Identifier
Created
Classification
Origin
06NAIROBI607
2006-02-10 11:10:00
CONFIDENTIAL
Embassy Nairobi
Cable title:  

CORRUPTION IN KENYA: ANGLO-LEASING COMBINES WITH

Tags:  ECON EAID EFIN KCOR PGOV PREL KE 
pdf how-to read a cable
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C O N F I D E N T I A L SECTION 01 OF 04 NAIROBI 000607 

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: 02/10/2026
TAGS: ECON EAID EFIN KCOR PGOV PREL KE
SUBJECT: CORRUPTION IN KENYA: ANGLO-LEASING COMBINES WITH
THE GOLDENBERG REPORT

Ref: A. Nairobi 527 B. Nairobi 494 C. Nairobi 395 D.
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 04 NAIROBI 000607

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: 02/10/2026
TAGS: ECON EAID EFIN KCOR PGOV PREL KE
SUBJECT: CORRUPTION IN KENYA: ANGLO-LEASING COMBINES WITH
THE GOLDENBERG REPORT

Ref: A. Nairobi 527 B. Nairobi 494 C. Nairobi 395 D.
Nairobi 284

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


1. (C) SUMMARY: In an apparently transparent attempt to
deflect public attention away from allegations of grand
scale corruption within his own administration, Kenyan
President Mwai Kibaki has officially accepted a long-
awaited report into the Goldenberg affair, a huge scandal
that took place over a decade ago. However, because the
Goldenberg Report implicates the former president, as well
as a key current minister, it offers little comfort as a
diversion from the credible allegations now rocking
Kibaki's embattled administration. Kibaki has yet to
respond to the Anglo-Leasing allegations since they came
out in public almost three weeks ago. It may not matter.
Outside of government, a powerful momentum appears to be
building in the media, in Parliament, and among the public
for full disclosure and political accountability in
connection with the Anglo-Leasing and similar scams. In
the face of these demands, Kibaki may be forced to take
additional action soon -- or else face disaster at the
polls in 2007. END SUMMARY.


2. (SBU) Issues of high-level corruption, both past and
present, continue to dominate political life at all levels
of Kenyan society, prompting the country's largest daily to
claim in a recent editorial, "Kenyans are at a momentous
crossroads in our history." In the midst of the major
furor over corruption and cover-up in the sitting
government (reftels),President Mwai Kibaki on February 3
officially received the report of the Goldenberg Judicial
Commission of Inquiry.

--------------
What The Heck IS Goldenberg Anyway?
--------------


3. (SBU) The Goldenberg Report is the result of a 2.5 year

inquiry ordered by Kibaki in February 2003. Carried out by
a three-person commission led by Justice Samuel Bosire at a
cost to taxpayers of $5.6 million, its purpose was to get
to the bottom of the Goldenberg scandal, a complex set of
illegal financial transactions that unfolded under the
former regime of Daniel arap Moi between 1990 and 1993.
The scam, allegedly masterminded by Kenyan businessman
Kamlesh Pattni, began as a ploy to obtain export credits
from Kenya's Treasury by Pattni's firm, Goldenberg
International Ltd., for fictitious exports of gold and
diamond jewelry. While the Goldenberg Report has not been
made public, press sources claiming to have seen it say it
estimates the scam cost the Kenyan Treasury $1.4 billion.
This money, the report claims, has exited the country or is
otherwise not traceable or recoverable. Bosire noted in
delivering the report that the scandal was of sufficient
magnitude that it caused "massive inflation and loss of
foreign exchange from the country." While the prime
suspects in the case have long been known, no one has yet
been successfully prosecuted in connection with the
Goldenberg scandal.

--------------
Goldenberg Report: Suspicious Timing
--------------


4. (C) The Goldenburg Report was completed in the fall of
2005, and the GOK is widely believed to have received an
advance copy at that time. But its official delivery to
the GOK was put off to de-politicize its impact in the
context of the referendum for a new constitution, held on
November 21. Kibaki's claim on February 3 that he had not
read the report and needed time to do so thus appear
disingenuous. Further, the timing of delivery appears by
all accounts to be a transparent attempt by Kibaki to
distract attention away from allegations of similarly high-
level, grand scale graft now rocking his own administration
(reftels). The latter follow in the wake of the
publication by the media starting January 22 of a summary
dossier of evidence compiled by Kibaki's former anti-
corruption advisor, John Githongo, now in self-imposed
exile in the UK. The allegations contained in the Githongo

NAIROBI 00000607 002 OF 004


dossier led to the unprecedented resignation February 1 of
ex-Finance Minister David Mwiraria (ref B).

