered the cranes as promised.
Such allegations of corruption are difficult to prove, but without the equivalent of the Foreign Corrupt Practices Act, and in the context of pervasive corruption at all levels of Kenyan government and society, it seems inconceivable that Chinese firms don't contribute actively to the corruption problem in Kenya. Whether they do so more readily than companies from other countries is a matter of debate.
On another level, however, the perception that Chinese firms and the Chinese government are willing to do business in Kenya without any strings attached is widespread, and this undermines in small ways efforts on the part of Western donors and domestic reformers to reduce corruption and improve governance. Government spokesman Alfred Mutua summed up the attitude of some in the GOK when he commented to the press in 2005 : "The Chinese do not peg their economic activity or aid to political conditions...You never hear the Chinese saying that they will not finish a project because the government has not done enough to tackle corruption. If they are going to build a road, then it will be built."
In early 2006, revelations from investigative reports of two major government-linked corruption scandals rocked Kenya and led to resignations, including three ministers (one of whom was later reappointed). In March 2006, another major scandal was uncovered involving money laundering and tax evasion in the Kenyan banking system. The government's March 2006 raid on the Standard Group media house conducted by masked Kenyan police was internationally condemned and was met with outrage by Kenya media and civil society. The government did not provide a sufficient explanation. No one has been held accountable.
The Ethics and Anticorruption Commission (EACC), an independent agency, continued to investigate corruption and develop and enforce a code of ethics for public officials. The EACC lacked prosecutorial authority, which remained with the DPP, to bring senior officials to justice. The Leadership and Integrity Bill of 2012, a watered-down version of a previously introduced integrity bill, allowed candidates with pending criminal court cases to run for government office and stripped the EACC of its authority to gather information from government bodies on political candidates. Both the EACC and DPP suffered from capacity constraints to carry out their mandates effectively.
In July 2013, Mumo Matemu was reinstated as the EACC’s chairman, replacing Abdi Ahmed Muhammed, after the Court of Appeals reversed the High Court decision that nullified Matemu’s appointment as chairman in September 2012 amid allegations of financial impropriety during his tenure as commissioner at the Kenya Revenue Authority and legal counsel at the Agricultural Finance Corporation. Although the High Court had criticized the government for failing to investigate accusations against Matemu, the appellate court ruled that evidence against Matemu was insufficient to deny him the chairmanship. Throughout the year key technical staff members, including investigators, left the EACC to pursue other career options, which severely weakened the institution.
According to the government’s Economic Survey for 2013, the number of cases the EACC handled declined by 51 percent, from 7,326 in 2011 to 3,592 in 2012. The number of criminal cases the EACC referred to other investigative agencies dropped from 2,916 in 2011 to 1,486 in 2012. The number of cases the EACC referred to the DPP dropped by 49 percent, from 138 in 2011 to 70 in 2012. Most of these cases involved mid- or low-level officials.
Although police corruption was endemic, authorities rarely arrested and prosecuted officers for corruption. Despite the implementation of significant judicial reforms, corruption persisted throughout all levels of the legal system. Transparency International’s Global Corruption Barometer 2013 found police, the judicial system, registry and permit service, and land service to be the country’s most corrupt institutions. Bribes, extortion, and political considerations influenced the outcomes in large numbers of civil cases. To address corruption in the judiciary, in April 2012 the JSC established the Judges and Magistrates Vetting Board. By December 2012 the board had vetted all 53 judges in office. The process declared 11 judges unfit to continue serving in the judiciary, but the government dismissed only eight.
In January 2013 the National Taxpayers Association released results of a sample audit it conducted in 2012 of 28 constituencies (out of 210) that received money from the national Constituency Development Fund. The association reported the disappearance of KSh 355 million ($4.1 million), a high prevalence of ghost projects, and inflated project costs. The association blamed parliament, the overseer of the fund, of mismanagement. In September 2012 the National Taxpayers Association alleged that as much as KSh 25.77 billion ($298 million), or 30 percent of all public funds allocated to the Constituency Development Fund since its inception in 2003, had been lost due to corruption. The government did not investigate this allegation.
In July 2013 a court accused Nairobi parliamentarian John Njoroge, a former Nairobi deputy mayor, of soliciting a bribe of KSh 150,000 ($1,730) from a contractor to authorize payment of KSh 3.3 million ($38,000) to the contractor for the construction of a secondary school. At year’s end Njoroge was free on bond awaiting trial.
In March 2013 the government indicted former foreign affairs permanent secretary Thuita Mwangi, former charge d’affaires of the embassy in Tokyo Allan Mburu, and the deputy director of administration at the Ministry of Foreign Affairs, Anthony Mwaniki Muchiri, on allegations of corruption in the 2010 procurement of the chancery and ambassador’s residence in Tokyo. They were released on bail of KSh two million ($23,120).
Local media reported on allegations of high-level corruption related to energy, airport construction, and infrastructure contracts awarded to Chinese firms that allegedly did not comply with public procurement laws.
Corruption investigations were in progress in 2013 at the Nairobi City Council and the Ministries of Education, Water and Irrigation, Roads, Energy, Immigration, Sports and Youth Affairs, Special Programs, and Land. Officials at the National Social Security Fund, National Health Insurance Fund, and National Bureau of Statistics also faced corruption allegations.
In an unprecedented ruling, in June 2013 the High Court ordered Deputy President William Ruto to surrender a 100-acre farm and pay KSh five million ($57,800 ) in compensation to a farmer who sued Ruto for illegally taking his land during the 2007 election violence. In August, Ruto returned the land to the farmer.
The government freed on bail two former government officials convicted of corruption in 2012 while appealing their convictions. Former permanent secretary of the Ministry of Tourism Rebecca Nabutola was found guilty of defrauding the ministry of KSh 8.9 million ($102,900). Former deputy director at the Ministry of Education Enos Magwa was sentenced to three years in jail and fined KSh 3.6 million ($41,600) for his part in the disappearance of KSh 4.2 billion ($48.6 million) meant for free primary education.
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