CORRUPTION IN KENYA: NOT THE TIME TO MOVE FORWARD

C O N F I D E N T I A L SECTION 01 OF 03 NAIROBI 000395

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: N/A
TAGS: ECON EAID EFIN KCOR PGOV PREL KE
SUBJECT: CORRUPTION IN KENYA: NOT THE TIME TO MOVE FORWARD
ON THE IMF AND MCC PROGRAMS

Ref: A. Nairobi 284 B. 05 Nairobi 5103

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


1. (U) This is a joint Embassy-USAID message and contains
a policy recommendation and rationale in paras 10-14.


2. (C) Summary: Public release of serious and credible
evidence of graft and cover-up at the highest levels of the
Kenyan Government is generating outrage in Kenya and
threatens to plunge the country into another round of
political crisis. A befuddled leadership under President
Mwai Kibaki has yet to fully respond to the allegations,
and the early indicators point towards yet another attempt
by the leadership to ride out the storm. Until the
leadership takes swift and decisive action to demonstrate
political will in the fight against corruption, the U.S.
Mission in Kenya recommends postponing any upcoming action
on Kenya's IMF and MCC programs. End summary.

--------------
High-level Graft and Cover-up Exposed
--------------


3. (SBU) As previewed in reftels, Kenya's largest daily
newspaper, the Nation, began running a series of stories on
January 22 detailing high-level corruption and cover-up
within the Kenyan administration of President Mwai Kibaki.
The serial is based on a 19-page summary dossier provided
in early December to the paper by John Githongo, the GOK's
former Permanent Secretary for Governance and Ethics.
Githongo resigned under pressure from his post in February
2005 and has been in self-imposed exile in the UK ever
since. As reported reftels, President Kibaki, the Kenya
Anti-Corruption Commission (KACC),and the U.S. Embassy
were also provided copies of the summary dossier, which is
now circulating widely among the Kenyan press, which
commendably continues to give it prominent play.


4. (SBU) The Githongo dossier offers information that has
been circulating in USG channels for some time. What is
new, however, is the graphic and coherent way it details
the high-level involvement and cover up by some of Kibaki's
most influential and trusted ministers in connection with
the Anglo-Leasing and other similar scams, which first came
to light in April, 2004. Named and shamed in the report,
among others: then-Justice and current Energy Minister
Kiraitu Murungi; former Security Minister Chris Murungaru;
Finance Minister David Mwiraria; and, Vice President Moody
Awori.

--------------
Githongo Dossier Completely Credible
--------------


5. (C) Githongo was a close contact of the U.S. Mission
prior to his resignation and self-exile, and remains so
now, indirectly. He is widely viewed by Kenyans and the
international community as a person of great integrity and
dedication to the anti-corruption cause. His "dear diary"
account squares with information from a variety of other
sources available to the U.S. Mission. We therefore view
it as completely credible, both in its details and in the
broader connections it makes between senior leaders of the
Kibaki administration and a shadowy network of private
businessmen who for years have brokered corrupt procurement
scams at a huge cost to Kenyan taxpayers and to the
country's economic and political development.

--------------
Public Reaction Gathers Steam
--------------


6. (SBU) Now that the story is in the public domain, it is
predictably causing public outrage. In an eloquent and
unprecedented page-one editorial on January 22, the Daily
Nation described "the long hard struggle to break the cycle
of sleaze...fueled by hunger for power and quick wealth."
It promises, "Today, we start that fight." As the public
continues to follow and digest the story in the press, a
coalition of church groups and Transparency International
have already called for the resignation or dismissal of the

NAIROBI 00000395 002 OF 003


ministers and officials implicated in the Githongo dossier.
Uhuru Kenyatta, Chairman of Parliament's Public Accounts
Committee (and not coincidentally also the head of the
official opposition) is planning a trip by committee
members to London to meet with Githongo shortly to review
his detailed evidence. On January 26, Uhuru further called
for the resignation or sacking of implicated ministers, for
the reconvening of Parliament, and for "mass action" in the
event the President fails to bring Parliament back into
session on schedule.

--------------
The U.S. Approach - Short Term
--------------


7. (C) Thus far, the U.S. Mission, in coordination with
other key donor countries, has adopted a low-key public
approach to the Githongo revelations. This is to allow
what is in every respect a Kenyan drama to play itself out
and to allow President Kibaki and his re-made Cabinet time
to digest and respond to it. We are currently formulating
a joint letter with other missions to President Kibaki that
we anticipate could be delivered quietly before or during a
hoped-for meeting with the president the week of January

29. It will note our collective alarm about the
allegations and suggest that the administration take swift
and decisive action to demonstrate political accountability
and repair what little is left of its credibility on the
anti-corruption front.

