Identifier
Created
Classification
Origin
06NAIROBI1439
2006-03-31 11:24:00
CONFIDENTIAL
Embassy Nairobi
Cable title:  

CORRUPTION IN KENYA: PARLIAMENTARY REPORT BLOWS

Tags:  ECON PGOV EAID EFIN KCOR PREL PINR KE 
pdf how-to read a cable
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O 311124Z MAR 06
FM AMEMBASSY NAIROBI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0689
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INFO RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
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C O N F I D E N T I A L SECTION 01 OF 03 NAIROBI 001439 

SIPDIS

SIPDIS

DEPT FOR AF/E, AF/EPS, EB/IFD/OMA
USAID FOR AFR/DP WADE WARREN, AFR/EA JEFF BORNS AND
JULIA ESCALONA
MCC FOR KEVIN SABA AND MALIK CHAKA
TREASURY FOR LUKAS KOHLER
LONDON AND PARIS FOR AFRICA WATCHERS

E.O. 12958: DECL: 2/14/2031
TAGS: ECON PGOV EAID EFIN KCOR PREL PINR KE
SUBJECT: CORRUPTION IN KENYA: PARLIAMENTARY REPORT BLOWS
THE LID ON ANGLO-LEASING

Ref: A. Nairobi 944, B. Nairobi 661, C. Nairobi 607, D.
Nairobi 527, E. Nairobi 494, F. Nairobi 395, G. Nairobi 284

Classified by Econ Counselor John Hoover for reasons 1.4
(B) and (D).

C O N F I D E N T I A L SECTION 01 OF 03 NAIROBI 001439

SIPDIS

SIPDIS

DEPT FOR AF/E, AF/EPS, EB/IFD/OMA
USAID FOR AFR/DP WADE WARREN, AFR/EA JEFF BORNS AND
JULIA ESCALONA
MCC FOR KEVIN SABA AND MALIK CHAKA
TREASURY FOR LUKAS KOHLER
LONDON AND PARIS FOR AFRICA WATCHERS

E.O. 12958: DECL: 2/14/2031
TAGS: ECON PGOV EAID EFIN KCOR PREL PINR KE
SUBJECT: CORRUPTION IN KENYA: PARLIAMENTARY REPORT BLOWS
THE LID ON ANGLO-LEASING

Ref: A. Nairobi 944, B. Nairobi 661, C. Nairobi 607, D.
Nairobi 527, E. Nairobi 494, F. Nairobi 395, G. Nairobi 284

Classified by Econ Counselor John Hoover for reasons 1.4
(B) and (D).


1. (C) Summary: Like a second nuclear strike following the
release of the Githongo dossier in January, a long-awaited
report into the Anglo-Leasing and related scandals by
Kenya's Parliament was released on March 30 and is sending
shockwaves through Kenyan politics. The report from the
Parliament's Public Affairs Committee builds on and
augments Githongo's evidence and paints a damning portrait
of high-level corruption and cover-up in the administration
of President Mwai Kibaki. The report explicitly states
that Kibaki himself was fully briefed from the beginning on
the Anglo-Leasing scandals and on who was behind them. How
the embattled administration will react in the current
polarized political environment remains to be seen, but we
are unlikely to see any dramatic actions to demonstrate
renewed political will or accountability. End summary.

--------------
Reviewing What "Anglo Leasing" Means
--------------


2. (SBU) On March 30, Kenya's Parliamentary Public
Accounts Committee (PAC),the legislature's primary
oversight body, accepted for debate and released the much-
anticipated results of its investigation into the Anglo-
Leasing scandals. Although laboriously titled "Report on
Special Audit on Procurement of Passport Issuing Equipment
by the Department the Immigration, Office of the Vice
President and Ministry of Home Affairs," the 68-page
document provides a useful reminder to all readers,

including Washington consumers, of exactly what "Anglo-
Leasing" refers to. In its original and simplest form, it
refers to two large-scale procurement scams, one worth
$54.6 million to procure turnkey construction of a police
forensics lab, and the second worth around $36 million for
procurement of a new secure passport issuing system. Both
contracts were with a non-existent UK finance company,
Anglo Leasing and Finance Ltd.


3. (SBU) But "Anglo-Leasing" has come to be short-hand for
a series of security-related procurement scams that
followed much the same pattern and involved the same loose
and shadowy network of GOK officials and private
businessmen described in greater detail ref A. (Note: Ref A
requests visa revocations against four members of this
network; that request remain pending in Washington. End
note). The PAC report therefore reminds us that "Anglo-
Leasing" is much more than one or two isolated scandals,
but rather a large and sticky web of high-level, grand-
scale corruption. To wit, the PAC report notes that:

-- 18 separate contracts of the Anglo-Leasing nature worth
$730 million were signed by the Moi and Kibaki Governments
between 1997 and 2003.

-- A total of $240 million was paid out under these
contracts through May 2005. A total of around $12 million
has been mysteriously returned to the government on three
of the 18 projects after their exposure in mid-2004.

-------------- --------------
A Win for Parliamentary Oversight and Transparency
-------------- --------------


4. (SBU) Initially, even getting the PAC report tabled in
Parliament appeared problematic. Predictably, the
government on March 28 tried to block it from being
introduced. But in a clear win for Parliamentary
independence, House Speaker Francis ole Kaparo rejected the
government's arcane legal arguments and ruled March 30 that
the report be tabled for debate in light of the "immense
public interest." The following day, the full report was
available, and the media did its part by publishing
condensed versions and excerpts in all major papers on
March 31. Post has e-mailed the full report to AF/E and
INL/C/CP. A useful condensed version is available at:

http://nationmedia.com/dailynation/downloads/ PAC-

NAIROBI 00001439 002 OF 003


Report.pdf.


