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Kenya: Githongo Report
AfricaFocus Bulletin
Feb 26, 2006 (060226)
(Reposted from sources cited below)
Editor's Note
John Githongo, who resigned a year ago as Kenya's anti-corruption
chief, this month released a report on scandals he was
investigating that has already forced the resignation of Kenya's
finance minister and threatens to bring down other top officials.
The report is based on detailed records he kept during his
investigation, and spells out how officials used security contracts
worth as much as $1 billion to siphon off government funds into
non-existent companies.
The cast of officials potentially implicated in fraud or coverups
includes David Mwiraria, minister of finance; Chris Murungaru,
former minister of security; Moody Awori, vice-president; Kiraitu
Murungi, minister of justice; Francis Muthaura, head of public
service; and Dave Mwangi, permanent security for security. Also
involved were Kenyan businessmen Anura Peres and Deepak Kamani,
companies in England, France, and Switzerland, and an American
consultant, Merlyn Kettering.
A 19-page summary of the unusually detailed 91-page report has been
posted on the web by the BBC and other sites in an image PDF format
(5.7 M). The web version of this issue of AfricaFocus Bulletin
(http://www.africafocus.org/docs06/git0602.php) contains a quickly
loading html version of Githongo's cover letter and the 19-page
summary. The version sent out by e-mail contains selected excerpts
from the cover letter and summary.
++++++++++++++++++++++end editor's note+++++++++++++++++++++++
JOHN GITHONGO
Senior Associate Member
St. Anthony's College
H.E. President Mwai Kibaki
President of the Republic of Kenya
State House Nairobi
22nd November 2005.
Dear Sir,
Re: Cover letter accompanying report on my findings of graft in the
Government of Kenya
It has been my desire to send the attached summary report to you
but I thought it wise to wait until the conclusion of the
politically intense referendum-related campaigning period. The
reason for this was that my report be not construed. to be part of
a politically- motivated action in favor or in opposition to any
political formation in the Kenyan context. Indeed, I completed this
dossier in September 2005 after four and half months of steady work
and chose to wait until the conclusion of the referendum process to
forward it for your attention.
Find attached a summary document of a wider 91 page report on my
findings regarding the most egregious cases of corruption that were
the subject of my attention under your instruction during the time
I served as your Permanent Secretary in the Office of the President
in-charge of Governance and Ethics.
Although you are aware of the issues, I have chosen to prepare this
report for you in part, as a result of information being made
available to me by your Permanent Secretary in- charge of Strategy
based at State House, Mr. Stanley Murage, that some of my written
briefs to you during my tenure may no longer be available for one
reason or another, that is not in the realm of my understanding.
Secondly, as we discussed with you severally during our briefing
sessions when I served as your Permanent Secretary, I had evidence
of culpability on the part of the senior-most officials of our
administration in some of the corruption-related scandals that were
the subject of my Department's interest; and that were subject of
investigation variously by the Office of the Controller and Auditor
General, the Kenya Anti Corruption Commission; and, at times the
Kenya Police.
As you may remember from our meeting of the 3rd of February 2004
that took place in the evening in your room at. State House I
adopted the practice of regularly keeping a record of key meetings
I was involved in. I am m a position. to conclusively substantiate
the claims made in the attached report by means of incontrovertible
material evidence. I am happy to share this with you directly.
It is my hope that these matters can be brought to their nationally
beneficial conclusion and should you .seek any clarification, I
will be happy to avail it at your earliest convenience.
I believe, Sir, that dealing with the issues very briefly mentioned
herein are integral to regaining the trust and goodwill of the
Kenyan people in your Presidency and the Government. I am willing
to assist in any way you should direct in not only dealing with
these issues but in contributing to the processes that will ensure
they are not repeated in the future.
I beg to remain, Sir,
Your Most Faithful Servant
John Githongo
STATEMENT
This is my statement of events leading up to my resignation in
February 2005 and in particular the assorted corruption-related
matters I was inquiring into at the time which came to a head. I
start at the beginning of 2004.
1. ANGLO LEASING
On the 3rd of March 2004, my department was provided with
information that suggested that a non-existent company called Anglo
Leasing and Finance had been awarded a contract by the Immigration
Department in the Ministry of Home Affairs and a 3 percent down
payment, of around Ksh.90 million had been paid.
2. THE VICE PRESIDENT AND ANGLO LEASING
l0th March 2004
On Wednesday, March 10, information reached me that mirrored what
had been told to me on March 3, 2004.
I called Vice-President Moody Awori on the hotline regarding the
Immigration department contract matters and he denied knowledge of
this saying that he made a point of not knowing about these things.
However, he promised that he 'would look into the matter'.
I informed the Vice President that there were two things bothering
me: first, I had heard that maybe the Anglo Leasing company did not
exist and therefore had been created for some untoward purpose and,
second, the supposed company was linked to Deepak Kamani of
Mahindra jeeps fame and that if we continued interacting with him
as a new government this would cause us great embarrassment
considering his terrible track record.
3. STRUCTURAL BOTTLENECKS IN THE FIGHT AGAINST CORRUPTION
27th/28th March 2004
While attending a money laundering conference in Mombasa that was
opened by Hon. David Mwiraria the Minister of Finance, Hon.
Mwiraria pulled me aside during a break and told me that Hon.
Murungaru had recently called him. Apparently Murungaru had asked
Mwiraria to ask me whether I had authorized an investigation into
the back accounts of an individual called Anura Peres at Equatorial
Bank.
Hon. Mwiraria informed me that Perera was a 'strong supporter of
the President and had backed him for over 10 years', and had even
paid the President's medical bills incurred in London following his
road accident in 2002. This surprised me because since 2003 Mr.
Perera's name had been linked, albeit without evidence, to some of
the egregious cases of corruption in the defence/security sector
going back to the 1980s. The head of the Banking Fraud Department
of the Central Bank, Nicholas Kamwende, was also at the workshop.
I later went over to ask him whether he was indeed conducting such
an investigation because I knew nothing about it. He confirmed that
he was indeed conducting such an investigation because his
department suspected that Equatorial Bank was involved in the
setting up of fictitious accounts that were 'being used for capital
flight'.
4th April 2004
Your Excellency, I briefed you on all these matters on the 4th of
April 2004.
4. ANGLO LEASING GOES PUBLIC
21st April 2004
KANU MP for Ntonyiri, Maoka Maore tabled documents before
parliament on a company called Anglo Leasing and Finance Company
Limited that had allegedly been paid a commitment fee of 3 percent
amounting to over Ksh.90 million as part of a Ksh.2.7 billion
contract to produce tamper-proof passports for the immigration
department.
Your Excellency I briefed you on this on the 22nd of April 2004 and
that in light of the intelligence this was likely the first big
case of graft in our administration. I also wrote a letter to the.
Kenya Anti-Corruption Authority asking them to get lo the bottom of
the matter as we had. discussed.
5. ANGLO LEASING: THE ANATOMY
Your Excellency the anatomy of the Anglo Leasing matter is
contained in reports I made available to you titled: KACC report
titled 'Immigration Security and Document Control Project-report on
Investigations into allegations of corruption in this project'
dated 18-05- 04; and the Kenya National Audit Office Special Audit
Report on procurement of passport issuing equipment dated 13-05-04.
2nd May 2004
At the end of April 2004, I travelled to the United Kingdom with
Hon. Kiraitu Murungi to the offices of Kroll Associates. While at
Kroll we asked to do a search for the company called Anglo Leasing
and Finance Co. and found that no such entity existed in the UK or
had ever existed there. Upon return to Kenya, I found the
investigations had been proceeding expeditiously despite hiccups
and, Your Excellency, I updated you on progress, including the fact
that senior officials in government were possibly implicated in the
unfolding saga. Those mentioned by the investigators at this stage
included Hon. Moody Awori, Hon. Kiraitu Murungi, Hon. David
Mwiraria, Hon. Chris Murungaru, PS Home Affairs, Mr. Sylvester
Mwaliko, PS Finance, Mr. Joseph Magari, PS Internal Security Mr.
David Mwangi, Mr. Alfred Getonga, Mr. Deepak Kamani and Mr. Jimmy
Wanjigi.
I also remember that you emphasized to me at this meeting that we
locate the commitment fee paid to the Anglo Leasing and Finance
Company of Ksh.91 million. I immediately set about doing this.
6. DISCUSSION OF ANGLO LEASING WITH VICE PRESIDENT, MINISTER MURUNGI AND MINISTER MURUNGARU
4th May 2004
On the 4th of May 2004 1 was invited to lunch by Hon. Kiraitu at
the Vice President's home. Minister Murungaru also attended. We had
an inconclusive discussion on the Anglo Leasing matter which I
briefed you on later. The Ministers questioned the need for an
investigation into the matter since the Vice President had already
given a parliamentary statement.
