Post by anenro on Aug 12, 2021 18:33:19 GMT 4
The Cost of Kenya’s ‘Budgeted Corruption’
In June, Kenya’s President Uhuru Kenyatta announced a lofty goal: vaccinating the entire adult population of 27 million against COVID-19 by the end of the year. But a long-time problem –– the lack of functioning medical facilities throughout the country –– left many skeptical.
The lack of clinics is not for want of spending.
In 2016, Kenya’s Ministry of Health paid over US$10 million to private companies to deliver and install shipping containers repurposed as portable clinics, to improve healthcare access for marginalized populations in the urban centers of Nairobi, Mombasa, and Kisumu. For the next four years, the 100 containers sat near the Mombasa port while government agencies investigated how an obscure Kenyan company won a hyper-inflated contract to supply them.
Some time last year, the container clinics were moved from their storage place. Yet journalists could only locate a handful of them, and not one is operational.
Kenyans are used to seeing procurement scandals in the news, stories about billions in public funds paid to ghost companies for goods and services that never materialize. But they rarely learn who is behind the schemes, or why they’re so common.
When OCCRP member center Africa Uncensored acquired a leak of 25,727 public procurement records that spanned nearly four years and eight government agencies, reporters set about digging through the data. They identified companies linked to public officials, while seeking to understand the systemic loopholes that enable endemic fraud and embezzlement in Kenya.
Procurement contracts are now “commonly referred to in Kenya as ‘budgeted corruption,’” according to John Githongo, an anti-corruption activist and whistleblower, who added that there have been no consequences for the political elite involved in the plunder.
“Unfortunately it has been a defining characteristic of the Jubilee (Party) regime, and very sadly the health sector has been predated upon more than others,” he said.
The Jubilee Party did not respond to a request for comment on this story in time for publication.
Public Officials Prosper
While Kenya’s Ethics and Anti-Corruption Commission has been pursuing the case of the hyper-inflated, non-operational portable clinics for five years now, police have made no arrests and no one in power has been officially implicated in the $10 million scheme.
“It is totally out of the question that they would get the contract without the involvement or assistance of a public official. It just doesn’t work like that in Kenya,” said Githongo, who blew the whistle on another public procurement embezzlement scheme in 2002, which is still under investigation.
In the leaked data, reporters found previously undisclosed business links between the obscure company that supplied the clinics, Estama Investment Limited, and public officials, including a charity headed by Kenyan First Lady Margaret Kenyatta called Beyond Zero. They also discovered two former members of parliament in the company network, and a current lawmaker who is under investigation for money laundering in a separate embezzlement scheme.
The director of Estama and Beyond Zero both declined to comment on the investigation. The Ministry of Health did not respond to questions.
This isn’t the only suspect procurement process exposed in the leak.
An earlier investigation revealed that board members of a government corporation were awarded tenders worth millions of Kenyan shillings related to the construction of two dams, intended for one of Kenya’s most water-stressed regions. Reporters showed that their companies continued to benefit even after being outed by Kenya’s Department of Criminal Investigations.
In another, reporters identified two obscure companies belonging to a niece of a powerful MP, Rachael Nyamai, who had oversight of the health ministry’s spending at the time the contracts were awarded. The companies, which had no history of delivering medical supplies, appear to have been paid $240,000 to do just that. One of the companies, Tira Southshore, was also awarded a mysterious $43 million agreement to supply hand sanitizer, according to the government’s procurement system. Reporters were unable to confirm whether the money had been paid, and Nyamai declined to answer questions.
A separate investigation showed numerous contracts belonging to companies owned by Frank Mithika Linturi, a controversial senator from Kenya’s Meru County (more on this below).
Kenya’s legal anti-corruption framework doesn’t ban public officials from doing business, and has very broad standards for what could be considered conflict of interest when it comes to public tenders. For example, a public official can hold shares in a company that wins a government contract, but cannot have a controlling interest.
“They played around with the law quite interestingly,” said Harriet Wachira, a program coordinator at Transparency International-Kenya, referring to the loopholes enshrined in the 2013 Leadership and Integrity Act.
There are several efforts now underway that would strengthen the legal framework around conflict of interest and other corrupt practices. Last year, Kenyan authorities started collecting beneficial ownership information, which will be accessible to law enforcement agencies. Senator Farhiya Ali Haji recently introduced lifestyle audit legislation that would target unexplained wealth. And the Attorney General’s office is actively reviewing a draft bill that would significantly strengthen conflict of interest standards, according to a 2019 version seen by Transparency International-Kenya.
“If all these laws come together the anti-corruption landscape would change completely,” said Wachira. “It would make very serious strides in sealing the loopholes.”
Middleman Money
A peculiar phenomenon of Kenya’s procurement system is the awarding of contracts to companies that don’t produce the goods they promise to deliver, and have no track record of providing the services required. Inexplicably, they are paid by government agencies to procure goods and services from other companies.
