By Mars Group
Could we be on the verge of cracking the Anglo Leasing case? Over the last two weeks, Members of Parliament have twice discussed the irrevocable promissory notes issued to the fictitious credit providers associated with the 18 or so Anglo Leasing type contracts. And now the Daily Nation reports that the Ministry of Finance has contracted Price Waterhouse Coopers, who over the past few months have been engaged in forensic inquiries into the 18 so called Anglo Leasing type contracts. My instinct, suspicious fellow that I am, is to call this a clever diversion away from the Government’s real problem – that serious people are beginning to ask serious questions about the irrevocable promissory notes issued by the Government of Kenya to the tune of Ksh 56.33 billion, to fictitious credit providers. The PWC contract is in my view a red herring that should worry Kenyans for several reasons.
At the most basic level, it is proposed to pay an external auditor Ksh 96 million more of our tax money to do
what the Controller and Auditor General has already done, as far back as April 2006. Mr. Evan Mwai, now retired, reported to Parliament that he had submitted detailed reports of the 18 individual contracts thus, “as already stated the nature of the subject matter of this Report precludes the publication of detailed Audit Reports on the individual supplier/credit contracts. However, such detailed Reports have been issued to the respective Accounting Officers with copies to the Treasury.” It is therefore clear that the Ministry of Finance has had detailed individual reports since at least April 2006. The question is what has it done with them since then? Is the Price Waterhouse Coopers consultancy a red herring?
It is time for Kenyans to demand that the Minister for Finance, Amos Kimunya, immediately table the detailed audit reports on the 18 contracts by our constitutionally mandated auditor, in Parliament so that an objective decision can be made as to whether or not we need to hire expensive external auditors. I say an objective decision because, in the Anglo Leasing case, the Ministry of Finance is very much a suspect in the loss of Ksh 56.33 billion, which Mr. Mwai identified as far back as 2004 and reported on in 2006. It is not prudent to rely on the accused (the Ministry which was responsible for issuing irrevocable promissory notes worth Ksh 56.33 billion to bogus credit providers) to supply us with an auditor regarding the loss of our tax money.
Another concern is that a PWC report at this stage could further muddy the legal waters. In essence it has been hired to do what the Kenya Anti Corruption Commission (Ksh 1 billion per year budget) is meant to have been doing since day one. That is to say, carrying out forensic investigations to establish criminal or corrupt activity in relation to the 18 contracts. With all due respect to PWC, why should we expect that they will not have their report treated as inconsequential and even unlawful by a court system that has challenged KACC’s locus in corruption investigations repeatedly, and with devastating effect? If PWC manages to secure mutual legal assistance in international circles, what does that tell us about the KACC and the Attorney General, Amos Wako? It’s not hard to imagine what will happen once the Government attempts to use the PWC report in court. Ask any street lawyer and they will tell you that under the Constitution, the only lawful auditor is the Controller and Auditor General, whose reports are admissible in court. Can the same be said of PWC’s work, no matter how diligent they may be? Ksh 96 million is a lot of money. PWC should be watch-dogged to ensure that, if they do get this assignment, they tell us more than we already know.
Nevertheless the entry of PWC into the Anglo Leasing equation shines the spotlight directly on the Minister for Finance, Amos Kimunya, who must surely issue a ministerial statement at the first opportunity, else we would suggest that Kenyans petition parliamentarians to adjourn the House to discuss the irrevocable promissory notes as an urgent matter of national importance.
According to the Hansard of April 17th 2007, Joe Nyagah the MP for Gachoka Constitutency, a former banker, had this to say on the matter: “The Anglo Leasing issue was discussed in this House. The Anglo Leasing issue was implemented by this Government and we lost a lot of money in the process. Later on, some money was returned to this country. But my biggest fear is not what was returned or what happened. That does not bother me! What bothers me is that, we have promissory notes in which the Republic of Kenya said: “On this year, 2010, the month of July 1st, we will pay so much” or, “On this year, 2015, we will pay so much.” That is what bothers me! Our children and grandchildren are going to be left in a very difficult position.”