5d, May 2004
Gideon Mutua and Hussein Were, who were the KACC's lead
investigators into the matter, came in to brief me and reported
that everything now pointed to a 'gigantic attempted fraud'. They
informed me that in addition to the Ksh.91 million that had been
paid to Anglo Leasing as a commitment fee, an additional Euro
3,750,000 (Approx. Ksh.300 million at the time) was even then being
processed for payment to Anglo Leasing on the same project. They
explained that while interviewing PS Magari he bad pointed out to
them that Hon. Murungaru had asked for them to pull back.
Later that day, 5th May, 2004 in parliament Hon. Chris Murungaru
announced that the Government had cancelled the Anglo Leasing
contract pending the completion of investigations.
l0th May 2004
On the 10th of May, 2004 the KACC investigators informed me that
the PS/Treasury, PS/Home Affairs, Dr Sitonik, the head of GITS and
the entity known as Anglo Leasing were the primary suspects in the
case of the attempted fraud. Your Excellency, on this day I briefed
you regarding this development. Later that day, Hon. Kiraitu came
to my office and informed me that, Mr. Alfred Getonga -had
expressed his concern to him (Kiraitu) that I was-investigating him
because the President had told him (Mr. Getonga) that 'very serious
people' had told him that he was involved in the immigration deal.
Hon. Kiraitu told me that we had to be careful that the
investigation did not 'knock out key political people' like Alfie
and Murungarus He argued that these were "key players at the very
heart of government."
7. CONCLUSIONS OF THE INVESTIGATION
13th May 2004
By the 13th of May, 2004 conclusive reports into the Anglo Leasing
matter had been received from both the KACC and the Controller and
Auditor General and their conclusions were in the same vein. They
all pointed to a significant fraud perpetrated by Messrs. Magari,
Mwaliko, Sitonik and the entity called Anglo Leasing and Finance.
Hon. Kiraitu called me that same day and told me that Hon. Mwiraria
had informed him that he did not plan to table the damning
Controller and Auditor General report before the Public Accounts
Committee before making some 'major changes' at the Treasury. That
same evening. I had a telephone conversation with Ambassador
Francis Muthaura who insisted that we should find out who Anglo
Leasing really were. He suggested that we should enquire with the
French printing firm FCOF. FCOF had placed a large advert in the
newspapers explaining their virtues as a company and the importance
of the immigration passports project was to the Government of
Kenya. In the week I was to receive threats over the telephone and
abuse in the gutter press.
14th May 2004
On the 14th of May, 2004 a credible source advised me that all the
Anglo Leasing type fictitious companies were very likely
established by a man called Pritpal Singh Thethy, an accountant and
engineer, who allegedly had offices in a complex owned by Anura
Perera near Westlands. Thethy's primary job was the setting up of
bogus companies for General Kibwana, Anura Perera and Deepak Kamani
among others. The businessman claimed that in all likelihood one of
these companies that had been created in 1997 was called Anglo
Leasing and Finance Co. These entities routinely won most large
contracts to supply goods and services to the security and defence
sectors at hugely inflated prices. An assortment of reliable
sources including from within-the military indicated that Mr.
Perera was involved in a range of questionable projects in the
defence/security sector and had developed a reputation for paying
sizable kickbacks.
Your Excellency, on the 14th of May, 2004 I handed over to you my
final report on the Anglo Leasing matter and advised that a similar
project was underway at the Police Department connected with the
construction of a forensic laboratory for the CID. I added that I
had heard of a range of other similar projects as well. This was at
around 17:30HRS. Once I arrived home, at around 19:3OHRS, I
received a telephone call from Ambassador Francis Muthaura. He
informed me that Anglo Leasing had contacted him and had assured
him that they were going to repay the money, which he described as
a great success.
I later contacted the Central Bank for proof that the money had
been repaid and they sent over a transmission sheet that showed
that Anglo Leasing and Finance, from their back account at,
Schroder & Co Bank AG in Zurich had 'refunded' Euro 956,700 on
14-05-04. The transaction was certified on 17-05-04 by the Central
Bank.
On the 17th of May, 2004 Ambassador Francis Muthaura informed me
that H.E. the President had authorised the suspension of Messrs.
Magari PS/Treasury, Mwaliko PS/Home Affairs, Dr. Sitonik of GITS
and Dorcas Achapa an official from the AG's chambers who had
'approved' the Anglo Leasing contract.
I pointed out that Ms. Achapa had never been considered a suspect
by the KACC. Ambassador did, however, admit to me that on the
morning Magari and Mwaliko came into his office for him to
communicate their suspension to them, that both had totally denied
any knowledge of Anglo Leasing and Finance which even he said he
found preposterous. Indeed, up until this time there was no
government official who claimed knowledge of who Anglo Leasing and
Finance were.
8. REACTIONS
17th May 2004
In the afternoon of the same day Hon. Kiraitu Murungi stepped into
my office unannounced. He expressed concern about the way the Anglo
Leasing investigation was going. He told me `people' were concerned
whether I appreciated the political costs of my work'. He told me
that it was hoped once the Anglo Leasing paid back the money the
investigation would stop. Hon. Mwiraria dropped in on me in the
same afternoon. He warned that Mr. Jimmy Wanjigi had sworn to kill
me; and just as Kiraitu had suggested earlier, he expressed the
hope that the immigration investigation would stop since the money
had now been paid back. He expressed concern that he'd heard I was
'investigating' him, Hon. Murungaru and even Brig. Boinett.
9. ANURA PERERA
On the evening of the 17th of May, 2004, I attended a meeting at
the office of the Governor of the Central Bank, Andrew Mullei,
together with Hon. Kiraitu Murungi, Philip Murgor the Director of
Public Prosecutions and Nicholas Kamwende the head of the Banking
fraud department of the central bank. As we left the meeting
Kiraitu leant over and warned me that 'they' were thinking of
attacking me through my father . On the 20th of May, 2004, Hon.
Kiraitu Murungi called me to his office in the late afternoon. He
warned me that I needed to 'go easy' on 'our friends' Murungaru and
Alfie in particular, Hon. Kiraitu pulled out a file given to him by
the lawyer (A.H.) Malik. Mr. Malik was a lawyer from whom my father
had borrowed money in mid-1990s to purchase a piece of land in the
outskirts of the city. Kiraitu said that Malik had informed him
that the person who had really lent money to my father to purchase
a piece of land in Kitisuru almost io years before was Anura Perera
through Malik. Indeed, he informed me that Mr. Perera had called
him about the matter and that Perera was in the good books of the
system.: The message Hon. Kiraitu was communicating very directly
to me was that Mr. Perera wanted me to 'turn off the heat' so that
the Kitisuru matter can be 'settled amicably'. Malik claimed to
Kiraitu that my father 'knew very well' that the initial loan came
from Perera and therefore I was by extension somehow complicit in
the affairs of Perera. Hon. Kiraitu emphasised the nervousness of
Alfie Getonga and Hon. Murungaru with what I was doing and, the
risk of a major political fallout as a result. He said, "you know
we have lost Keriri already, if Chris is dropped and Alfie is
dropped we're in trouble, the enemy will have won." I declined to
cooperate and said the matter would be dealt with in court. A
lawyer friend, the late Ishan (Kapila) called me later and said
Muin Malik (son of A.H. Malik) had dropped in on him frightened
saying that I knew who the 'real principal' was on the Kitisuru
transaction and I therefore 'needed to be considerate'. Within the
Kapila firm my father's matter was being handled by Ishan's elder
brother, Sheetal.
10. PUBLIC ACCOUNTS COMMITTEE
24th May 2004
In an afternoon session I appeared before the Public Accounts
Committee on the Anglo Leasing affair based on the report of the
Controller and Auditor General of May 13, 2004.
After my meeting with the PAC I visited a senior politician who had
been seeking for us to have. a chat.. I was aware that he was in
close contact with both Hon. Murungi and Hon. Murungaru and had
calculated that being a friend of my father he may communicate to
me messages that perhaps the two leaders may have wanted to
emphasize to me. His advice to me was to be particularly careful
because there was no way senior ministers were not involved in the
Anglo Leasing matter. He warned me that "Murungaru would not let
you destroy them, they wilt kill you first". He emphasized
repeatedly that my security was now an issue and he hoped that I
would take more of a back seat in the Anglo Leasing investigation.