5. (SBU) The PAC report lays out in even greater and more
stunning detail the connections between the Anglo-Leasing
and similar deals and the senior-most members of the Kibaki
administration. Its evidence relies heavily, but far from
exclusively, on the Githongo dossier (ref G),drawing also
from government documents and from testimony obtained from
18 witnesses who appeared at 22 "sittings" before the PAC.
The report paints a compelling narrative of corruption and
cover-up in the 18 Anglo-Leasing-style procurement scams,
complete with charts and graphics that identify a series of
non-existent finance companies and the individuals behind
them. At the same time, it carefully talks of "possible
inter-relatedness" between specific individuals and tainted
deals so as not to categorically pass judgment and lay the
PAC open to charges of slander. As such, it doesn't quite
connect the dots, but it lays them all out so that the
reader is left with little doubt about where the evidence
points.

--------------
Naming Names and Drawing Conclusions
--------------


6. (SBU) The PAC report nonetheless discusses and passes
judgment of a sort on a number of individuals and organs of
the Kenyan government. In a section entitled "Political
Culpability," it makes the self-evident point that the Vice
President and the ministers involved were "constitutionally
responsible for the actions under their control," and that
they "did not exercise due care and diligence in
undertaking those responsibilities." The report rejects
claims from Vice President and Home Affairs Minister Moody
Awori and other ministers that they were unaware of the
corrupt deals being hatched within their ministries, noting
that the evidence clearly shows they were well-briefed at
all times regarding the suspect transactions. The report
has the following to say about some of the key players in
the Anglo-Leasing drama:

-- Ex-Minister of Finance David Mwiraria: "The Ministry
abdicated its...role...in as far as securing external
loans." Mwiraria "displayed a most cavalier attitude" and
"was either outrightly incompetent...or deliberately remiss
in giving the Anglo-Leasing principals an advantage."

-- Ex-Justice Minister Kiraitu Murungi: "There is credible
evidence that Hon. Murungi MP gave protection to Anglo-
Leasing principals...the principals behind Anglo-Leasing
were probably a front for persons within President Kibaki's
administration."

-- Head of Civil Service Francis Muthaura: Muthaura "misled
the public that there had been no wrongdoing..." and on
related matters "...either deliberately misled the
Committee or is incompetent in his duties."

-- The Kenya Anti-Corruption Commission: The KACC, under
Justice Aaron Ringera only recommended prosecution of lower-
level civil servants in the initial Anglo-Leasing
investigations and appears to have closed off for itself
other fruitful avenues of investigation. The PAC report
concludes it "is not convinced about the ability of the
KACC to prosecute the case given its selective exclusion of
political figures."

--------------
What About the President?
--------------


7. (C) Through a recital of facts, the Githongo dossier
makes clear President Mwai Kibaki was fully briefed on the
Anglo-Leasing and related scams, and therefore knew who in
his administration was behind them. But it never says so
directly. The PAC report is more explicit:

-- "...it would be difficult to conclude that he (Githongo)
did not brief the President on the Anglo-Leasing contract."

-- "Even if it is accepted that Mr. Githongo never briefed
the President, as may be claimed, other persons also
testified that the President received appropriate

NAIROBI 00001439 003 OF 003


briefings."

-- "The Committee believes the KACC reports were availed to
the President and especially that his Governance and Ethic
Permanent Secretary dealing with corruption issues kept him
fully informed."

--------------
PAC Report Recommendations
--------------


8. (SBU) The PAC report makes 16 recommendations, key
among them:

-- Prosecution of "persons involved in negotiations and
approval of the passport issuing equipment project."

-- Termination or resolution by the Attorney General of the
18 frozen security-related contracts.

-- Tabling in Parliament of the audits of the 18 projects.

-- Presidential authorization for government to release
additional information to the PAC to allow it to further
investigate the 18 projects.

-- A series of procedural and institutional measures to
increase the oversight authority of Parliament with regard
to procurement and foreign borrowing.


--------------
Comment, Part I: Is It All Politics?
--------------


9. (C) Without doubt, key PAC members had a strong
political incentive to draft a hard-hitting and well-
organized report. By statute, the PAC Chairman is a member
of the political opposition, in this case Uhuru Kenyatta,
the articulate head of the opposition KANU party. The rest
of the PAC consists of four other KANU members, with only
two additional members affiliated with the ruling NARC
government. GOK cries that the corruption allegations are
politically motivated will thus always have a ring of
truth. This should not, however, be allowed to detract
much from the substantive contribution the PAC report is
making in terms of greater transparency in the long war
against corruption in Kenya. The report itself, and the
fact that it was successfully tabled and then made
available publicly is an important and positive step
towards greater accountability and transparency. Kudos
again to the media, and for once, to Parliament.

--------------
Comment, Part II: What Next?
--------------


10. (C) After weeks of headlines about cocaine and
mercenaries, the PAC report returns the Anglo-Leasing and
related scandals to the spotlight, and lays bare the
inadequacy thus far of the government's response to the now
well-documented allegations of high level graft and cover-
up. Thus, as the report is debated in Parliament in the
coming days, the biggest question revolves around how the
GOK will react. We hope we're wrong, but our best guess is
that in the current polarized atmosphere, the GOK will
publicly proclaim its intention to aggressively investigate
and prosecute all graft, and then batten down the hatches
and do whatever it can behind the scenes to divert further
attention from the Anglo-Leasing issue. We do not expect
any additional political accountability from Kibaki. The
President, in fact, has yet to make a detailed and
definitive statement on the Anglo-Leasing affair since the
release of the Githongo dossier in January, and the
situation is only more difficult now because the PAC report
is even more explicit in revealing that Kibaki knew about
Anglo-Leasing all along.
Bellamy