Kenya: Githongo Report, 02/26/06
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. This 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. ...
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 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.
...
5. ANGLO LEASING: THE ANATOMY
...
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
... 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.
...
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.
... 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.
...
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. ...
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. ...
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. ...
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.
...
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.
...
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. ...
13. WHO IS ANGLO LEASING?
On the night of the 2nd of June 2004, I met with both Hon. Mwiraria
and Hon. Kiraitu 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. ...
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.
...
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." ...
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. ...
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. ...
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. ...
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. ...
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.
...
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
...
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.
...
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. ...
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. ... 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. ...
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'. ...
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. ...
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. ...
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. ...
-
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. ...
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. ...
24th January 2005
I tendered my resignation from the UK during a trip starting on the
24th of January 2005.
Kenya: Githongo Report
africafocus@igc.org
Sun, 26 Feb 2006 09:59:54 -0800
Page Editor: Ali B. Ali-Dinar, Ph.D.