Paul Muite, MP for Kabete constituency, and a Senior Counsel at the Bar, added to this in response to a point of order by Jimmy Angwenyi (Kitutu Chache) who claimed that Mr. Nyagah was out of order to say that the Government will be obliged to pay what he called “fraudulent promissory notes.” Mr. Muite’s intervention went thus, “Mr. Temporary Deputy Speaker, Sir, I just wanted to inform the Hon. J. Nyagah that those were not just promissory notes. They were irrevocable promissory notes. So you cannot even revoke them. Once you negotiate them, even if there was fraud between the original payee and you negotiate them or discount them with a bank, there is an absolute liability in law for the Kenya Government to pay the irrevocable promissory notes.”
One week after that exchange, the irrevocable promissory notes re-emerged in Parliament again when Paul Muite managed to get a response from Finance Minister Amos Kimunya. We set out in full the Daily Nation’s reportage of April 25th 2007 where it states that:
“The Government will pay funds committed to Anglo-Leasing type of contracts after the authenticity of the services provided has been proven. Finance Minister Amos Kimunya also allayed fears that Kenya could be facing a debt amounting to billions of shillings committed to contracts through irrevocable promissory notes. He said the Government had discussed the matter with a House committee and had also moved to court to seek interpretation of the contracts which were entered in regards to Anglo Leasing. Mr. Kimunya also stated that some of the promissory notes were cancelled by the Government which has moved to court to clear the cloud of the scandal. He had been challenged by Paul Muite (Kabete, Safina) to tell the House the status of the promissory notes and the liability that the Government was facing. Mr. Muite warned that the Government was sitting on a huge debt by failing to clarify the issues surrounding the irrevocable promissory notes which were issued to Anglo Leasing and Finance Company. He was contributing to the debate on the supplementary budget in which the minister was asking Parliament to allow him to draw Sh28 billion from the Consolidated Fund to meet its expenditure up to June this year. Parliament, the MP said, was not a rubber stamp. Mr. Muite raised concern over the status of the Banking Act, demanding that the minister tables in Parliament evidence that he had gazetted it. He claimed the minister could be planning to repeal the Act irregularly through the budget as it happened to the Donde Act. He told the Finance minister to reciprocate Parliament’s support by implementing key decisions as approved by the House. Alego Usonga MP Sammy Weya (Narc) urged Kimunya to set up a website in his ministry to enable members of the public to monitor public funds allocation and expenditure.”
We will try and get the Hansard for the day, to ensure that the report is accurate, but it does correspond to previous statements by Mr. Kimunya, for example on television on February 1st 2007.
But it appears to us that a corner is being turned. At last, the Minister for Finance, Amos Kimunya, has been forced to discuss the issue of the irrevocable promissory notes by which, according to the Controller and Auditor-General, the Government is committed to pay Ksh 39.6 billion in the future. We are disappointed that he maintained the following fictions as if they will make the real problem go away, namely that:
- It is possible to assess the authenticity of phantom projects such as the Forensic Science CID Laboratory which of course does not exist since it was never built, while ignoring the fact that the Controller and Auditor General clearly states that Ksh 4.1 billion worth of irrevocable promissory notes were issued to Anglo Leasing and Finance Limited (non-existent by all accounts) on August 16th 2001. Why is Mr. Kimunya dissembling over a very simple matter? The Attorney General himself gave a legal opinion which stated that the irrevocable promissory notes constituted an unconditional promise to pay as has been demonstrated in our report entitled Illegally Binding.
- Discussion with a House committee constitutes a serious attempt to save Kenya billions of shillings in unconscionable debt, while dismissing as misplaced any concern over the fate of irrevocable promissory notes signed by Government of Kenya officials and backed by the signature and legal opinion of the Attorney General.
- The Government has moved to court to seek interpretation of the contracts which were entered in regards to Anglo Leasing. As far as we can tell this is either the imaginings of the Daily Nation’s unnamed parliamentary reporter or a bare-faced lie by the Minister to his parliamentary colleagues. The other alternative is that the Government has moved to court in secret against an unknown entity. If this were so, we would rather have a statement from the Attorney General, the appropriate Minister to tell us about litigation, such as described bellows
- There actually were credits to the Government of Kenya, when the former Controller and Auditor General very clearly states that he could find no evidence of such credits and worse still, found that at least 7 of the credit suppliers or contractors were not registered in the countries they claimed to come from, if at all.