--------------
GOK Response: Nothing Yet; Signs Not Good
--------------


8. (SBU) Preliminary feelers indicate that we should
not/not anticipate the GOK will take soon the kind of
swift, decisive, and politically painful actions needed to
restore the confidence of Kenyans or of donors. In its
first statement on the issue, Justice Minister Martha Karua
on January 23 reiterated age-old talking points about the
high priority the GOK places on fighting corruption, and
then simply refuted the overwhelming evidence contained in
the Githongo dossier by stating: "The Government never has
and will never sanction corrupt or irregular deals to
finance politics." The Cabinet then met January 26 under
the chairmanship of Vice President Moody Awori (Kibaki was
away attending a funeral) to discuss the matter. The
result, according to preliminary press reports, was that 35
ministers and assistant ministers (which is only be around
half of the cabinet) "rallied around Awori and pledged to
counter the Anglo-Leasing 'story' collectively." In a
press statement read after the meeting, Lands Minister Amos
Kimunye denied knowledge of the Githongo dossier, attempted
to cast doubts on Githongo's credibility, and blamed the
press for politicizing the corruption issue.


9. (C) Equally if not more disturbing has been the
reaction, or lack thereof, of President Kibaki. In his
meeting with Kibaki January 25 on the corruption issue,
British High Commissioner Adam Wood reported that when
asked about the Githongo dossier, Kibaki simply denied
having ever seen it. (Comment: Kibaki is either not fully
in command of his faculties, or more likely is being
disingenuous. We have reliable reports that he received
and read the dossier in early December, and the document is
now in wide circulation in any event. End comment). In
other second-hand reports from people who met with Kibaki
this week, he has been described as relaxed and serene,
almost unaware of the political storm gathering around him.

--------------
Recommendation: Postpone IMF and MCC Actions
--------------


10. (C) Until the Government of Kenya responds in a full
and satisfactory way to the credible allegations now in the
public domain about high-level graft and cover-up within
its ranks, this Mission recommends that the United States
and the international financial institutions in which we
are members be selective in approving new upcoming credits,
tranches, or assistance programs for Kenya. In this
context, the U.S. Mission recommends that U.S.
representatives to the International Monetary Fund request

NAIROBI 00000395 003 OF 003


a postponement of the scheduled February 22 IMF Board
meeting, which was expected to approve the second review of
Kenya's Poverty Reduction and Growth Facility. In a
breakfast meeting with the Ambassador on January 26, five
other Nairobi-based Chiefs of Mission (UK, Canada, Germany,
Sweden, Switzerland) said that they would be making similar
recommendations to their capitals.


11. (C) For the same reason, we recommend no action be
taken in January or February at the Millennium Challenge
Corporation (MCC) in connection with Kenya's Concept Paper
for the MCC Threshold Program.


12. (C) Should in the coming days or weeks the GOK do an
about-face on this issue and take bold action that has the
effect of achieving a measure of political accountability
and renewed confidence in the GOK, we would of course
modify these recommendations accordingly.

--------------
Comment and Rationale
--------------


13. (C) The U.S. Mission to Kenya is not arguing for
broader disengagement from Kenya in response to the most
recent revelations of scandal. On the contrary, we seek
greater, more coordinated engagement to send an
unmistakable signal to the Kenyan leadership. We should
not underestimate the seriousness of the latest
allegations. Their corrosive effect will likely
destabilize Kenya politically and thus further hamper our
ability to advance U.S. interests on all fronts here. We
are not sure the leadership yet grasps the seriousness with
which we, the Kenyan public, and other donors take the
situation. Sadly, the leadership's track record suggests
it may simply try to ride out the storm.


14. (C) Therefore, we should in concert with like-minded
donors send an early and clear signal on the need once and
for all for political will and serious action by Kenya's
leadership. Moving ahead now at the IMF or the MCC could
and would be painted by the enemies of good governance
within the GOK as support for business-as-usual, and would
thus send a negative signal and put us on the wrong side of
this issue. The United States retains respect and
admiration among large swaths of the Kenyan population
precisely because at key moments when leadership and
courage are required, we come out not on the side of
individual leaders or administrations, but on the side of
democracy and improved governance as guiding principles for
Kenya's development. This is one such moment.
Bellamy