New Internationalist

Anatomy of a scam

Issue 396

John Githongo, Kenya’s exiled anti- corruption chief, speaks to Vanessa Baird.

‘I’m careful with interviews,’ says John Githongo, as he settles his large frame into one of the Oxford college armchairs.

With reason. The exiled former anti-corruption tsar of Kenya has been making powerful enemies in recent times.

A warm, modest, unassuming man, he does not look the part of ferocious watchdog. Yet it was he who spearheaded one of the most ground-breaking corruption investigations in Africa.

President Mwai Kibaki of Kenya won a 2002 election landslide on an anti-corruption ticket. He made the bold move of appointing the country’s head of Transparency International as his anti-corruption tsar and included him as part of the Government.

A journalist by profession, John Githongo was first introduced to anti-corruption work by his father who was one of the founders of the Kenyan chapter of Transparency International.

But in his high-prestige post in the new Kibaki government Githongo junior committed the ultimate sin: he was just too good at his job. He uncovered a $200 million scam that ultimately led to the heart of government itself.

It began when John Githongo received information that prompted him to investigate a contract with a company called Anglo Leasing and Finance to provide the Immigration Department with a new tamper-proof passport system. A commitment fee had been paid but no work appeared to have been done. Furthermore, no one who should have known seemed to know exactly what Anglo Leasing was.

He investigated further and, almost miraculously, the money paid out to Anglo Leasing started coming back. Not just a trickle either – it poured. Obese cheques – one for 4.7 million dollars – arrived at the Kenya Central Bank.

‘I have to admit, I got carried away. I thought: wow… here is somebody returning all this cash and not suing us. If someone is forced to pay back half a billion shillings on a contract, they have to be out of pocket in a big way and should go to court. Now this is the real business… this is the real fight against corruption… this is half a billion which can now perhaps be spent on something more worthwhile. Recovery of money on this scale had never happened before.’

But, he recalls with a wry smile, ‘my colleagues did not share my enthusiasm. No celebratory atmosphere developed. No champagne bottles were popped. There was something odd…’

Senior officials told him to back off now. The Anglo Leasing sandal was not a scandal, he was told, as the money had been repaid.

But he did not follow their advice. He carried on and found that there were other Anglo Leasing type companies and contracts for various projects – a forensic laboratory for the police, ships for the navy, a telecommunications system.

The pressure on him to ‘take a back seat’ from the investigation became more intense.

He was determined to find out who was behind this massive network of scams so that they could be prosecuted. A combination of naivety and optimism kept him going, says Githongo. ‘I had no idea my inquiries would reach so high.’

Githongo kept his boss, the President, informed at each stage of his investigation. Finally, though, his position became impossible. He received warnings from friends. People in high office wanted him dead. He escaped to Britain in early 2005 and has been here since. But he has not kept quiet.

In January 2006 he issued a damning dossier which implicated and named four high-ranking Kenyan government officials in corruption on a massive scale: David Mwiraria, finance minister; Kiraitu Murungi, energy minister; Vice-President Moody Awori; and Chris Murungaru, former national security minister. The main purpose of the corruption, the dossier alleged, was to raise party funds with which to fight elections by siphoning off government money into non-existent companies.

Since the report was published three of the ministers concerned have been fired from the cabinet and Kibaki’s fragile Rainbow Coalition has collapsed. But there have been no high-level prosecutions to date and the accused ministers continue to deny wrong-doing.

Githongo thinks there are some people in government who still support him and his anti-corruption drive but they are ‘not a critical mass’. As he says: ‘The fact that I am here [in Britain] speaks volumes.’

The Government has made other attempts to put the lid on the scandal. The lead investigator in the Anglo Leasing Affair has been fired. Meanwhile Justice Aaron Ringera, head of the Kenya Anti-Corruption Commission, has been accused by Githongo and others of ‘shielding the culprits’ until after the 2008 general election.

Thousands of demonstrators have been taking to the streets of Nairobi to protest against the Government’s corruption and Ringera’s complicity.

‘The scale of the public outrage that has been created is so great I don’t think it will die,’ Githongo comments. ‘If the Government thought this was going to go away it got it wrong. The press is really at the forefront of public accountability in Kenya these days. There have been some setbacks, like the government raid on The Standard [a Nairobi daily] earlier this year. But the press came together and has remained steadfast on this issue of anti-corruption. It’s a very positive development – one of the key institutions in the structure of our democracy.’

‘I knew too much’

In a 91-page dossier addressed to his employer, His Excellency the President of Kenya, former Permanent Secretary for Governance and Ethics John Githongo provides a rather sinister insight into corruption in high places. Here are some extracts: On 3 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 three per cent down-payment of around $1.2 million had been paid.

On a trip to Britain, Githongo finds that there is no such entity as Anglo Leasing and Finance registered there. He informs President Kibaki that several senior Kenyan government officials may be implicated in a corruption plot and names them. Kenya Anti Corruption Commission investigators confirm that everything points to a ‘gigantic attempted fraud’. In addition to the $1.2 million commitment fee, a payment of $4.6 million is being processed for payment to Anglo Leasing on the same project. Interior Minister Chris Murungaru announces the cancellation of the Anglo Leasing contract pending the completion of investigations.

