CORRUPTION IN KENYA: FINANCE MINISTER RESIGNS,

C O N F I D E N T I A L SECTION 01 OF 04 NAIROBI 000494

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: FINANCE MINISTER RESIGNS,
DIPLOMATS SEE THE PRESIDENT

Ref: A. Nairobi 395, B. Nairobi 284, C. 05 Nairobi 5103

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


1. (C) Summary: In an unprecedented move, Kenya's Finance
Minister has resigned in response to the Anglo-Leasing and
related revelations. In resigning, David Mwiraria asserted
his innocence - a claim swiftly countered by John Githongo,
the man whose dossier on high-level corruption and cover-up
in the administration of President Mwai Kibaki continues to
rock Kenyan politics. Kibaki has yet to speak publicly
about the scandals, and in a private meeting with the
Ambassador and other diplomats February 2, he was defensive
and dismissive of Githongo. This may bode ill for hopes
among the public and donors that Kibaki will at last rise
above the fray and come clean in dealing with the
corruption that has dogged his administration for the last
two years. End summary.

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Mwiraria Quits, Proclaims Innocence
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2. (SBU) In the first substantive Government of Kenya
(GOK) response to the public release of the Githongo
dossier (reftels),David Mwiraria on February 1 resigned
from his post as Finance Minister. In a prepared statement
read at an afternoon press conference, Mwiraria denied the
allegations made against him in the media by Githongo, and
said that he was voluntarily resigning to pave the way for
investigations which he said would clear his name and
protect the integrity of his family. President Kibaki was
reported to have immediately accepted the resignation. To
date, however, Kibaki has not made a single public
statement that directly addresses the allegations of high-
level corruption and cover-up that continue to swirl around
him.

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Githongo Counterpunches
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3. (SBU) In a rapid response to Mwiraria's claims of
innocence, John Githongo showed he's increasingly willing
to play hardball. In a statement issued from the UK
immediately following Mwiraria's resignations remarks, he
said, "I want to categorically state that evidence in my
possession conclusively proves that Mr. Mwiraria was an
integral player in the Anglo-Leasing scandal and related
scams." And in a subtle unspoken challenge to Kenya Anti-
Corruption Commission (KACC) Director Aaron Ringera,
Githongo said, "No impartial and independent inquiry can
reach a contrary conclusion."

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Every Man for Himself?
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4. (SBU) The Mwiraria resignation takes place in the
context of an ongoing media frenzy fueled by the explosive
allegations contained in the Githongo dossier, and also y
the apparent unraveling of Kibaki's former inner circle.
On January 29, former Security (and then Transport)
Minister Chris Murungaru, believed to be at the center of
the Anglo-Leasing and similar scams, sent a memo to the
KACC reporting that President Kibaki himself authorized the
tainted $57 million contract for the purchase of a Kenyan
naval vessel. Murungaru does not explictly suggest
wrongdoing by Kibaki, but is reported to say in his memo
"no procurement of this magnitude can go ahead without the
President's authorization."

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More Public Resentment Over Luxury Cars
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5. (SBU) The GOK was also rocked by revelations published
by the Kenya branch of Transparency International the week
of January 31 that the GOK spent $12.2 million in 2003 and
2004 for luxury cars for ministers and other senior civil
servants and parastatal heads. At a time when Kenya is
suffering from devastating drought and famine, the report

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resonated with the public in pointing to such waste and
extravagance as "morally reprehensible and ethically
indefensible". It cites such spending as one of the
reasons "why Government fails to deliver the economic
development...the country has the potential for."

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Murungaru Plays Games with KACC
--------------


6. (C) In the background, press reports indicate the KACC
has reopened investigations and that Murungaru and Vice
President Moody Awori were both questioned the week of
January 30. Predictably, Murungaru is fighting the
allegations against him. Murungaru has publicly proclaimed
his innocence and welcomed investigations into the
allegations against him as a way to clear his name. But on
February 1, he went to court to stop the KACC from
exercising its legal authority by requiring him to disclose
his personal wealth through the GOK's mandated wealth
declaration forms. In a rich touch of irony, Murungaru's
lawyer, Member of Parliament Paul Muite, argued that doing
so amounted to self-incrimination.

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Embassies Engage in Quiet Diplomacy
--------------


7. (C) By prior agreement after the publication of the
Githongo dossier, the U.S. and other like-minded members of
the diplomatic and donor communities have said little of
substance in public about the scandal, preferring to give
the GOK and the Kenyan public time to respond, and to also
engage in quiet diplomacy. As follow up, Ambassador
Bellamy and four other Nairobi-based chiefs of mission
(Canada, Germany, Sweden, and the UK) met privately with
President Kibaki on February 2. They delivered a carefully
coordinated written memorandum that conveys the
international community's alarm over the current situation.
The memo, signed by a total of 11 chiefs of mission, calls
for swift, decisive action by Kibaki as a means to achieve
political accountability and restore a measure of
confidence in his administration. The text of the
memorandum follows below in para 12. It was conveyed to
President Kibaki in strictest confidence and is thus not
for dissemination outside USG channels.


8. (C) Separate reporting will provide additional details
into the COM/Kibaki meeting, but the Ambassador in a
preliminary readout while enroute from State House to
Mombasa, reported a "very discouraging response" by Kibaki.
Kibaki and his advisors, for example, repeatedly tried to
discredit John Githongo, and dismissed the latter's dossier
as "no basis for action." Kibaki remarked that Mwiraria
acted on his own when he resigned. If this is true, it
would indicate Kibaki has yet to make any important
decisions in dealing with the crisis himself.

