L. Muthoni Wanyeki
Monday, May 21, 2007
The grand corruption scandal known as Anglo Leasing is now firmly back in the public domain. Following the release of the report Illegally Binding: The Anglo Leasing irrevocable promissory notes by the Media Analysis and Research (Mars) Group, insistent questions have been raised on this aspect of the scam.
Thus far, answers to those questions have only been tendered in parliament by Minister for Finance Amos Kimunya. Those answers have been, at best, contradictory. However, last week, the minister's technocrats sought a meeting with the Mars Group to clarify what they termed "inaccuracies" in the information currently circulating about the promissory notes. And they did have some reassuring news to impart.
First, they stressed that the issuance of irrevocable promissory notes as a method of payment for external financing has now been abolished. Second, they said future procurement for security-related contracts will follow the Procurement Act and that, as the Treasury has now reclaimed its rightful role as the seeker of external financing for programmes and projects proposed by line ministries, any contracting of further external debt will be according to the External Loans and Credit Act.
Third, they flagged the release of the Treasury's new publication, the Annual Debt Management Report for July 2005-June 2006 and noted that the full external public debt register is now to be published and made available for debate as part of the annual budgetary process.
It is, of course, good to know that the Ministry of Finance intends to follow the law. But it is a sad thing when this has to be asserted as a sign of progress.
And the meeting also revealed that irrevocable promissory notes as a mode of payment for external financing dates back to the times that Kenya was in the bad books of the IMF and the World Bank and thus unable to secure financing from more reputable sources on more concessionary terms.
This has meant that documentation of Kenya's external debt has been sorely lacking. To all intents and purposes, Kenya does not yet have an accurate external public debt register.
Finally, it was revealed that pressure to pay up on the stopped 18 security-related contracts continues to date.
On non-payment of the Anglo Leasing contracts, contrary to the Controller and Auditor General's special audit report into the 18 contracts, the Treasury holds that irrevocable promissory notes can only be proved to exist in respect of six of the contracts and that these are now all currently in the possession of the Kenya Anti-Corruption Commission. Although they were apparently voluntarily surrendered when the Anglo Leasing scandal first broke (by shadowy and untraceable individuals), the Treasury admits that they could conceivably not have been legally discharged and that other irrevocable promissory notes could conceivably still be in circulation with respect to another four contracts.
What Treasury is thus hoping will emerge from the PricewaterhouseCoopers audit being done with the KACC, is a real valuation of the goods and services to be supplied, which may provide a basis for renegotiation of the supply contracts, possibly by lengthening their maturity date. In short, like it or not, we are going to pay.
In fact, from the Treasury's own documentation, we have already paid. On every single contract except one. To the tune of Ksh18 billion ($260 million) of the total amount of Ksh54 billion ($782 million). To the extent that payments on three of the 18 contracts (one of which was commissioned by the current administration) are, in fact, deemed to be complete.
The Kenyan public do not want to pay for goods and services that were only partially delivered (if delivered at all) through contracts that were single-sourced at over-inflated values through unnecessary (and, in some cases, non-existent) financiers. We also want everybody - every single person - who allowed this to happen to face the full weight of the law.
L. Muthoni Wanyeki is a political scientist based in Nairobi
First published in The East African (Nairobi)
http://www.nationmedia.com/eastafrican/current/Opinion/opinion21050714.htm
