Civil servants denied permission to open foreign bank accounts

EACC chief executive Halakhe Waqo said the commission received 450 applications from public officers to open or continue to operate bank accounts outside Kenya. PHOTO | FILE
EACC chief executive Halakhe Waqo said the commission received 450 applications from public officers to open or continue to operate bank accounts outside Kenya. PHOTO | FILE 

More than 146 government employees have been denied permission to operate bank accounts outside Kenya, as law enforcement agencies bring into force a constitutional provision that seeks to stem the long-standing culture that is seen to help public officials steal and stash billions of shillings abroad.

The Ethics and Anti-Corruption Commission (EACC) said it rejected the requests, mainly because the State officers submitted incomplete applications and failed to make full disclosures.

Those rejected represent nearly a third of the total 450 applications that the EACC received in the year to June 2015.

“The commission received 450 applications from public officers to open or continue to operate bank accounts outside Kenya. Of these, 304 were approved,” EACC chief executive Halakhe Waqo says in the agency’s annual report for the fiscal year ended June 2015.

Article 76(2) of the Constitution provides that public officers must not open or continue operating a bank account outside Kenya without approval from EACC.

Of the total approved, 277 are officers working in Kenyan diplomatic missions abroad while the remaining 27 are public officers based in Kenya.
Payment of school fees abroad, receiving salaries and business payments were some of the reasons given by the non-diplomatic applicants in setting up bank accounts in foreign countries.

EACC’s move to make public the number of officers running offshore accounts highlights new efforts to fight public sector corruption.

Kenya is estimated to lose more than Sh500 billion or about a tenth of GDP to bribery, creative accounting, wasteful spending, tendering fraud, and other graft practices, according to a study by KPMG.

Moi-era carpetbaggers – mostly public officers - looted more than £1 billion (Sh146 billion) from taxpayers’ and stashed the cash in offshore bank accounts and prime real estate overseas, according to a forensic study by Kroll Associates.

President Mwai Kibaki ordered the Kroll study shortly after ascending to power on an anti-corruption platform in the 2002 General Election.

The move to regulate operations of offshore bank accounts is meant to tame the corrupt practice of pillaging taxpayers’ cash and hiding the loot abroad.

“It is meant to cure any possibility of money laundering by public officers,” said EACC spokesman Benson Marimba.

The number of public officials allowed to run bank accounts outside Kenya has now risen to 367 as at the end of January 2016.

Another 38 applications have been deferred pending submission of requisite documents and further disclosures, EACC said in a statement to the Business Daily.

The increased appetite by public officers to open foreign bank accounts comes at a time when government employees’ pay has overtaken that of the private sector.

The average monthly earnings in the public sector was recorded at Sh49,739.90 compared to Sh44,806.80 monthly in the private sector, according to the Economic Survey 2015.

EACC declined to reveal the identity of the persons or the location of the bank accounts.

Those okayed to operate foreign bank accounts are required to submit annual statements showing all transactions to EACC, according to the Leadership and Integrity Act (2012).

EACC expressed doubt that all public officers running bank accounts have made disclosures to the bank, but warned of punitive measures against those found running secret offshore accounts.

“Unless they come forward, we cannot tell if a public officer is running a bank account abroad,” argued Mr Marimba.

Public officials who fail to declare ownership of a bank account outside Kenya face a jail term of three years and a fine of Sh5 million, says the Leadership and Integrity Act.

Kenyan businessmen and public officials were among a list of persons holding secret bank accounts in Switzerland and suspected of crimes such as drug-running, corruption and money laundering, according to leaked files belonging to high-street lender HSBC made public in February 2015.

Machakos Senator Johnstone Muthama and Deepak Kamani, a key suspect in the Anglo Leasing scandal, were named among the 238 Kenyans holding Sh51.1 billion in HSBC’s Swiss accounts.

Troubled CMC Motors directors were found to have set up an offshore account in the island of Jersey, according to a forensic study by South African firm Webber Wentzel.

The Jersey account is said to have received ‘commissions’ totalling £8.6 million (Sh1.2 billion) between 1977 and October 2013.

Those who benefited from this secret account include Joshua Kulei, who served as private secretary to former President Daniel Moi, former Attorney-General Charles Njonjo, billionaire Jeremiah Kiereini, former managing director of CMC Martin Forster and CMC founder (deceased) Jack Benzimra.

Chris Okemo, a former Energy minister, and Samuel Gichuru, an ex-CEO of Kenya Power, are wanted in Jersey for defrauding the electricity retailer – having stashed the cash in the channel island.

The two face 53 counts linked to “commissions” paid by companies to win Kenya Power tenders and held in a Jersey account in foreign currencies: £4.45 million; $3.2 million and kr790,000; totalling Sh1.01 billion at current exchange rates.