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Comment: Where From Here?
--------------


9. (C) In the sad context of Kenya's recent history,
Mwiraria's resignation is unprecedented, and in this sense
marks progress towards greater political accountability.
While professing his innocence, the soft-spoken and
technically competent Mwiraria nonetheless showed a degree
of political maturity and personal responsibility in
stepping down, particularly if he did so of his own
volition.


10. (C) It is unclear what if any additional steps Kibaki
will take to respond to public demands to clean house --
and come clean himself. The press is speculating that
Energy Minister Kiraitu Murungi and Vice President Moody
Awori might be next to resign or be fired given their
prominent roles in the Githongo dossier. But based on
Kibaki's meeting with diplomats February 2, we fear a
scenario in the coming days in which the President will do
nothing further in the hopes that the Mwiraria resignation
(and the earlier exclusion of Murungaru from cabinet) will
be enough to mollify the public and donors and make the
problem go away.

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11. (C) But doing so would put Kibaki on thin ice. Public
and media pressure to do more continues to be intense, and
as noted above, Githongo is not going away either. Kibaki
would be wise to re-embrace (instead of vilify) Githongo,
apologize to the nation for letting his vision for the
country go so far off-track, and pledge to clean house and
turn his administration around. But thus far, he has shown
little evidence of an ability to get a grip on the crisis
burning around him, let alone rise above the fray and exert
inspirational leadership. Until he does, we have to be
ready in the coming days to speak out publicly on the need
for more action.


12. (C) Text of the February 2 letter and memorandum to
President Kibaki from concerned members of the diplomatic
community follows below:

Cover letter:

Your Excellency,
Concerned about the recent reports of corruption within the
Kenyan administration in connection with the Anglo-Leasing
and other similar cases, the undersigned Heads of Missions
wish to present you the attached memorandum in the spirit
of partnership and dialogue that has characterized our
support for Kenya. Building on earlier steps to improve
governance, we urge you to take all necessary and prompt
actions in order to demonstrate your Government's
credibility and to restore confidence of members of the
international community and we wish to reiterate our
support in this regard.
Yours truly,
[Signed by the Chiefs of Mission of: Australia, Canada,
Denmark, Finland, Germany, Netherlands, Norway, Sweden,
Switzerland, United Kingdom, United States].

Text of Memorandum:

We represent some of Kenya's most supportive international
development partners. It is in this capacity as friends of
Kenya and in the spirit of partnership that has
characterised our support for Kenya, we continue to support
the anti corruption-related institutional and legal
measures put in place by the Government since 2003 and
recall the current administration's initial commitments to
zero tolerance of corruption. We are deeply concerned by
the recent reports of high-level corruption and cover-up
within the Kenyan administration in connection with the
Anglo-Leasing and other similar cases.

We view these revelations as serious and credible. They
have laid bare the hard fact that the Government of Kenya
has neither dealt effectively with the above-mentioned
issues, nor with some of their underlying causes.

As such, in the eyes of the Kenyan public and the
international community, the administration faces a
deepening crisis of confidence. The response to this crisis
will likely have profound implications for the near-term
direction of Kenya's democratic evolution, and for its
relations with international development partners.

We therefore urge the President to swiftly seize this
moment to affirm his pledge to the fight against corruption
in Kenya through concrete and unambiguous actions. Failure
to do so will damage the ability and willingness of the
international development and business communities to
engage as deeply and broadly with Kenya as would otherwise
be the case.

It is not our role to prescribe specific actions the
President could take to begin to restore the Government's
credibility and the confidence of the Kenyan public and the
international community. Our assessment of the current
political climate both in Kenya and internationally,
however, indicates that firm and focused actions would do
much to help. Such suggested actions include, but might
not be limited to, the following immediate, short-term
measures:

1.Consistent with both the spirit and letter of the
Ministerial Code of Conduct, Ministers and Government

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officials implicated in the Anglo-Leasing and related cases
are required to resign or to stand aside pending full
investigations into their alleged roles in either
committing such crimes, or in covering them up. Publicly it
has to be explained why these Ministers and officials are
required to resign or step aside.

2.The independence of the Kenya Anti-Corruption
Commission (KACC) and the Department of Public Prosecution
in pursuing investigations and/or prosecutions of suspects,
no matter how highly placed in government, must be
reiterated publicly.

3.The Government publicly commits to and implements a
policy of timely and regular public disclosure of all audit
reports by the Auditor General, as well as all commissioned
ad-hoc governance and anti-corruption related investigative
reports.

4.Those foreign and Kenyan individuals and companies
implicated in the Anglo-Leasing and similar scams should be
identified by the Government. Neither they nor their
proxies should be allowed to do business with the
Government unless and until investigations into their
alleged crimes fully exonerate them.

While legal accountability is indispensable to the fight
against corruption, this alone is not sufficient. In fact,
the recent Anglo-Leasing revelations underline an equally
important reality. When those very legal and institutional
measures fail to root out the most insidious forms of
graft, then it is incumbent upon the nation's leaders to
use the political and administrative tools at their
disposal to enforce political accountability in government.

We hope that whatever steps the President chooses to take
now go beyond merely referring cases to the Kenyan Anti
Corruption Commission or others for further investigation.
We urge the President to include bold and swift executive
actions that demonstrate political accountability in his
Government. Only then will the Government be able to
restore the credibility we all need now to move forward to
advance our common goals in nurturing Kenya's democracy,
growing its economy, and reducing the poverty of its
people.

End text.
Bellamy