Kenya: Corruption Scandal

Daniel Arap Moi on the 50 shilling note
President Daniel Arap Moi as depicted on Kenya's 50 shilling note.

One of the pledges that the National Rainbow Coalition (NARC) government made when it came to power at the end of 2002 was to fight corruption in every way possible. It was with this in mind that President Mwai Kibaki appointed the Goldenberg Commission of Inquiry on Feb. 24 this year.

The commission was charged with fully investigating the Goldenberg export compensation scandal, which cost Kenya billions of shillings in the early 1990s. According to witnesses at the commission’s hearings, as much as 60 billion Kenyan shilllings (US$850 million)—a fifth of Kenya’s gross domestic product—was looted from the country’s Central Bank through billionaire Kamlesh Pattni’s Exchange Bank in 1991.

Pattni, it emerged, exploited a government scheme designed to revitalize Kenya’s faltering economy in the years surrounding the first Gulf War. In 1990, hoping to persuade exporters to repatriate their hard currency earnings, the government promised a 20-percent premium on foreign currency deposited in Kenya’s Central Bank. Claiming that his company, Goldenberg International, was processing gold and diamonds for export, Pattni was able to manipulate loopholes in the system with the help of government officials. He made an agreement allowing the company to earn up to 35 percent compensation for the export of minerals that did not exist.

“Pattni appears to have hit Kenya below the belt at a time when the country was at its weakest,” wrote the East African Standard (July 25).

As the inquiry has progressed, former President Daniel arap Moi, his two sons, Philip and Gideon (now a member of Parliament), and his daughter June, as well as a host of high-ranking Kenyans, have been implicated. In a bombshell testimony in late July, Treasury Permanent Secretary Joseph Magari recounted that in 1991, President Moi ordered him to pay Ksh34.5 million ($460,000) to Goldenberg, contrary to the law existing then.

The hearings have left Kenyans—a majority of whom live on less than a dollar per day—reeling at the news of how much money the country lost to fraudsters. At the end of July, Kibaki expanded the commission’s mandate, authorizing it to seize all assets acquired using Goldenberg money. 

“Every effort must be made by every patriotic Kenyan to assist the government in its efforts to recover the stolen funds,” wrote the Daily Nation (July 31). But Mathayo Ndekere, writing in the East African Standard (Aug. 3), wondered if there was “time enough to not only unravel Goldenberg’s truly labyrinthine secrets but also punish all the malefactors through the court system, complete with its appeal and counterappeal components.”

One of the biggest questions facing the government now is whether to pursue charges against the former president. Formerly, the NARC government had said that it was reluctant to prosecute Moi after he ceded power in December’s democratic election. But following the inquiry’s dramatic revelations, pressure may be building for a change in policy. 

“[Moi’s supporters] have to rehearse another refrain instead of this leave-Moi-alone nonsense,” wrote David Makali in the Daily Nation (Aug. 2). “For me, the climax of the Goldenberg movie will be that moment when the former president steps [onto] the stand.”