Eurobond scandal puts Jubilee in a difficult situation

Opposition leader Raila Odinga on January 14, 2016 at Serena Hotel, where he pointed an accusing finger at the leadership of the Jubilee administration as the shadowy hand behind the Eurobond saga. The Eurobond scandal has puts Jubilee in a difficult situation. PHOTO | JEFF ANGOTE |  NATION MEDIA GROUP

In Summary

• With little independent media interest in the scandal and reactionary public authorities that seem eager to shut down public debate on the scandal, it has taken the political gravitas of the leader of the opposition, Raila Odinga, and the brilliance and credibility of the economist, Dr David Ndii, to convince the country that something went wrong with the management of the proceeds of the sovereign bond.
• Of interest is how the government dealt with the U$2 billion realised from the initial issue, half of which was not transferred into the country and which, according to documents that Odinga has provided, was instead transferred from the receiving bank, JP Morgan, into an account at the Federal Reserve Bank of New York whose holders remain unclear.
• There is no evidence as to what happened to this substantial sum of money once it landed in this bank.
• After huffing and puffing while trying to answer the various questions raised, the Treasury gave up and has declared that Odinga is an economic saboteur, making reckless statements that will have the effect of driving investors out of the country.

By GEORGE KEGORO
More by this Author

Just as it was struggling to convince the country that its attempts to address grand corruption are
serious, the Jubilee Government finds itself in the middle of swirling allegations of a major financial scandal relating to its handling of the proceeds of Kenya’s sovereign bond issue, referred to as the Eurobond.

The odds that this scandal was ever going to come to light are high.

With little independent media interest in the scandal and reactionary public authorities that seem eager to shut down public debate on the scandal, it has taken the political gravitas of the leader of the opposition, Raila Odinga, and the brilliance and credibility of the economist, Dr David Ndii, to convince the country that something went wrong with the management of the proceeds of the sovereign bond.

Of interest is how the government dealt with the U$2 billion realised from the initial issue, half of which was not transferred into the country and which, according to documents that Odinga has provided, was instead transferred from the receiving bank, JP Morgan, into an account at the Federal Reserve Bank of New York whose holders remain unclear.

NO EVIDENCE

There is no evidence as to what happened to this substantial sum of money once it landed in this bank.

Odinga also addressed attempts that the Treasury had made to address queries about the movement of this money, represented by various entries in the relevant government accounts at the Central Bank, and which he termed as forgeries, providing as his evidence, the fact that the leaf numbers are not sequential as should ordinarily have been the case.

After huffing and puffing while trying to answer the various questions raised, the Treasury gave up and has declared that Odinga is an economic saboteur, making reckless statements that will have the effect of driving investors out of the country.

It is not clear how things will proceed from here. The management of the two previous mega-scandals, Goldenberg and Anglo-Leasing, will give a pointer as to what may happen next.

Just like is happening now, the discovery of those two scandals was followed by official denials of wrongdoing, and even attempts at active cover-up.

GOLDENBERG

In the case of Goldenberg, the excellent media work by veteran journalist Sarah Elderkin, which this newspaper serialised, threw the case wide open rendering official cover-up impossible.

However, nothing meaningful followed. The private prosecution that the Law Society had commenced against some perpetrators of the scandal, a reaction to official inertia, was soon taken over by the government and quashed, as was another private effort brought by Odinga.

It was not until the Narc Government came to power, more than 10 years later, that the first earnest attempt to bring the perpetrators to justice was made.

A questioning media ultimately overwhelmed the government’s attempts at denying the Anglo-Leasing scandal, and motivated Parliament to carry out independent action.

Eventually, the Public Accounts Committee, chaired by Uhuru Kenyatta, carried out an official investigation, which not only confirmed that a monumental scandal, straddling the Kanu government and the new Narc government, had occurred but also that the government had, thereafter, engaged in an elaborate attempt at covering it up.

Already, the Ethics and Anti-Corruption Commission has pronounced itself on the Eurobond scandal, at some point threatening to arrest Odinga for his whistleblowing troubles, before eventually making a finding that no wrongdoing has taken place.

PUBLIC ACCOUNTS COMMITTEE

While the Public Accounts Committee has shown interest in addressing the scandal, the conditions in Parliament are such that little hope can be placed in the attempts by the committee.

A polarised Parliament can hardly be relied upon to play a meaningful role on a matter in which the leader of the official opposition has taken a leading role.

In both the Goldenberg and Anglo-Leasing scandals, the question of how much the president knew, and what his possible role might have been, remained central to the scandals.

Although it did not make an official finding against President Moi, the Goldenberg Commission amassed sufficient circumstantial evidence to conclude that Moi was complicit.

The bold conclusions by the Public Accounts Committee included a finding that President Kibaki was personally aware of the Anglo-Leasing scandal and that his closest advisers were then involved in an attempt to cover-up the scandal.

The evidently concerted obfuscation of the Eurobond scandal suggests that somebody higher than the mandarins at Treasury is possibly involved.

The questions that remain unanswered include who the persons higher up might be, and what they know or did.

DIFFICULT PLACE

The Eurobond scandal puts Jubilee in a difficult place. If, as circumstances suggest, this was a high-level heist of public funds, no action is likely as would shed light on the scandal and no accountability is likely as long as Jubilee remains in power.

Jubilee’s anti-corruption credentials, which were already very weak, would surely be extinguished by such inertia and there would be nothing else left to promise the public.

If, against its interests, Jubilee allows an earnest attempt at accountability on the Eurobond scandal, there is no knowing where this would lead to and what the consequences of the knowing the whole truth might be.

In short, the Eurobond scandal marks the loss by Jubilee of whatever innocence it still retained and, with it, the ability to continue posturing that its government stands for the common good.

From here it will only get harder as Jubilee’s ability to maintain itself in power will depend on pretence and, if necessary, force, rather than legitimacy.