--------------
Goldenberg-as-Smokescreen: A Risky Tactic
--------------


5. (C) The fact that most of the media and public have
seen through the GOK's attempt to deflect attention away
from present-day graft by taking delivery of the Goldenberg
Report is only part of the problem for Kibaki, however.
The Goldenberg Report itself presents its own set of
difficult political dilemmas for the President. The report
apparently recommends "further investigation and possible
prosecution" of more than 70 people, most of whom were
close to the Moi administration, but some of whom remain in
positions of influence. Most notably, the report is
believed to contain strong evidence against current
Education Minister George Saitoti for his central role in
the scam in his capacities as both Finance Minister and
Vice President during the time the scandal unfolded. Former
President Moi is also among those identified for further
investigation and/or prosecution.

-------------- -
Anglo-Leasing and Other Scandals: Here to Stay
-------------- -


6. (C) Moreover, Githongo's allegations surrounding the
Anglo-Leasing and related scandals involving Kibaki's
administration appear to have staying power. Predictably,
Vice President Moody Awori and current Energy Minister
Kiraitu Murungi both publicly announced on February 2 and 4
respectively an unwillingness to follow Mwiraria's lead in
stepping down from their jobs to facilitate investigations.
Both proclaimed their complete innocence in any wrongdoing,
despite figuring prominently as the architects of the
cover-up of the Anglo-Leasing scams in the Githongo
dossier. Their protestations of innocence may come back to
haunt, as events still unfolding at the end of the week of
February 6 indicate that the allegations put forth in the
Githongo dossier will not be easily wished away, no matter
how explosive and distracting the details of the Goldenberg
Report prove to be.

--------------
Githongo Has More to Share
--------------


7. (C) First, Githongo himself has indicated a steely
determination to press his case and put additional evidence
into play. In a February 7 conference call from the U.S.
Embassy, Githongo told the Ambassador, the World Bank
Country Director, and four other Western diplomats that
"additional evidence needs to be put forward." His BBC
Television interview on February 8 was a brave next step.
Githongo shared with the BBC part of a May 20, 2004
discussion he had secretly recorded with then Justice
Minister, and current Energy Minister, Kiraitu Murungi. In
the excerpt, Murungi apparently encourages Githongo to "go
slow" on the Anglo Leasing investigation, and tacitly
threatens Githongo's father with difficulty over a business
loan if Githongo did not comply. Neither Murungi nor
Kibaki have yet responded to this evidence, which is
supported by information we've seen through other sources.
[Note: On June 30, 2004 President Kibaki's closest advisors
tried to move Githongo and the Office of Governance and
Ethics out of the Office of the President and under
Murungi's authority at the Ministry of Justice. This move
was quickly reversed after massive outcry by civil society
groups and leading donors. End Note.]


8. (C) During the February 7 call, Githongo also confirmed
that he will provide fresh evidence during a meeting with
Kenya's Parliamentary Public Accounts Committee (PAC) in
the UK beginning February 10. On February 9, the Vice-
Chair of the PAC, Hon. Joseph Lagat, told a special
gathering of Kenya's World Bank-hosted Donor Coordination
Group (DCG) that he expected Githongo to provide
significant new evidence (and hinted that there might be
additional recordings of Githongo's conversations with key
government officials). Lagat promised that the PAC would
call those implicated in Anglo Leasing and other scams to

NAIROBI 00000607 003 OF 004


be questioned before the committee.


9. (C) While largely ineffective thus far in responding
meaningfully to the Anglo-Leasing scandal (and other
instances of alleged corruption),the PAC is nonetheless
the legislature's official oversight body and thus an
appropriate venue for the disclosure of, and further action
on, the evidence at Githongo's disposal. In the February 7
telecon with Ambassadors, Githongo expressed faith in the
PAC's ability to put together a comprehensive report after
it received evidence and testimony from himself and others.
To bolster PAC's case, Githongo also noted that "many of
the answers to the questions now being asked" about the
role of key Kibaki officials in the Anglo-Leasing scandals
can actually be found in the written records of
Parliamentary testimony going back to the period after
April 2004, when Parliament began looking into the matter.