He also warned me quite logically that if the ,stability of the
regime was threatened by my work then the President would stop
backing me. He sincerely commiserated with me regarding my dilemma
that of finding that the President's closest associates are deeply
involved in the corruption that had been uncovered within our
administration: He told me Alfie Getonga was going around
complaining openly about my work; Hon. Kiraitu was accusing me of
working fox foreigners and Murungaru was threatening my life
directly. His final piece of advice was that I needed to visit the
President together with my father and advise him of my dilemma. I
left this meeting rather puzzled.
Your Excellency, on that night I briefed you on how the PAC session
had gone and the fact that Hon. Kiraitu had indicated to me that in
every likelihood Hon. Murungaru and Alfred Getonga were behind the
Anglo Leasing matter.
Tuesday, 25th May 2004
On Tuesday 25th May 2004 Ambassador Francis Muthaura called me to
question the legal authority of the KACC to conduct the immigration
investigation; he even queried if the Anti-Corruption and Economic
Crimes Act was a reasonable piece of legislation at all. He said it
was defective because it granted too much power and independence to
the KACC. The previous day, Gideon Mutua, the director of the KACC
had informed me that Muthaura had also called him with the same
questions regarding his authority to conduct the investigations.
Ambassador Muthaura also expressed surprise that the Office of the
President had entered into a contract for USD55 million with Anglo
Leasing to provide a forensic laboratory for the CID department
which he claimed had recently come to his attention.
Later the same day, after a briefing lunch for the diplomatic
community Dave Mwangi the PS in Hon. Murungaru's docket called me
for a meeting which I attended. He adopted an advisory tone. He
claimed that he wanted to speak frankly and conceded that the
immigration investigation had caused a lot of political disquiet.
He observed that the affair threatened to destabilize the
government. He said that Hon. Murunguru and others he did not name
were very concerned about whether or not I appreciated the
political implications of my investigations. I also asked Dave
Mwangi to provide me with a copy of the forensic laboratory
contract and he agreed. He pointed out that the contract had
already been signed in 2001 by Zakayo Cheruiyot PS-Internal
Security and PS-Finance, Mwagazi Mwachofi. In this contract Anglo
Leasing Finance Company used a completely different address.
11. ANGLO LEASING'S FORENSIC LABORATORIES CONTRACT
Thursday 27th May 2004
Former Finance PS, Joseph Magari appeared before the Public
Accounts Committee on the 27th of May, 2004 and told parliament
that Anglo Leasing had already been doing work (since 2001) for the
Office of the President, building a forensic laboratory for the CID
as a way of explaining why he had not bothered to do a proper due
diligence of them. The next day I spoke to Dave Mwangi who told me
that he and Ambassador Muthaura had discussed the forensic
laboratory contract and decided to deal with the matter
`administratively' because even though the contract had been signed
in 2001, no work had actually been done to date. By this time we
had already discovered that despite no work being done roughly USD5
million had nevertheless been paid to them. I had been advised by
an assortment of sources that the resurrection of this project
under our administration had been engineered by the likes of Deepak
Kamani, Jimmy Wanjigi, Chris Murungaru, Dave Mwangi, Alfred
Getonga, Mr. C. Oyula the Financial Secretary, among others.
Your Excellency we had opportunity to discuss these issues later
the same day. In the 2001 forensic labs contract Anglo Leasing had
used a different address and we bad not been able to locate them at
that address either. From my notes it is clear that I spoke to
Muthaura sometime that day and he assured me that he had briefed
H.E. the President fully on the Anglo Leasing forensic project. On
Saturday, 29th May, 2004 I met again with Your Excellency and was
surprised when you advised me that no one had briefed you on the
forensic laboratory project. You asked me to furnish you with a
copy of the contract which I did. On Monday, 31st May 2004 I met
with Ambassador Muthaura in his office At this meeting he informed
me that he had fully briefed H.E. the President on the forensic
project matter and it had been agreed that (i) all payments be
stopped (ii) we find out who Anglo Leasing is. I was admittedly
confused by this because Your Excellency had been emphatic the day
before that you had not been briefed on this matter.
12. MAGARI'S POSITION
Monday June 2004
On Monday the 1st June, 2004 a close friend informed me that he had
met with Joseph Magari who had been keen to explain his role in the
Anglo Leasing matter. Magari had supposedly claimed that, in
effect, `Anglo Leasing was Muthaura, Mwiraria and Awori'. Magari
claimed that it was Awori who took advantage of American
terrorism-related fears to expand what was a small project into a
cash cow. According to Magari, Awori had done this with Mwaliko,
but without informing ole Ndiema the Principal Immigration Officer.
Awori had then pulled Muthaura and Mwiraira into the scheme.
Magari, according to my friend, pointed out that Awori was the most
frightened. I took this information no further and decided to wait
and see what the KACC would come up with considering that Mr.
Magari had not shared any such information with them to date.
13. WHO IS ANGLO LEASING?
On the night of the 2nd of June 2004, I met with both Hon. Mwiraria
and Hon. Kiriaitu at Hon. Mwiraria's office. At this meeting Hon.
Kiraitu admitted that he had been surprised to realise just 'how
high up' the Anglo Leasing matter reached in the Government. He
admitted that he had not realized how high up and just how
intricately involved members of our own administration were with
Anglo Leasing. He told me that Alfred Getonga had not stopped
badgering him about my Department's pursuit of the Anglo Leasing
matter even after the monies had been repaid and that he realized
Anglo Leasing was in effect 'us'. Hon. Kiraitu admitted that his
greatest fear was that Ra.ila Odinga knew exactly who was behind
Anglo Leasing and would use it to paint the Kibaki government as
corrupt something we would never recover from. Kiraitu claimed that
he had also raised the corruption allegations with Hon. Murungaru
who had never responded conclusively.
On the 3rd of June 2004, I wrote to Ambassador Muthaura confirming
that the British High Commissioner had in turn confirmed in a
letter dated 03-06-04 that the purportedly British company - Anglo
Leasing and Forensic Laboratories Ltd did not exist. I rushed the
letter off by hand. That evening Muthaura called me to tell me that
the contents of my letter both 'shocked' and 'frightened' him. The
next day I wrote to the Governor of the Central Bank asking him to
stop all further payments to the entity known as Anglo Leasing
Finance Company Ltd until pending investigations were completed. In
my letter I had requested that he respond on the record on the
issue of money transfers to Anglo Leasing.
During the week of June 5, 2004, the Financial Secretary J.M. Oyula
when being questioned by the PAC about the immigration Anglo
Leasing project had like Magari admitted to the forensic one. It
was later reported in the press that he had admitted to some of the
payments perhaps having been made by mistake (Daily Nation of
Tuesday, June 15, 2004).
At around this time a source of mine provided me with an
unreferenced letter from the Governor of the Central Bank to Joseph
Oyula dated May 14, 2004 that sought clarification with regard to
a number of suppliers' credits and external commercial loans.
Specifically, the Governor was seeking confirmation that the
Minister of Finance had indeed given authorisation for the payment
of the following credits as required by law.
| Payee |
Purpose |
Amount (millions) |
Signatories |
Date signed | .