We hear that, next week, Joe Nyagah will again step up to the crease and ask about these irrevocable promissory notes. Having reviewed his last contribution on the same matter of April 17th 2007, we foresee trouble for the Finance Minister as he attempts to talk his way out of the problematic fact that what is irrevocable cannot be revoked.
Now is the appropriate time for Mr. Kimunya to admit the problem and seek help if need be in identifying who is responsible for losing this country Ksh 56.3 billion shillings through the so called Anglo Leasing type contracts of this and the past regime. At least some are cabinet colleagues.
Lest Mr. Kimunya underestimates the damage he is doing to the country by time-wasting and refusing to call a spade a spade, we direct his attention to the fate of Congo DRC which stands to lose US$ 100 million to vulture funds who buy up sovereign debt like the Anglo Leasing irrevocable promissory notes for a song and then litigate the contractual amount from governments such as Kenya’s. A friend informs us that just yesterday, Jubilee USA, the debt relief campaigners, announced that the U.K. Royal Court of Justice ruled against Zambia in the US$50 Million lawsuit brought against them by the vulture fund, Donegal International. The court ruled that Zambia must pay over $15 million to the vulture fund, almost half of what they would have saved this year after being selected for 100% debt cancellation at 2005 Group of 8 (G8) meetings.
Kenyans must now surely demand that the government, and Parliament, as a matter of urgency deal with the following issues:
1. The Controller and Auditor General’s Report of April 2006 says of 18 Anglo Leasing type contracts: “through the eighteen security related supplier/financier credit contracts/projects, Government has been committed to spending a total of Ksh 56.33 billion. The commitments were in the form of Irrevocable Promissory Notes which were given to the credit providers on the dates the respective credit agreements were signed.” The Controller and Auditor General is speaking about the following purported credit agreements and purported credit providers:
2. As the table shows, the Government is now facing litigation and having to spend extraordinary amounts to defend itself in Europe and Nairobi.The litigants believe they have enforceable contractual rights against the Government of Kenya – what does Mr. Kimunya imagine will be the position of whoever now holds the irrevocable promissory notes issued by the Government of Kenya.Sovereign debt issues cannot be handled as informally as the Minister keeps trying to.
3. It will be next to impossible to solve this problem the Kimunya way. We believe that the Government of Kenya has no chance of success in repudiating its obligations unless and until it can demonstrate that it has alerted the world to the Anglo Leasing fraud and its perpetrators having obtained Kenyan sovereign paper. It must demonstrate that it has taken all reasonable steps to arrest and punish the perpetrators of the fraud both before and after the fact – including cover-up actors. It must, in other words take decisive action against its own officials, past and present, who have any hand in illegal dealings related to the contracts listed above.
If the Minister does not act, he imperils Kenya’s creditworthiness and raises the prospect of an embarrassing failure as he floats a Kenya Bond in London for US$75 million. Mr. Kimunya should also come clean and table all the evidence he says he has that we have a legal defence to the claims likely to be brought by those who hold our debt notes. He must provide us with the details of the irrevocable promissory notes and indeed of the 18 separate Anglo Leasing type contracts. This is our challenge to the Minister for Finance.
The challenge we Kenyans face is dealing with impunity granted by the Government of Kenya to people who have cost us Ksh 56.33 billion. We are being condemned to pay what is not our debt in truth, for services we did not receive or were grossly overpriced, to people we do not know. A quick look at the external public debt register which the Government has kept hidden from us tells us how deeply in debt we have been put, by successive governments.
How can we act to save ourselves and our country? We would suggest a robust demand targeted to our Members of Parliament – a last chance some might say. Ksh 56.33 billion is double the amount that Mr. Kimunya is asking Parliament to vote, so that he can keep government ticking over until the budget in June 2007. Imagine also if you may what it could do to improve the health and education standards of our people!
As our representatives, Members of Parliament have the collective obligation to support Mr. Nyagah as he rises next week to hold Mr. Kimunya and the Government of Kenya to account. Should they fail us, we would have no option but to conclude that they are either negligent or complicit in this economic crime against generations of Kenyans.
Posted to APN by Karuga wa Njuguna, UK
Published by African Press in Norway, apn, firstname.lastname@example.org