In June, Kenya’s President Uhuru Kenyatta announced a lofty goal: vaccinating the entire adult population of 27 million against COVID-19 by the end of the year. But a long-time problem –– the lack of functioning medical facilities throughout the country –– left many skeptical.
The lack of clinics is not for want of spending.
In 2016, Kenya’s Ministry of Health paid over US$10 million to private companies to deliver and install shipping containers repurposed as portable clinics, to improve healthcare access for marginalized populations in the urban centers of Nairobi, Mombasa, and Kisumu. For the next four years, the 100 containers sat near the Mombasa port while government agencies investigated how an obscure Kenyan company won a hyper-inflated contract to supply them.
Some time last year, the container clinics were moved from their storage place. Yet journalists could only locate a handful of them, and not one is operational.
Kenyans are used to seeing procurement scandals in the news, stories about billions in public funds paid to ghost companies for goods and services that never materialize. But they rarely learn who is behind the schemes, or why they’re so common.
When OCCRP member center Africa Uncensored acquired a leak of 25,727 public procurement records that spanned nearly four years and eight government agencies, reporters set about digging through the data. They identified companies linked to public officials, while seeking to understand the systemic loopholes that enable endemic fraud and embezzlement in Kenya.
Procurement contracts are now “commonly referred to in Kenya as ‘budgeted corruption,’” according to John Githongo, an anti-corruption activist and whistleblower, who added that there have been no consequences for the political elite involved in the plunder.
“Unfortunately it has been a defining characteristic of the Jubilee (Party) regime, and very sadly the health sector has been predated upon more than others,” he said.
The Jubilee Party did not respond to a request for comment on this story in time for publication.
Public Officials Prosper
While Kenya’s Ethics and Anti-Corruption Commission has been pursuing the case of the hyper-inflated, non-operational portable clinics for five years now, police have made no arrests and no one in power has been officially implicated in the $10 million scheme.
“It is totally out of the question that they would get the contract without the involvement or assistance of a public official. It just doesn’t work like that in Kenya,” said Githongo, who blew the whistle on another public procurement embezzlement scheme in 2002, which is still under investigation.
In the leaked data, reporters found previously undisclosed business links between the obscure company that supplied the clinics, Estama Investment Limited, and public officials, including a charity headed by Kenyan First Lady Margaret Kenyatta called Beyond Zero. They also discovered two former members of parliament in the company network, and a current lawmaker who is under investigation for money laundering in a separate embezzlement scheme.
The director of Estama and Beyond Zero both declined to comment on the investigation. The Ministry of Health did not respond to questions.
This isn’t the only suspect procurement process exposed in the leak.
An earlier investigation revealed that board members of a government corporation were awarded tenders worth millions of Kenyan shillings related to the construction of two dams, intended for one of Kenya’s most water-stressed regions. Reporters showed that their companies continued to benefit even after being outed by Kenya’s Department of Criminal Investigations.
In another, reporters identified two obscure companies belonging to a niece of a powerful MP, Rachael Nyamai, who had oversight of the health ministry’s spending at the time the contracts were awarded. The companies, which had no history of delivering medical supplies, appear to have been paid $240,000 to do just that. One of the companies, Tira Southshore, was also awarded a mysterious $43 million agreement to supply hand sanitizer, according to the government’s procurement system. Reporters were unable to confirm whether the money had been paid, and Nyamai declined to answer questions.
A separate investigation showed numerous contracts belonging to companies owned by Frank Mithika Linturi, a controversial senator from Kenya’s Meru County (more on this below).
Kenya’s legal anti-corruption framework doesn’t ban public officials from doing business, and has very broad standards for what could be considered conflict of interest when it comes to public tenders. For example, a public official can hold shares in a company that wins a government contract, but cannot have a controlling interest.
“They played around with the law quite interestingly,” said Harriet Wachira, a program coordinator at Transparency International-Kenya, referring to the loopholes enshrined in the 2013 Leadership and Integrity Act.
There are several efforts now underway that would strengthen the legal framework around conflict of interest and other corrupt practices. Last year, Kenyan authorities started collecting beneficial ownership information, which will be accessible to law enforcement agencies. Senator Farhiya Ali Haji recently introduced lifestyle audit legislation that would target unexplained wealth. And the Attorney General’s office is actively reviewing a draft bill that would significantly strengthen conflict of interest standards, according to a 2019 version seen by Transparency International-Kenya.
“If all these laws come together the anti-corruption landscape would change completely,” said Wachira. “It would make very serious strides in sealing the loopholes.”
Middleman Money
A peculiar phenomenon of Kenya’s procurement system is the awarding of contracts to companies that don’t produce the goods they promise to deliver, and have no track record of providing the services required. Inexplicably, they are paid by government agencies to procure goods and services from other companies.