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Assess public-private deals in graft war

graft

Policing private business can be like trying to eradicate roaches. FILE PHOTO | NMG

Summary

  • We have checks and balances in place but cleaning up government and policing private business can be like trying to eradicate roaches: every year or two a new generation appears immuned to last year’s preventive measures.

Was the Kroll report on looting that’s heavily and widely quoted an original or final copy? If not, where is the final Kroll report? That should be best answered by the Kenyan Government.

When John Githongo, then PS for Ethics and Governance, went into exile for exposing the multi-billion Anglo Leasing scandal, some government bureaucrats must have seen it as a perfect opportunity to halt the Kroll investigation.

Government cut ties with the consulting firm and rescinded paying agreed consulting fees, blocking the official handing over of the report.

In 2015, when I gave Forbes magazine an interview for a story titled Corruption and Tenderpreneurs bring Kenyan economy to its knees I disclosed how Kenya lost a multi-billion shilling Samsung assembly plant to Ethiopia because some top government officials were asking for heavy bribes.

Many Kenyans asked how the local media missed this big story.

I bring out the two stories to demonstrate the scale and magnitude of obstruction, under-reporting as well as unreported cases of corruption malpractices.

We have checks and balances in place but cleaning up government and policing private business can be like trying to eradicate roaches: every year or two a new generation appears immuned to last year’s preventive measures.

In his latest report, the Kenyan Auditor General issued a revealing indictment that seem to be getting little limelight.

He cited global consultancy firm McKinsey & Company and the Ministry of Industrialisation for contravening the Public Procurement & Disposal Act 2005, saying the consultant not only started work before the contract was awarded but even raised an invoice of Sh69.8 million before a contract was signed.

READ: Use data to step up fight against the graft menace

Under these circumstances, the propriety of the expenditure of Sh69.8 million incurred on the contract, according to the auditor, could, therefore, not be confirmed.

For such a global firm, the least expected of them would be to subscribe to the highest global standards of ethics and integrity. But this is not the first time it finds itself in a controversial contract.

In 2014, Kenya Airways #ticker:KQ came under sharp scrutiny for paying the most expensive consultancy contract in Kenya’s corporate history to McKinsey, a staggering Sh2.3 billion in 10 months — translating to Sh46 million every week — in a contract that was to run for two years.

The brave irony was that McKinsey was part of the team (between 2008-2009) that drafted the Project Mawingu — the ambitious expansionary plan — that became the airline’s waterloo, probably leading to a record-breaking corporate Kenya loss of Sh52 billion.

Despite Kenya Airways getting little value for the huge consultancy costs, media reports also claimed that the struggling carrier actually paid the consultancy firm upfront.

In Africa, some of the worst corruption cases are not in government per se but more so private sector enabled by global firms because the only way we can find out is for someone to come forward and let the world know.

In South Africa, it took leaked emails between the scandal-filled Gupta family and associates to reveal the scale and scope of how the global auditing firm KPMG allegedly covered up how billions of taxpayers money was being used to expand the Gupta business empire.

In Mozambique, an audit report by Kroll revealed that $500 million (Sh50 billion) of the $2 billion (Sh200 billion) raised in the “tuna bonds” from lenders Credit Suisse Bank and Russian Investment Bank in 2013 and 2014 disappeared into thin air.

More revealing, the lenders charged exaggerated fees of more than $140 million (Sh14 billion) on top of $59 million (Sh5.9 billion) in bank fees which saw them remain with 10 per cent of total amount raised.

So as McKinsey goes into handling the government’s Big Four agenda, more eyes and ears will be needed on the ground.