| 1. Anglo Leasing |
Forensic Lab CID |
USD54.56 |
PS Treasury
PS-Internal
Security OP |
16-08-01 |
| 2.Silverson Establishment |
Security vehicles |
USD90 |
PS-Treasury
PS-Internal
Security OP |
16-08-01 |
| 4. Apex Finance(addendum 2) |
Police security |
USD30 |
PS-Treasury
PS-Internal
Security OP |
9-02-02 |
| 5. LBA Systems |
Security-met |
USD35 |
PS-Treasury |
07-06-02 |
| 6. Apex Finance (addendum 3)
|
Police security |
USD31.8 |
PS-Treasury
PS-Internal
Security OP |
14-06-02 |
| 7. Universal Satspace
|
Satellite services |
USD28.11 |
PS-Treasury
PS-Transport
|
11-07-02 |
| 8. First Mechantile |
Police security |
USD11.8 |
PS-Treasury
PS-Transport |
11-07-02 |
| 9. Apex Finance Corp |
Police security |
USD12.8 |
PS-Treasury
PS-Internal
Security OP |
12-07-02 |
| 10. LBA Systems |
Prisons security |
USD29.7 |
PS-Treasury |
19-11-02 |
| 11. Nedemar |
security |
USD36.9 |
PS-Treasury
PS-Transport |
19-11-02 |
| 12. Midland bank |
Police security |
USD49.65 |
PS-Treasury |
29-05-03 |
| 13. Navigia Capital |
Oceanographic vessel |
EUR26.6 |
PS-Treasury |
15-07-03 |
| 14. Empressa
|
Oceanographic vessel
|
EUR15 |
PS-Treasury |
15-07-03 |
| 15. Euromarine |
Oceanographic vessel |
EUR10.4 |
PS-Treasury |
15-07-03 |
| 16. Infotalent |
Police security |
EUR59.7 |
PS-Treasury
PS-Internal
Security OP |
19-11-03 |
| 17. Apex Finance Corp |
Police security |
EUR40 |
PS-Treasury
PS-Internal
Security OP |
17-12-03 |
| 18.Ciara Systems Inc |
Design, maintain satellite for NSIS |
USD44.56 |
PS-Treasury
Director NSIS |
20-01-04 . |
In a letter dated 21-05-04 Ref: ZZ36/183/02 Oyula had responded to
the Governor saying "please receive copies of the Minister's
authority for contract signature of the list attached. Those we
don't have at the moment will be forwarded to you as soon as we
find them from our files". The list was as follows:
| Payee |
Purpose |
Amount (millions) |
Signatories |
Date signed |
| 1. LBA Systems |
Security-met |
USD35 |
FST(FST presumably . meaning Financial Secretary Treasury) |
07-06-02 |
| 2. Sound Day Corp In the Central Bank list this was referred to
as Apex Finance(addendum 3) |
Police security |
USD31.8 |
FST/PSOP PSOP presumably standing for Permanent Secretary Office of the President |
14-06-02 |
| 3. Universal Satspace |
Satellite services |
USD28.11 |
FST/PS-Transport |
11-07-02 |
| 4. First Mechantile |
Police security |
USD11.8 |
FST/ PS-Transport |
11-07-02 |
| 5 Apex Finance Corp |
Police security |
USD12.8 |
FST/PSOP |
12-07-02 |
| 6. LBA Systems |
Prisons security |
USD29.7 |
FST |
19-11-02 |
| 7. Nedemar |
Security |
USD36.9 |
FST/ PS-Transport |
19-11-02 |
| 8. Midland bank |
Police security |
USD49.65 |
PST/PSOP PST presumably meaning Permanent Secretary Treasury |
29-05-03 |
| 9.Navigia Capital |
Oceanographic vessel |
EUR26.6 PST |
15-07-03 |
| 10. Empressa |
Oceanographic vessel |
EUR15 |
PST |
15-07-03 |
| 11. Euromarine |
Oceanographic vessel |
EUR10.4 |
PST |
15-07-03 |
| 12. Infotalent |
Police security |
EUR59.7 |
PST/PSOP |
19-11-03 |
|
13. Apex Finance Corp |
Police security |
EUR40 |
PST/PSOP |
17-12-03 |
| 14. Ciara Systems Inc |
Design, maintain satellite for NSIS |
USD44.56 |
PST/ Director (NSIS) |
20-01-04 |
14.. FRED OJTAIVD30
I was surprised by the extent of the contracts.
On the 11th of June, 2004 PS Dave Mwangi called me at 20:20HRS to
complain that lawyer Fred Ojiambo, a senior partner of Kaplan and
Stratton had been arrested and if he spent the night in police
cells it would cause 'problems'. The decision to arrest Ojiambo had
been taken by the KACC because he had steadfastly refused to honour
all summons even if simply to share with the authorities the
identities of the clients (Anglo Leasing) who were instructing him
to put adverts in the Kenyan press. Whatever the identity of the
owners/companies and clients of Anglo Leasing there can be no doubt
that Ojiambo was acting as their lawyer. Indeed, on the 11th of
June, 2004 Hon. Kiraitu Murungi called me sounding agitated and
told me that Hon. Chris Murungaru had called him while on an
overseas trip in the UK to ask what was happening with regard to
the Ojiambo matter. He said he would drop in on me later that day.
Just as I put down the phone Hon. David Mwiraria stepped into my
office and announced that Anglo Leasing had paid back all the money
they had been paid on the Forensic laboratories contract since
2001.
Hon. Mwiraria claimed to have spoken to Your Excellency the
President and claimed that you felt we needed to `go easy' on the
matter since the money had been paid back and if it came to public
light that there as another corrupt deal of this magnitude in our
administration this would cause problems. Hon. Kiraitu walked into
my office and said the same thing. Hon. Kiraitu emphasised that if
we went after Anglo Leasing our government would fall and he added
that Hon. Nyachae had called him that morning to express the same
broad sentiments especially following the arrest of Ojiambo. Both
ministers pushed me hard to back off or the government would be
undone by the fight against corruption since now it was clear, as
we noted "that many of our people were involved." Over these days
Hon. Mwiraria, PS Dave Mwangi, Hon. Murungaru, Hon. Nyachae and
Hon. Murungi all directly or indirectly opposed the arrest of
Ojiambo ostensibly on the grounds that he might implicate senior
people in the government and cause it to fall. Your Excellency,
that the arrest of a mere lawyer even one of Ojiambo's stature
could bring down the Kenya Government sounded utterly ludicrous to
me. The disdain with which Ojiambo treated the KACC including his
refusal even to acknowledge it indicated to me that he enjoyed
protection from senior officials in the state. Had this not been
the case, he would at least have met with the KACC and invoked
client-attorney privilege and declined to answer any further
questions on the transactions themselves but reveal the identity of
his clients.
While all this was happening I had been gently reminding Andrew
Mullei, Governor of the Central Bank, to provide me with a report
on the forensic contract particularly on the payment vouchers. For
whatever reason, he was equivocating on this. Hon. Mwiraria said it
was he that had held the Governor back. Governor Mullei had told me
that I would get my report later in the day from the minister
directly.
That Friday afternoon I accepted that we had probably reached an
important watershed with the fight against corruption within our
own administration. My secretary then called me (this was in the
afternoon and I was out of the office) and told me that Hon.
Mwiraria had arrived at my office with the letter from Governor
Mullei but then returned after a few minutes and taken it back and
said he was delivering it directly to H.E. the President.
15. ANGLO LEASING MYSTERY
Saturday June 12, 2004
Your Excellency, on the morning of Saturday 12th June, 2004 we
discussed the entire Anglo Leasing investigation. I explained that
the passports investigation- the local aspects of it at least was
nearly ending and after this we would go into the international
phase which would require us to crack the foreign bank accounts of
Anglo Leasing Finance Company.
I advised you, Sir, that we could charge the suspects in the case
and that the only suspect missing was Anglo Leasing and Finance
Company which had returned the 'evidence' of Ksh.91 million. Your
Excellency, you asked me who I believed was behind Anglo Leasing
and Finance and, I told you that in my convinced opinion the Hon.
Vice President, Hon. Murungaru, Alfred Getonga, Hon. Mwiraria,
former PS/Magari, Financial Secretary Oyula, former PS/Mwaliko and
perhaps Hon. Kiraitu knew who Anglo Leasing were. This was
especially the case because Hon. Kiraitu had admitted to me the
involvement of Hon. Murungaru and Mr. Alfred Getonga for example on
the 11th of June, 2004.
Your Excellency, in the course of this conversation you asked me
again, "Who knows about this matter?" I responded to your agreement
that they were mostly locals and concluded even "some of our own
people including the Vice-President, Murungaru, Alfred Getonga,
Magari, Mwaliko, Oyula and Oriyonka (the head of the debt
management department at the Treasury)." I remember, Your
Excellency, that I proceeded as well to inform you that we probably
had several other odd contracts in the security sector.
16. THE UNRAVELLING OF THE MATTER
That evening a journalist with the East African Standard called me
and told me that he had heard that the passports investigation had
ground to halt because I had 'orders from above' to stop pursuing
it. I denied this. He also, to my considerable alarm, told me that
he knew all about the Anglo Leasing forensic laboratories project
and that it had been included in the budget David Mwiraria had read
on the previous Thursday June 10, 2004. I checked with Hon.
Mwiraria through Hon. Kiraitu and was informed that this was not
true.
Sunday, June 13th 2004
The Sunday Standard headlined with the story that the government
had even put Anglo Leasing into the budget. Hon. Mwiraria
strenuously denied this when I had called to ask him. I later
established that it was indeed the case when I obtained a copy of
the budget estimates book myself. I called Hon. Kiraitu and told
him that the Ministry of Finance had allocated KSh_222,530,000 to
be paid to a fictitious company in the coming financial year.
