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The Finance minister’s display of promissory notes that he claimed had been cancelled raised questions on how he got them yet identities of those behind the scam were not known, as he, the Attorney General and the KACC have always claimed, writes Gakuu Mathenge.

The Sh56 billion Anglo Leasing scam that links the Kibaki administration to the murky underworld continues to wag its tail despite efforts by the State and the Kenya Anti-Corruption Commission (KACC) to downplay it. Though many questions remain unanswered and despite the bad press it had given the Government, Finance minister Mr Amos Kimunya continued to support and defend the skunk the administration inherited from the Kanu regime, and which the Kibaki administration has continued to nurse and nurture

Recently, the campaign to resolve the scandal assumed international dimensions after a consortium of civil societies filed petitions with the World Bank, the International Monetary Fund and the trans-national Swiss Bank, HSBC Republic Bank, to intervene and exert pressure on the Kenyan authorities to stop the drain of public coffers through some 18 Anglo Leasing type contracts with shadowy foreign firms.

After months of relative lull, Anglo Leasing was thrust back to the limelight when Ntonyiri MP, Mr Maoka Maore, on May 9, tabled what he claimed to be copies of irrevocable promissory notes, issued by the Treasury on behalf of the Government to some shady credit finance suppliers. HSBC, is holding the promissory notes, which would be redeemed on demand when they fall due. Kimunya was unable to convince Parliament last week that the Government had cancelled the promissory notes as he could not table evidence of indemnity.

Twice, Kimunya issued contradictory statements to Parliament, in a failed bid to conceal his ministry’s and the Government’s dealings with the shadowy firms. Kimunya’s response provoked hue and cry from both the August house and civil society groups, who accused the minister of being too casual with grave corruption matters and misleading the House and the public.

At issue is a foreign firm whose directors and physical addresses are still unknown, Global Tel Inc, the principal company contracted in 2002 to supply multi-channel telecommunication equipment to the Administration Police.

The deal was to be financed by a firm called Midlands Finance and Securities Ltd. The terms of the agreements were such that the Government was to issue a Sh360 million commitment fee, plus irrevocable promissory notes (similar to post-dated cheques) committing to pay Sh6.1billion, in 36 regular instalments, to Midlands Finance and Securities Ltd as payment for the equipment purportedly supplied by Global Tel Inc.

The down payment was paid and the first instalment fell due on May 29 2003. The last instalment was to be settled on June 9 2009. In spite of the down payment and the promissory notes, the fictitious companies are yet to supply the equipment they were being paid for. And as with several other Anglo Leasing-type scandals, the companies involved here have since been found to be phoney.

During a special audit conducted by the former Auditor and Controller General, Mr Evans Mwai, in April last year, the two companies were found to have been non-existence in the countries they had indicated as their physical addresses. All the same, some Sh687,725,491 million has been paid to the Midlands Finance and Securities. In his recommendations to Parliament, Mwai said the fact that the firms were non-existent was a positive development in that the Government would not have to honour the promissory notes.

The biggest questions on the public’s mind is why Kimunya, was willing to bend over backwards and even tell untruths in Parliament, to protect companies and individuals he and KACC have insisted are unknown to them. In response to Maoka Maore’s dossier, Kimunya has on several occasions, both in and out of Parliament insisted: "No promissory notes were issued against this project. There is no refund against the said project because no payments were made."

His statements not only contradict the Auditor and Controller General’s report of April 26 last year to Parliament but also plunged the minister into a very awkward position. In an effort to convince an increasingly cynical public the minister called a press conference, where he displayed a bunch of promissory notes, which he claimed had been cancelled and therefore were null and void.

The move raised questions as to how the minister would be holding promissory notes issued to foreign firms whose owner’s identities he, the Attorney General and the KACC, have always maintained were unknown.

It also raised the question as to whether KACC would interview Kimunya to shed more light on the shadowy figures behind Anglo Leasing-type contracts. Kimunya’s predecessor, Mr David Mwiraria, who left office a disgraced man, did not disclose who the faces behind Anglo Leasing were despite having said some of the firms refunded money to Treasury.

As the official economic crimes investigative agency, KACC’s handling of the Global Tel affair has also been on the spotlight. If its official report for the third quarter of 2006 is anything to go by, KACC seems to have dropped the matter off its list of priorities. In its second quarter report, KACC documents the progress as follows under case file number 48, KACC/FI/INQ/33/2005:

"Inquiry into allegations of irregular contract between Global Tel Inc and the Government of Kenya for the supply and installation of a multi-channel security system for the Administration Police Department. The same was procured by Office of the President and the contract was signed on 29th May 2002. The project involved the supply and installation of a backbone communication infrastructure dedicated to the Administration Police.

Investigations established various irregularities in the procurement process. The project was not planned for nor was it budgeted for as required by law. No due diligence was done to assess the competence and capability of the contractors. Further, a commitment fee and the first instalment were paid before anything was done to implement the project. The Attorney General’s office gave a legal opinion on the project."

The report further says: "The file was forwarded to the Attorney General on 27th September 2006 with recommendation that the following persons be charged with criminal offences as follows: The former Permanent Secretary, OP with three counts of breaching procurement regulations and one count of economic crime; the former Deputy Chief Finance Officer with two counts of breaching procurement regulations; the former Minister for Finance with two counts of economic crime for approving a project without ensuring that provision for repayment of credit was made in the estimates of expenditure approved by Parliament and failing to adhere to provisions of Central Bank of Kenya Act ;and the former PS, Treasury, with two counts of economic crime and three counts of abuse of office for improperly approving payment to Global Tel of Euros 1,489,500, being three per cent commitment fee, Euros 4,000,000, being first instalment and Euros 3,315,854 being second instalment. Action on the report is awaited."

But in the third quarter report, KACC does not mention the case, or progress made. Questions have persisted about prospects of successful conclusion of the Anglo Leasing-type contracts in court, if the cases investigated by KACC are forwarded to Wako, for prosecution.

As the chief Government legal advisor, Wako appended his signature for approval and favourable legal opinion on all the contracts in questions, and, legal experts say, he should be a witness or a plaintiff, not the prosecutor.