Kenya sets out to repatriate looted assets

2019-06-14

Kenyan President Uhuru Kenyatta has maintained a tough stance on the fight against corruption, setting no limits on a campaign to recover the proceeds of graft. However, the drive risks being undermined by several factors. These include insufficient state implementation of controls on the circulation of illicit cash – exacerbated by official corruption and a long tradition of political patronage.

The current system makes it possible for corrupt officials to launder their money by investing it domestically, or illicitly sending it abroad. This sort of money laundering often occurs through investments in cash-generating businesses and real-estate projects, or by stashing it in foreign banks. Jason Braganza, Executive Director of Africa Tax Justice Network Africa, told ENACT that ‘Kenya has been losing US$400 million every year, since 2011, through illicit financial flows.’

In March, the US Department of State included Kenya on a list of global hotspots for money laundering – a development that came as no surprise.

Kenyan courts are yet to deliver a single high-profile conviction, despite many arrests and prosecutions – some of which involve top government officials

Among the measures that Kenyatta has taken has been a move to integrate the anti-graft campaign into Kenya’s foreign relations. As part of a diplomacy offensive, he signed agreements with the UK, Jersey and Switzerland between March and December 2018.

The aim of Kenyatta’s diplomatic move was to recover these proceeds of crime, worth billions of Kenyan shillings, that have been kept illicitly in tax havens. However, proper checks and balances will be crucial to ensure that the repatriated funds are not once more diverted.

In July 2018, Kenyatta and his Swiss counterpart, Alain Berset, signed a declaration of intent on the return of illegally acquired funds amounting to millions of dollars stashed in Swiss banks. A month later, Kenyatta signed a similar agreement with British Prime Minister Theresa May. Earlier in March, a deal between Kenya and Jersey facilitated the repatriation of funds confiscated by a Jersey court in February 2016.

Among the targeted stolen assets are the proceeds of the multi-million-dollar Anglo-Leasing scandal, the Goldenberg scandal and more recent ones such as the so-called ‘Chickengate’ scandal and the National Youth Service scandal.

Money laundering in Kenya often occurs through investments in cash-generating businesses and real-estate projects, or by stashing it in foreign banks

In some cases, the foreign accomplices of Kenyan suspects have faced justice in the UK and Jersey, and paid fines for their involvement in illicit activities.

For instance, a Jersey firm that traded with former cabinet minister Chris Okemo, and former Kenya Power managing director Samuel Gichuru, pleaded guilty in 2016 to four counts of laundering the proceeds of crime between July 1999 and October 2001. Over Ksh520 million (US$3.8 million) is thus set to be recovered. Slow or reluctant to comply with the law, Kenyan authorities are yet to extradite Okemo and Gichuru to Jersey to stand trial – even after Kenya’s High Court endorsed the extradition process following a formal request from Jersey.

Kenyan courts are yet to deliver a single high-profile conviction, despite many arrests and prosecutions – some of which involve top government officials.

In the so-called Chickengate scandal, the UK’s Serious Fraud Office carried out investigations that led to sanctions against British firms. These included Smith & Ouzman, a ballot printing company, which was found guilty of paying out bribes – codenamed ‘chicken’ – to Kenyan officials to secure election-related deals. No Kenyan officials have been sanctioned. The key suspects remain at large, some holding powerful offices. A politician allegedly involved in the National Youth Service scandal is now an elected governor.

The aim of Kenyatta’s diplomatic move was to recover the proceeds of crime, worth billions of Kenyan shillings, that have been kept illicitly in tax havens

On another front in Kenyatta’s diplomatic offensive, top security officials travelled to London in 2018 in a bid to repatriate unexplained wealth held in the UK by Kenyans. ‘Kenya wants to exploit the UK’s “unexplained wealth” legislation to recover the money,’ said Kenya’s Director of Public Prosecutions, Noordin Haji. British law requires individuals to reveal the source of their assets. It allows for seizure of property worth more than £50 000 held by a politically exposed person involved, in or connected to, an entity involved in serious crime.

In 2018, Nigeria pursued a similar strategy, and recovered US$322 million from the Swiss government, which had been stolen by former military ruler Sani Abacha. Nigerian President Muhammadu Buhari obtained support from the US, UK, World Bank, International Monetary Fund, world security agencies and friendly nations in his fight against corruption.

A report calling for a rethink of Nigeria’s redistribution programme says strict conditions signed with Switzerland and the World Bank may halt a Nigerian government redistribution programme. This prompted a motion in the Nigerian House of Representatives requiring the exercise to respect the country’s revenue-sharing formula for disbursing money among all 36 states. The motion followed complaints of recovered funds being looted by officials within the very agencies that carried out investigations and recovered the funds. The recovered funds appeared to end up in the accounts of ‘ghost beneficiaries’.

Kenya should therefore focus on recovering stolen money and assets while, at the same time, putting in place an effective and transparent mechanism to manage the funds, and prevent recovered money from being recycled and returned to overseas bank accounts in tax havens.

Deo Gumba, ENACT Regional Organised Crime Observatory Coordinator – East and Horn of Africa, ISS

EU Flag
ENACT is funded by the European Union
ENACT is implemented by the Institute for Security Studies and INTERPOL, in
affiliation with the Global Initiative against Transnational Organised Crime
ISS Donors
Interpol
Global
feature-5Page 1