The evidence J. Oyula had given before the Public Accounts
Committee at the beginning of the month was only coming into the
public domain. The minister of Roads and Public Works Raila Odinga
also called me on Monday the 14th of June, 2004 and announced to me
that since his ministry had also been mentioned by Oyula in his
testimony according to the newspaper reports, he would also be
ordering an investigation within his own ministry. Hon. Odinga's
Permanent Secretary Erastus Mwongera. also called me and informed
me that he had been ordered to compile a report on the forensic
laboratory and role of the Ministry Roads, Public Works and Housing
in it. Hon. Kiraitu also called and told me that the revelations
had 'shocked' him.
17. KAMANI PAYS BACK KSH.4.00 MILL
I went to see Hon. Mwiraria late that morning and found him looking
upset. He told me he was in the process of preparing a
parliamentary statement on the two Anglo Leasing projects for him
to make in parliament the next day. I warned the Honourable
Minister that we needed to investigate all the other suppliers'
credit payments that NARC had entered into in respect of security
contracts because it was not unlikely that we were at times paying
for thin air. I was particularly concerned about entities like
Silverson Forensic that were also in the budget and for which
hundreds of millions had been allocated and yet my information was
that they did not exist and were not delivering anything anyway. I
took the opportunity to ask Hon. Mwiraria for my letter from the
Governor of the Central Bank that had been the subject of numerous
reminders, and that the Governor had indicated had been transmitted
through him. Hon. Mwiraria informed me that he had forwarded the
latter to the President. Hon. Mwiraria also informed me that the
forensic laboratories 'payback' of around Ksh.400 million had been
made only after he had asked Oyula to pick up the phone and call
Deepak Kamani. It was after this call that the money was then
returned. To me this was a startling admission. Hon. Kiraitu
telephoned me and asked me to help 'rescue' Mwiraria but, in truth,
if Mwiraria knew Kamani was behind everything and people in his
office were calling him (Kamani) comfortably then clearly he knew
more than had ever been made known to the Controller and Auditor
General or the KACC.
18. MERLYN KETTERING
Tuesday June 15, 2004
Before I went to work one of my sources called me and told me that
my `digging around' the Anglo Leasing matter had caused another
'Anglo Leasing company to pay back over Ksh.500 million'. I was
informed that the name of the company was Infotalent Ltd, another
fictitious company linked to the Kamanis.
As the Anglo Leasing investigations had progressed, it had become
clear that one individual, an American called Dr. Merlyn Kettering
was the consultant/advisor on all the lucrative security and
computerisation projects that the government was engaged in. He was
involved, for example, in the Police forensic laboratory project
having been retained as a consultant by Anglo Leasing and Finance
Company. He had even attended some meetings and signed some
documents on their behalf.
Wednesday 16th June, 2004
I received information that Kettering, even as we and the KACC
investigated Anglo Leasing and its associated deals, was involved
in yet another project at the Office of the President, this time to
create a 'unified national security telecommunication backbone
network'.
The information showed that Dr. Kettering attended meetings at the
Office of the President to discuss this project together with other
top security sector officials. In minutes of these meetings he was
described as a Telecommunications or Management Consultant. The
KACC in their investigations had dug up this curious individual as
well. He seemed to attend highly sensitive security meetings.
On the same day, Ms. Jacinta Mwatela (then a senior and highly
respected official of the Central Bank, who was later appointed
Deputy Governor of the Bank) was dispatched to my office to deliver
to me the letter that the Governor had previously said he had
eventually opted to transmit through the Minister of Finance. It
confirmed that the Central Bank of Kenya had received
USD4,744,444.44 on the 7th of June 2004 from Schroder and Co Bank
AG of Zurich on behalf of their client Anglo Leasing and Finance
Company. These monies had been paid to Anglo Leasing as follows:
| Payment Advice No. |
Amount |
Date Paid |
| 073761 |
$ 900,0000.00 |
23-10-2001 |
| 093736 |
$1,922,222.22 |
22-12-2003 |
|
093864 |
$1,922,222.22 |
04-03-2004 |
| TOTAL | $4,744,444.44 | |
19. KAMANI PAYS BACK KSH.500 MILL
That day a source provided me with proof that Infotalent had paid
back Euro5.2 million to the Central Bank as another source had
indicated two days earlier. This was again confirmed in official
documentation that I requested from the Governor of the Central
Bank of Kenya.
I found this unsettling. First Euro 956,700 on 17-05-04 and then
USD4.7million is repaid on 07-06-04, by a company that does not
have legal status and no indication from within Government on who
its owners were. Only Hon. Mwiraria's admission to me on the June
14, 2004 that J. Oyula had called up Kamani who had then repaid the
money gave an indication as to who Anglo Leasing was. Now another
bogus company, Infotalent, had 'repaid' Euro5.2 million.
Your Excellency, I informed you of these developments on this day
16h June, 2004. We agreed that we were talking about the 'refund'
of almost Ksh. 1 billion and no one was celebrating; those making
the refunds were not making themselves known; none of the civil
servants involved were saying they knew who Anglo Leasing was.
Anglo Leasing refunded USD 4.7 million (KSh.370 million) on the
Forensic Laboratories project; Anglo Leasing refunded E956,700
(KSh.95 million) on the Immigration security project and Infotalent
Ltd refunded E5,287,164 (KSh.5o6 million) on the E-Cops Security
Project.
Friday 18th June 2004
Your Excellency we met and discussed these issues at length on the
18th of June, 2004. We by now had a clear idea of who was behind
the Anglo leasing deals from all the circumstantial evidence the
investigators had obtained and Hon. Kiraitu's admissions. We
acknowledged, Your Excellency, who the key players in the scams
were. At the time, Sir, you advised me not to hand over the Magari
and Mwaliko files to the Attorney General for prosecution just yet
and to delay handing over the Infotalent file to KACC. From there
I went to see Ambassador Muthaura (at his office) and we had a
heated disagreement because he accused me of leaking the Ministry
of Public Works brief on the forensic laboratories project to the
East African Standard who had proceeded to publish elements of it.
I was furious and we argued for over an hour on the fundamentals as
well of how to deal with corruption within our administration.
Monday 21st June, 2004.
On Monday June 21st, 2004 Hon. Kiraitu called me on my home land
line to tell me that he and Ambassador Muthaura had been called in
by the H.E. The President who wanted a statement on graft because
the media were asking for the sacking of ministers which bothered
him. I told Hon. Kiraitu plainly that in light of my disagreement
with Ambassador Muthaura it was unlikely that we would agree on a
single statement on corruption.
20. WARNING OF RESHUFFLE
Tuesday, 21st June 2004
On Tuesday 21's June, 2004 I was provided with information to the
effect that: Muthaura and Mwiraria were key to all the scams that
we were investigating and my digging around had now gone too far
and they were determined to take action against me. I was provided
with a brief that suggested that on the June 16, 2004 between
18:30HRS and 20:30HRS J.M. Oyuia, Alfie Getonga, Lee Nyachae and
other Treasury officials had met to discuss 'problematic government
projects' at a Nairobi hotel. The most worrying project was the
ongoing construction of a Navy Ship by a Spanish company called
Astilleros Godan on behalf of Euromarine which belonged to Anura
Perera. The report also claimed that during the same meeting, Oyula
had a telephone conversation with Perera. The report said that
there was soon going to be a reshuffle and that "Mr. Githongo, PS
Governance and Ethics will be transferred from the office of the
President. The President will be impressed on 'not to touch'
Murungaru. Mwiraria and Kiraitu because they are the only political
pillars he has.
21. GOVERNMENT STATEMENT ON GRAFT
Thursday, 23rd June 2004
The day began with the publication of Ambassador Muthaura's
statement dated the 21st of June, 2004 in a press release titled
"Office of the President Press Release" that then went into the
bureaucratic details of the forensic laboratories project. I was
particularly unhappy with the publication of this statement whose
language smacked of a cover-up. Your Excellency, you will remember
I rushed down to your office in what I shall admit was an
ill-advisedly emotional mood and warned that the statement Muthaura
had put out would make the government look as if we were
perpetrating a cover-up. I explained that this was actually lying
to the Kenyan people, because the reality was that we had uncovered
information regarding the project that was in stark contrast to
what Muthaura had presented in his press statement The statement
elicited a hostile response from the media, civil society,
international community and the public in general. Your Excellency,
you advised me not to issue a counter-statement as it would have
made the Government look divided. That afternoon on the floor of
the House the Minister of Finance claimed that his life had been
threatened as a result of Anglo Leasing.
Sunday, 28th June 2004
On Sunday 28th June, 2004 I was summoned to State House where I
found Your Excellency and Messrs. Hyslop Ipu, Ambassador Muthaura,
Hon. Kiraitu, Hon. Murungaru and Hon. Mwiraria. We had a general
discussion about the Anglo Leasing matter and the damaging media
coverage the government was receiving as a result of this scandal.