14 May – Once I arrived home I received a telephone call from Ambassador Francis Muthaura. He informed me that Anglo Leasing had contacted him and assured him that they were going to repay the money, which he described as a great success.

17 May – 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 it was hoped once Anglo Leasing paid back the money the investigation would stop.

Githongo receives a visit from an old friend of his father’s who also has friends in the cabinet:

His advice to me was to be particularly careful; there was no way senior ministers were not involved in the Anglo Leasing affair. He warned me that ‘Murungaru [the Interior Minister] would not let you destroy them, they will kill you first’. He also warned me quite logically that if the stability of the regime was threatened then the President would stop backing me.

25 May – Ambassador Francis Muthaura called me to question the legal authority of the KACC [Kenya Anti Corruption Commission] to conduct the investigation; he even queried if the Anti-Corruption and Economic Crimes Act was a reasonable piece of legislation at all.

A couple of days later it is disclosed that Anglo Leasing has been paid for another project – a contract for a police forensic laboratory. Though no work has actually been done roughly $5 million has been paid, ministers having taken advantage of US terrorism-related fears to expand what was a small project into a ‘cash cow’. A letter is delivered to Githongo which confirms that the Central Bank of Kenya has received $4.7 million from Shroeder and Co Bank AG Zurich on behalf of its client Anglo Leasing and Finance Company and an additional $6.5 million has been paid back by Infotalent, another bogus company.

I found this unsettling. We acknowledged, your Excellency, who the key players in the scams were. At that time, Sir, you advised me not to hand over... files to the Attorney General for prosecution just yet and to delay sending the Infotalent file to the KACC.

Meanwhile the press is calling for ministers to be sacked. Ambassador Muthaura makes an obfuscating statement in a press release that goes into bureaucratic detail of the forensic laboratories project. An angry Githongo goes to the President:

23 June – 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... this was actually lying to the Kenyan people.

There are other developments – and revelations:

29 June – I met with Hon Kiraitu [Murungi] at his office. Essentially he said that Anglo Leasing was ‘us’ – our people. He said that no matter what, he did not have what it took to countenance the arrest of Chris Murungara for corruption because they had ‘too much history’. He was blunt and emotional. He admitted that people like Murungara were key to the transactions of Anglo Leasing and even though he personally did not have the details the reason given to him was that the money was needed for political fundraising.

By this time the Anglo Leasing Affair has become a national and international scandal:

The diplomatic community led by British High Commissioner Edward Clay visited the President and spent two hours with him. 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 would say ‘all was OK’. I refused – it was too ridiculous and I was convinced that Kenyans would laugh in my face.

Another mysterious payment is made to the Central Bank by one of the non-existent companies involved in security procurement for $910,000. It comes from Silverson Forensic, drawn on a bank in Liechenstein, Landsbank AG.

By 20 October the list of suspect contracts by fictitious companies grew by the day and the cast of characters was the same. In my estimation we were sitting on roughly $700 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 $1 billion. From what I had been told by some of the perpetrators themselves and as His Excellency the President acknowledged to me on several occasions – we had a major graft problem and it was being perpetrated by characters within our administration... I met with Simeon Nyachae and he explained that Hon Murungaru was involved in raising five billion shillings for the next election through these schemes.

Githongo meets with Justice Aaron Ringera, head of the KACC:

8 November – His analysis was grim and he 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 knew too much. I was surprised when he told me that if I tried to leave ‘they’ could even try to kill me.

Evan Mwai, a government auditor, tells Githongo he fears for his own personal safety because of the information he is uncovering about the ‘security financing companies’ . Githongo concludes that:

The modus was clear: the Government of Kenya would enter a contract with a number of the financing entities that did not exist which mean the Government had no legal recourse. In most contracts the Government started debt repayments before substantive implementation of the projects had begun... The bogus financing companies... then proceeded to charge interest on what are in truth fictitious loans by the Government to itself...

The reports and findings by the Controller and Auditor General conclude that there are several Anglo Leasing type deals in excess of $200 million. But still ministers are pressurizing the auditor to authorize dubious payments. Githongo urges him not to.

14 January – Hon Kiraitu Murungi came to my office and pointed to me and said that party elections were around the corner and I was the one holding up the financing of these elections.

Bizarre and disturbing conversations take place with Kiraitu Murungi and Chris Murungaru during which they openly admit to Githongo that the suspect contracts were all along schemes to raise political finance. They infer that he is undermining the Party.

I played possum saying I was keen not to undermine the Party. But it was a final call – after this I calculated they had few or no options left. They have bared their souls to me. By coming 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 Murungara pointed out that the President had once been Minister of Finance and he understood how these things are done.

At that point Githongo realized he had to get out of Kenya. He tendered his resignation on 24 January 2005 while on a trip to Britain, where he has been since.

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This article was originally published in issue 396

New Internationalist Magazine issue 396
Issue 396

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