10. (SBU) By design, the chairperson of the PAC is the
leader of the official opposition, in this case Uhuru
Kenyatta. This essentially guarantees that the full force
of the Anglo-Leasing allegations will remain alive in the
public domain, through Parliament, for the foreseeable
future. Because a number of NARC MPs from the PAC were
moved into Kibaki's cabinet in December, the current PAC is
dominated by Kanu MPs.

--------------
Will The KACC Get Aggressive?
--------------


11. (C) Close behind Kenyatta and the PAC in pursuing
Anglo-Leasing leads may be Aaron Ringera, Director of the
Kenya Anti-Corruption Commission (KACC). The KACC under
Ringera's leadership is itself at a crossroads. KACC had
previously exonerated David Mwiraria of any wrongdoing in
the Anglo-Leasing scams, and appeared last year to have
washed its hands of the scandal. This and other indicators
have raised serious doubts about Ringera's leadership in
the war on graft and called into question KACC's
independence from State House. Ringera's response to the
current round of scandals will thus largely determine his
legacy, and perhaps even the length of his tenure in
office.


12. (C) In his February 7 telecon with diplomats, John
Githongo indicated that he will be meeting with Ringera
soon, and Ringera told another Western diplomat February 3
that he would be doing so in Amsterdam February 15-16.
Githongo expressed a willingness to provide any/all
information at his disposal to Ringera for the purposes of
the KACC's re-investigation of the Anglo-Leasing and
similar scams.


13. (C) The KACC is also generating at least the
appearance of action on the home front. Two of Ringera's
deputies met with Econ/C on February 3 to request USG
assistance in either questioning or extraditing Amcit
Merlyn Kettering, a consultant whose name figures
prominently in the Githongo dossier as a shadowy broker
behind a series of multi-million dollar security-related
procurement scams, including Anglo-Leasing. (Note: Post
still awaits the KACC's official written request in this
matter. Once received, Post will communicate the request
by septel or e-mail for Washington action. End note).


14. (SBU) Ringera has also made public his intention to
launch investigations into the personal wealth of several
Cabinet ministers or ex-ministers. In the past week, KACC
has twice overcome court challenges from former Security
Minister Chris Murungaru, who argued that in disclosing the
sources of his wealth, his constitutional right against
self-incrimination would be violated. Interestingly,
Ringera is also investigating several ministers not
implicated in the Githongo dossier, including Trade
Minister Mukhisa Kituyi and Agriculture Minister Kipruto
arap Kirwa. At the February 9 DCG, Ringera pointedly
assured that the KACC "can and will prosecute ministers."

--------------
GOK Reaction: What Reaction?
--------------


NAIROBI 00000607 004 OF 004



15. (C) Meanwhile, the Executive Branch has done little in
response to the Anglo-Leasing allegations beyond Mwiraria's
apparently self-imposed resignation on February 2. Nearly
three weeks since the publication of the Githongo dossier,
Kibaki has yet to speak to the public on the matter,
creating a deafening silence.


16. (C) Attorney General Amos Wako, whose own reputation in
prosecuting graft is far from stellar, announced February 5
that prosecutions in the Anglo Leasing scandal would begin
the same week. Thus far, however, there is no evidence to
support this claim. Wako's announcement was followed by a
"secret" five-hour meeting involving Wako, Ringera,
Director of Prosecutions Keriako Tobiko, Police Director of
Criminal Investigations Joseph Kamau, and Justice Minister
Martha Karua on February 6. Press reports described the
meeting as being more concerned with following up the
Goldenberg Report, however, further fueling public
suspicions that the latter will be used to deflect
attention away from the more immediate Githongo
allegations.

--------------
Comment
--------------


17. (C) We sense a potential turning point. Kibaki
appears frozen, utterly incapable of grappling with the
crisis or providing a modicum of leadership. The other
splintered pieces in his fractured coalition are split
between those scrambling to repudiate colleagues tainted by
Anglo-Leasing, and those who are trying half-heartedly to
defend Kibaki by deflecting attention onto the ancient
Goldenberg affair. All of this is somewhat discouraging.


18. (C) We wonder, however, whether Kibaki's inaction will
matter that much as the Githongo revelations continue to
develop traction and take on a life of their own. In what
is a compelling and completely Kenyan drama, the media,
civil society, Parliament, and the public are all lining up
together in calling for the truth and for political
accountability from their leaders. We don't think Kenyans
will let their government off the hook this time, as they
appeared to do last year after Githongo's resignation.
They will either force action from Kibaki and his dwindling
cast of advisors now, or else badly punish them at the
polls in 2007. Either way, we see hope for accountability.

Bellamy