After the meeting Hyslop Ipu and I had remained behind. Your
Excellency, you asked about Melvyn Kettering (whose name had come
up repeatedly in press reports). You also asked why British High
Commissioner Clay had been so upset with Muthaura's statement, to
which I reported that I had also met with Clay and could confirm
that he was deeply upset with Muthaura's statement.
Ipu and I went back down to his office to find Hon. Murungaru, Dave
Mwangi and Ambassador Muthaura. The focus of our discussion became
very much the Sunday Nation report of that day that had brought to
public light the role of Merlyn Kettering in many of the security
related projects. According to Muthaura, Mwangi and Murungaru, this
had clearly upset the President and a statement was being drafted
in response. At this meeting Dave Mwangi denied that Merlyn
Kettering was in any way involved in the project despite having
confirmed the same to me when we had spoken about it sometime in
May. In my discussion with the H.E. the President and Ipu, I had
confirmed that Kettering was even now involved in transactions at
the Office of the President (in part because the Kenya
Anti-Corruption Commission had uncovered this). I was surprised
that Muthaura and Mwangi were now denying this so vehemently.
22. PUBLIC ACCOUNTS COMMITTEE
Monday, 28th June 2004
I was grilled for two-and-a-half hours by the Public Accounts
Committee as part of their ongoing investigation into the Anglo
Leasing saga. It seemed to me that, J. Oyula, the Financial
Secretary, who had appeared some days before me had given the MPs
a great amount of information that the Ministry of Finance had been
reluctant to share with the KACC. It became apparent to me that in
Oyula's appearance before the committee he had admitted to being in
regular touch with Anglo Leasing & Finance Co. Ltd. He had
apparently become angry when questioned about their bona fides.
Despite this he seemed to have been reluctant to say who Anglo
Leasing was and so the MPs questioned me on this issue.
later that evening Philip Murgor the Director of Public
Prosecutions called me, speaking ostensibly - on behalf of the
Attorney General; asking to be kept informed on progress vis-a-vis
the assorted letters rogatory on the Anglo Leasing matter that had
been sent out on 27-05-04. These letters had been sent out by the
AG seeking to discover the beneficial holders of the Anglo Leasing
bank accounts from which resources were being wired back to Kenya.
We spoke again later the same evening with Murgor and he admitted
that Mr. Alfred Getonga had galled him and was "very disquietened
by the sending of the letters rogatory and actually asked whether
they could be recalled. Philip claimed tell him that this was not
the kind of thing that could just be done."
On the 29th of June 2004 I met with Hon. Kiraitu at his office.
Essentially he said it that it was now clear that Anglo Leasing was
`us' - our people. He said that no matter what, he did not have
what it took to order or countenance the arrest of Chris Murungaru
for corruption because `they had too much history'.. He was blunt
and emotional. He admitted that people like Murungaru were key to
the transactions of Anglo Leasing and even though he personally did
not have the details, the excuse given to him was that the money
was needed for political fund raising. He said that pressure was
high for me to be moved to the Ministry of Justice and
Constitutional Affairs and Muthaura's name was used as the one
behind the push though.
23. RESHUFFLE
Wednesday, 30th June 2004
On Wednesday 30th June, 2004 H.E. the President announced on
television that 1 bad been transferred from the Office of the
President to the Ministry of Justice and Constitutional Affairs. I
started packing to move out of State House. That night Mr. Stanley
Murage, among others, called me insisting that what had happened
was not the 'real thing'.
Thursday, 1st July 2004
I arrived at the Ministry of Justice and Constitutional Affairs at
11:30HRS for my meeting with Hon. Kiraitu to be inducted into my
new Ministry. He told me that he had done all he could to try and
save me but Hon. Murungaru, Alfie Getonga, Hon. Mwiraria and
Ambassador Muthaura had convinced H.E. the President that I had to
be moved. I told Hon. Kiraitu that I was angry because I knew I was
being demoted because of doing my job by pursuing the Anglo Leasing
matter relentlessly and that this left a very bitter taste in my
mouth. While we spoke, Mr. Stanley Murage called and told me that
it was urgent that we spoke in the morning because the 'transfer'
had not been sanctioned by the President. This sounded ridiculous
and I dismissed it.
Friday, 2nd July 2004
I eventually made it to the office at State House at past 10:00HRS
in the morning and was surprised to find Mr. Stanley Murage in my
office. He repeated the bizarre story that he had told me the night
before that someone had surreptitiously inserted my name into the
wrong place in the President's speech and therefore my transfer was
not meant to have happened at all. Your Excellency, I came to your
office at 16:15HRS and found Mr. Stanley Murage there. I informed
you of the developments and realised you were shocked by them. You
then reversed the transfer. We met again the next day and explored
who could have amended your statement to effect my transfer. We
also discussed Mr. Merlyn Kettering who seemed to have disappeared
but was still being sought after by our authorities. I remember
informing Your Excellency that surely Boinett of NSIS, Murungaru
and his PS Dave Mwangi could track down this man because all their
departments had been working with him for some time. I also used
this opportunity to point out that J. Oyula the Financial
Secretary, was also at the center of the corruption network at the
Ministry of Finance.
When we met the next day, Your Excellency you raised the issue of
Merlyn Kettering again and I informed you that the KACC were still
hunting him and that it was clear that the man was at the heart of
the entire national security network. You also assured me that we
would get to the bottom of the saga about who had changed the
reshuffle statement. On that day, Sir, you also asked me to look
into `the boats' that the Navy was building a project linked to the
arms dealer Anura Perera. You seemed intrigued to hear more about
this project that I had raised with you a number of times because
military officers had in turn taken to complaining to me about it.
On the 6th of June, 2004 Hon. Kiraitu Murungi. stepped into my
office looking exhausted. He blamed Muthaura and Hon. Murungaru for
the botched attempt to demote me. He said he had advised against it
but they had not listened.
24. LEAVE
I took a week off work and returned on Monday July 19. One of the
first things I did on that day was attend a meeting with Hon.
Kiraitu Murungi at his office. Also in attendance was Gideon Mutua
of the KACC who had been asked to produce a chronology of the Anglo
Leasing matter. Kiraitu wanted us to work together to produce a
parliamentary statement for him. Naturally the statement would make
no mention of the fact that the whole Anglo Leasing matter was
driven by his cabinet colleagues. While I had been on leave, a
person by the name M. Gruring had sent a fax to Ambassador Muthaura
from Switzerland - totally unsolicited it would seem - claiming to
be the Managing Director of Anglo Leasing. This confirmation
appears to have satisfied Ambassador Muthaura but the Government
was met with overwhelming public scepticism when it was announced.
Also on July 19th, 2004, I called the Governor of the Central Bank,
Andrew Mullei and asked him about the return of Euro5.2 Million by
Infotalent. He confirmed that this -still unidentified entity - had
indeed refunded Euro5,287,164 (Ksh 509,616,520) on or around June
16, 2004.
25. ANGL0 LEASING STORM
By this time, the Anglo Leasing matter had become a national storm.
The diplomatic community led by the British High Commissioner
Edward Clay who even visited the President on the July 20, 2004 and
spent two hours with him. The meeting had been' instigated by
Minister Musikari Kombo. The overwhelming donor support for me and
my office caused me tremendous discomfort but I had to live with
it. At this time, interestingly, I came under renewed pressure to
issue a statement on Anglo Leasing - essentially one that mould say
that 'all was OK'. On the 22nd of July we sat with Hon. Kiraitu in
my office and in an atmosphere of great discomfort attempted to
craft a statement based on the chronological report that Gideon
Mutua had produced. He insisted that I should issue the final draft
but I again refused - it was too ridiculous and I was convinced
that Kenyans would laugh in my face.
By the beginning of August 2004 I had confirmed that during our
tenure in government we had signed about USD27.7 million worth of
contracts of the Anglo Leasing kind. KANU signed USD443.36 million
between late 2001 and late 2002. I will admit, Your. Excellency, to
being slightly troubled during this time because H.E. made a number
of . public pronouncements seeking evidence before action on graft.
This was despite the fact individuals like Hon. Murungi had
admitted to me openly that the issues being investigated by the
KACC were engineered by the likes of Hon. Murungaru and Alfred
Getonga. During the first week of August I spoke to PS/Dave Mwangi
about Infotalent and this time interestingly he failed to admit as
he had previously done that he 'had signed the Infotalent contract.
He also gave me, a special document titled 'Summary: Security
Contracts Under Special Purpose Financing Vehicles In The Office Of
The President' listing all the contracts in the security sector and
their projects. This was apparently the document that had been
prepared for the President for the meeting that had taken place at
State House on Sunday June 28 2004.
I found it interesting that they had chosen to wait over one month
before sharing with me a document whose contents - especially some
of the suspect projects. -- I had been chasing for months. This
document openly admitted the involvement of Deepak Kamani, Merlyn
Kettering and others in a range of 'projects! Yet to my frustration
no civil servant or politician had ever publicly owned up to Kamani
being involved in any deal by name, indeed, we had-even asked
Kenyans to believe that a Swiss fellow called Grirring was the key
operator behind Kamani's deals. The document showed that for some
reason a number of the contracts had been 'cancelled in
consultation with the Treasury'. Coincidentally these cancellations
were of all the egregious contracts that were the subjects of my
Department's interest and which I felt needed to be handed over the
Kenya Anti-Corruption Commission.
26. MWAGAZI MWACHOFI: PUTTING MATTERS IN CONTEXT
Monday, 9th August 2004
At the beginning of August I travelled to the United Kingdom and
once in London made telephone contact with Mwagazi Mwachofi who had
been Permanent Secretary during 2002 when many of the KANU-era
security contracts I was grappling with were signed. He was a man
with a good reputation and was obviously keen to clear his name on
these matters. I shall not go into to the details of his
description of the tortured manner in which the contracts were
eventually entered into in 2001. However, the British Merchant
Bankers Lazard Brothers who had been hired to scrutinise this
commercial debt partly to fulfil an IMF conditionality had
concluded that they had 'difficulties finding the listed
creditors'. Mr Mwachofi informed me that they (Lazard Brothers)
scrutinised the contracts "but could not find the
creditors/banks/suppliers some of them did not seem to exist. This
seemed suspicious and caused us to doubt the integrity of the
Forensic Laboratories contract," said Mwachofi. According to
Mwachofi the visiting IMF mission later that year also questioned
the contracts because it became clear these were financing leases
being treated as debt and not part of the operating costs of the
ministry. On this matter Mwagazi concluded that the "Office of the
President said that security suppliers operate mysteriously behind
the shadows".
27. ANOTHER MYSTERIOUS PAYBACK
Sometime towards the end of August Dave Mwangi called me and told
me that one of the non-existent companies involved in security
procurement had paid back their commitment feet that had been paid
to them in 2001. He invited me to send a messenger to his office to
pick up the cheque which I did. It was rawn on `Silverson Forensic
cheque No. 02602 for USD910,o0o dated 01-07-04 drawn on a bank in
Liechtenstein Landsbank AG in favour of the Perm. Secretary Off. of
the Pres., the Governor of Kenya.' Altogether over Ksha billion had
been repaid.' In the last days of August Mr Anura Perera reached
out once again seeking to 'negotiate in neutral space' because I
was 'holding up' his payments. I asked his lawyers to put this
offer of a meeting in writing and they did. I declined the meeting.
On September 1st 2004, at a donor coordination meeting, the
Minister of Finance announced the start of a forensic audit of
security procurement by the Controller and Auditor General.
1st September 2004
On the 1st of September, 2004 Hon. Kiraitu called on me and shared
with me his concern that at the rate we were going 'we would have
another Goldenberg-type scandal before the elections' in 2007
because of the need to fund raise for the elections. He said that
if one's pig got stuck in the mud one had to jump in and get dirty
to extract the pig from the mud and someone one would get stuck in
the mud themselves. He said that in fact there would' be another
Goldenberg style Commission and all of us would be 'suspects' or
'witnesses' at it. We actually laughed about the coming Goldenberg
scam in 2006. It was a very surprising admission from Kiraitu about
corruption and 'us'. The next day Hon. Kiraitu Murungi and I had a
long meeting about political party financing. I expressed to him my
disquiet at the contradictions caused by the fact that we were
fighting corruption on one side and this fight was in direct
contradiction with the supposedly 'resource mobilisation' efforts
of people like Hon. Murungaru and others.. In our discussion on
political party funding with Hon. Kiraitu Murungi, he admitted
Anglo Leasing and other such deals were essentially part of
'resource mobilisation' carried out essentially by Hon. Murungaru
and Alfred Getonga. He repeated his fear that he expected another
Goldenberg type scandal to be generated from our struggle to hold
together the coalition. Both implicitly and explicitly he had
indicated that H.E. the President knew about all these
shennanigans.
28. GLOBOTEL AND OTHERS
4th September 2004
I met with the new Permanent Secretary at the Ministry of Finance
Joseph Kinyua. We agreed that there was need for the creation of a
'miscellaneous revenue' account into which all the `repaid' monies
could be deposited. I told him that this issue had been discussed
already at the Cabinet Committee Against Corruption. I had
contacted the PS in the Office of the President, Dave Mwangi, about
another project called Globotel worth Euro49.6million and which was
again, of an Anglo Leasing design and for which I therefore also
anticipated another 'refund'. We also discussed the ongoing
forensic audit of all these security contracts that was being
carried out by the office of the Controller and Auditor general and
the importance of expediting it.
7th September 2004
Your Excellency, I detailed all these issues to you on the 7th of
September, 2004 in addition to my brief on jump-starting the
economy. I also reported on the troubling refund by Silverson
Forensic of USD910,000. We agreed that the matter should be kept
low profile though I feel we also agreed that at the least we
should get to the bottom of all these strange goings on. I informed
you, Your Excellency, that the audit by the Controller and Auditor
General of the security contracts was critical because it would
allow us as a government to remove from the list, any contracts
that were plainly fictitious or ridiculously over-inflated. I
advised that there was potential for the country to save a great
deal of money on this.
29. DR PETER EIGEN & ADVICE FROM A MINISTER
8th October 2004
The Chairman of Transparency International Dr. Peter Eigen, who was
in town for the Transparency International Annual Membership
Meeting that preceded the international anti-corruption conference
came to State House to meet H.E. the President
20th October 2004
By the 20th of October 2004 the list of suspect contracts by
fictitious companies grew by the day although the cast of
characters was the same. Mr. Evan Mwai, the Controller and Auditor
General was proceeding with his audit of security contracts and I
was encouraging him where. I could. On October 21, 2004 we met with
the Treasury PS/Joseph Kinyua and we discussed this audit among
other issues. In my estimation we were sitting on roughly USD700
million worth of contracts some of them highly dubious. If one
brought in the even murkier and more secret military ones, then the
figure was over USD 1 billion. Its not as if all the money was in
the pipeline to be stolen but clearly from all the circumstantial
evidence, and from what I had been told by some of the perpetrators
themselves and as H.E. the President had acknowledged to me on
several occasions we bad a major graft problem and it was being
perpetrated by characters within our administration.
On Sunday 24th October 2004 I met with Simeon Nyachae, the Minister
of Energy who had recently returned to the country from Europe
where he had undergone a hip operation. I sought his advice on my
predicament. We met between 11:00HRS and 13:45HRS. We discussed the
fact that high level corruption was everywhere and acknowledged
that people like Hon. Murungaru were involved in Anglo Leasing. He
explained that Hon. Murungaru were involved in raising Ksh. 5
billion for the next election through these schemes. Naturally, I
was deeply frustrated by the limited action despite the evidence
available.
30. PLANNING DEPARTURE
Thursday, 28th October 2004
By the end of October I had started the process of down-sizing my
department and sending back civil servants to the departments from
which they had originally hailed.
8th November, 2004
After a meeting at our offices in Cooperative Bank House, Justice
Ringera remained behind. His analysis of my situation was grim and
admitted that once graft reaches the President he won't touch it.
He observed that I was now a prisoner in my job because I ]mew too
much. I was surprised when he told me that if I tried to leave
`they' could even try to kill me.
24th November 2004.
On the 24th of November, 2004 a nervous Evan Mwai visited my office
at State House. He had insisted en coming to me instead of me going
to him. He was deeply concerned that his ongoing audit of
security-related credit agreements was revealing things that had
frightened him. He also pointed out that in fact, he now feared for
his personal security. This was as a result of a reply to a letter
he had sent to Dave Mwangi: the reply from Mwangi with regard to
the Globotel contract was incredulous; so much so that it had
frightened Mwai. He said he feared for his own physical security
because implicitly Dave Mwangi as the head of internal security
could cause physical harm to come to him. He then went on to relate
how he had realized almost all of the contracts were similar and
suspect and this frightened him. I told him to conclude his report
and prepare an Executive Summary that I could give to H.E. the
President This incident was moving to me and in a certain sense the
penny dropped as a result My own position was clearly increasingly
untenable. But I made up my mind to see the H.E. President one more
time about the Mwai concerns that seemed so profound.
3rd December 2004
I wrote to Sammy Kyungu the Permanent Secretary at the Office of
the President in charge of Defense asking for clarification on the
ship the Navy was building. He called me immediately he got the
letter in an agitated state saying the matter was classified and
that Ambassador Muthaura would be calling me. Muthaura called and
we agreed to set up an appointment to meet soon. I went to see him
the next day and once there, I was surprised to find that Dave
Mwangi had also been summoned to sit in on the meeting. Muthaura
said the navy ship matter was very sensitive and was in any event
being audited by Evan Mwai. He assured me that he would hand me a
report on the matter but appeared to change his mind half way
through and said he would get it to me later.
Still, during that week I wrote letters to Evan Mwai the Controller
and Auditor General providing him with all the information I had
gathered about the purported 'security financing companies' he was
auditing. The modus was clear. the Government of Kenya would enter
into a contract with a number of the financing entities that did
not exist which meant that the Government had no legal recourse. It
also implied an effort on the part of financiers to avoid revealing
their true identities which flew against common practice by
reputable international financiers. Secondly, in most of the
contracts the Government started debt repayments before substantive
implementation of the projects had began. The implication of this
was that the bogus financing companies used the Government's money
to implement the projects and then proceeded to charge interest on
what are in truth fictitious loans by the Government to itself. In
the majority of financing entities we found they did not exist. The
navy ship linked to Mr. Anura Perera was organised under a similar
arrangement as two of the ostensible financing companies did not
appear to exist at their Madrid addresses.
The reports and findings by the Controller and Auditor General when
all the information was analyzed concluded that there were several
'Anglo Leasing type' deals in excess of USD200 million. During the
same week I spoke to Dave Mwangi about the giant Globotel project
that was ostensibly for the Administration Police and was in the
Anglo Leasing mould of deals. He said that the Globotel deal was
being investigated by an inter- ministerial committee.
4th December 2004
I met with H.E. the President before our travel to the wedding of
Raila Odinga's daughter. I gave him a nine-point agenda including
discussion of my department's future and the ongoing security
contracts audit by Mwai the Controller and Auditor General.
10th December 2004
On the l0th of December, 2004 Your Excellency we discussed the
ongoing security contract audit by the Controller and Auditor
General. I advised that Mwai needed to make a presentation directly
to you. before he made his report to the Public Accounts Committee
as he was required to do under law.
31. KINYUA'S FEARS AND CONCERNS
Tuesday 14th December 2004
I went to the Ministry of Finance for a meeting with the Donor
Consultative Group. After this meeting I had a long meeting with
Joseph Kinyua who shared with me just how terrified Mwai had become
as a result of the audits he was doing into the security sector
supplier contracts and what he had discovered. He told me that Mwai
had discovered that a majority of them were Anglo Leasing type
contracts. For the first time Kinyua enunciated his concerns about
the integrity of his own minister Mwiraria, Murungaru and other key
figures.
32. PRESSURE FROM ANURA PERERA
21st December 2004
On the 21st of December 2004, Gen (rtd) Mahmud Mohammed came by to
visit. My father had called to alert me that the General had met
with him seeking an appointment with me, and was now on his way.
The General told me he had just returned from London where he had
undergone a heart operation. Then he got to the real point of what
had brought him to see me. Anura Perera had gone to see him in
hospital in London and told him I was making life difficult for him
to extent that he was unable to travel to Kenya for fear of arrest
and that his money was held up because of my department's
inquiries.
The General told me that Perera was a good, generous and honorable
man who only sought audience with me to explain himself. To
demonstrate how honest Perera was, the General told me a story of
how the late Adam Ali (Financial Secretary) had died with Perera
owing him Ksh10 million. Perera had insisted on locating the man's
wife and giving her the Ksh. 10 million. Perera's primary complaint
was that the Treasury was holding up his payments and he felt I was
responsible for this. From the day the retired General visited me
he called either me or my father every day.
29th December 2004
I met with Joseph Kinyua who warned that 'he was under pressure'
from the Minister of ., Finance to make payments on the Anglo
Leasing type contracts that Mwai was investigating. I told him not
to because it was not unlikely that some of them were entirely
fictitious as we had. found with others earlier in the year.
33. 2005
On the 4th of January 2005, I spoke to Evan Mwai the Controller and
Auditor General who told me he was about to complete his forensic
audit and. that my letters to him had been of enormous help and had
merely confirmed what he already knew from his own investigations
that most of the. 'financiers' of the schemes were bogus. He did
however inform me that Joseph Kinyua was under 'tremendous
pressure' from Minister Mwiraria to pay up on some of the contracts
and was hoping that the report from the Controller and Auditor
General would save him from having to do this.
The next day I spoke to Mr Mwai again and he told me that
Ambassador Francis Muthaura had called him directing that the bills
that were pending needed to be paid even if his audit was not
complete because the concerned parties were pushing for payment. He
said that Hon. Mwiraria was ordering Kinyua to pay Deepak Kamani.
Mwai said that from the sound of Muthaura's voice, he too had been
convinced by Hon.. Mwiraria that payment needed to be made. Mwai
noted that Kinyua was delaying making payment until he got the
report that Mwai was preparing -- which in turn put the pressure to
complete on Mwai. Mwai by this time had also incorporated the
information I had given him in a letter dated 03-01-05 in his
report. I had copied the same letter to Kinyua who sounded relieved
when I called him to confirm whether he had received it. Mwai
called again to point out that LBA Prisons project was one in which
they had uncovered a host of irregularities and yet people were
pushing for it to be paid.
34. MEETING
l0th January 2005
On the l0th of January 2005 The Daily Nation carried an interview
in which I was quoted as saying that the Anglo Leasing scandal was
the litmus test of our administration as far as the fight against
corruption within NARC was concerned. The next day Hon. Kiraitu
Murungi was quoted directly contradicting me, saying that Anglo
Leasing was 'the scandal that never was' because the money was
repaid. Your Excellency, we met that day with a detailed brief I
had prepared on the security projects that Mwai was auditing. My
brief showed that a majority of the entities that had been
contracted to provide the finance in these projects did not exist.
We discussed prosecution of the Anglo Leasing cases and the
possibility of Evan Mwai the Controller and Auditor general coming
in to make a direct presentation on these matters to H.E. the
President.
14th January 2005
There was a cabinet meeting in State House on the 14th of January,
2004. After this meeting Hon. Kiraitu came up to my office and
pointed at me and said that party elections were around the corner
and I was the one holding up the financing of these elections. This
was clearly in reference to my work with Mwai and Kinyua. He said
some of the contracts had to be paid and he, Mwiraria and I would
sit and agree which ones so it's all done 'transparently'.
17th January 2005
I met with Hon. Kiraitu Murungi at his office from 16:30hrs. He
re-iterated that party elections were on the way and Prof. Nick
Wanjohi had estimated that they would cost Ksh.200 million and that
this money would come from the contracts that Kinyua and I had
stopped especially Anura Perera's matter clearly the ships. Hon.
Kiraitu demonstrated no concern that I would report this matter
back to H.E. the President.
The last time we had spoken he suggested a meeting with Mwiraria to
agree on a transparent system of financing elections but (in this
meeting) he said he'd organize a meeting between Chris Murungaru
and me. It was a bizarre discussion with Hon. Kiraitu opening up to
me in a totally unusual manner essentially admitting the suspect
contracts I had spent the past year pursuing were all along schemes
to raise political finance and by interfering with them I was
undermining the party.
I informed him that I -was uncomfortable with Anura Perera using
General Mohammed to put pressure on me and he confirmed that the
people who knew Perera were Hon. Murungaru and Alfred Getonga. He
said he could speak to them on this. He was nevertheless clearly
looking for a quid pro quo where I could somehow look for a way
that the payment for Perera can be approved by me. I played possum
saying I was keen, not to undermine the party. But it was a final
call after this I calculated they have few or no options left. They
have bared their souls to me.
20th January 2005
I had the same conversation with Hon. Kiraitu and Hon. Murungaru.
I played possum throughout. Once again they were clear that the
security related projects that were the subject of so much
controversy were for political financing purposes all along: Hon.
Kiraitu and Hon. Murungaru demonstrated no concern that I would
report this matter back to H.E. the President. The evidence had
been building up but with this final approach they let their guard
down. By corning to me knowing full well I had direct access to the
President meant they were not at all worried that I 'would report
them to the President'. Hon. Murungaru pointed out that H.E. the
President had once been Minister of Finance and understood how
these things were done.
24th January 2005
I tendered my resignation from the UK during a trip starting on the
24th of January 2005.
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