Feeding at the trough not only SA’s issue

2011-08-13 11:28

Were’s experience and that of my colleagues at the Standard was the most benign manifestation of the “Our Turn to Eat” culture. Its other forms were much uglier and their impact far more damaging. So few Kenyans identified with any overarching national project that their leaders felt free to loot state coffers, camouflaging crude personal enrichment in the prettifying colours of tribal solidarity.

Decade by decade practices that had flourished under the colonial administration – itself no stranger to high-profile corruption scandals – were fine-tuned and pushed to ever more outlandish lengths.

What they all shared were a reliance on the political access and inside knowledge enjoyed by either a minister, an MP, a civil servant or councillor and their target: the public funds and national assets on which every Kenyan citizen depended for education, health and the other basic necessities of life.

The command economy of the post-independence years made self-enrichment for the well-connected a fairly simple matter.

What could be easier for a minister than to slap an import quota on a key commodity, wait for the street price to soar and then dump tons of the stuff, thoughtfully stockpiled ahead of time by one of his companies, on the market?

A 1970–71 parliamentary commission helpfully authorised government employees to run their own businesses while holding down civil service jobs (“straddling”, as it was called), a ruling its chairperson later justified on the grounds that there was no point banning an activity that would persist whatever the law decreed.

A post in a state-run utility or corporation which could hike prices ever upwards thanks to its monopoly position offered untold profit-taking opportunities.

Similarly, who was better placed to benefit from foreign exchange controls that created a yawning gap between black market and official rates than an insider with excellent banking and Treasury contacts?

The structural adjustment programmes pushed on Africa by the World Bank and the International Monetary Fund in the 1980s, which loosened the Kenyan government’s stranglehold by making aid conditional on privatising bloated parastatals, dropping currency controls and opening markets to international trade, complicated things but the “eaters” quickly vaulted that hurdle.

The privatisation process itself, it turned out, provided all kinds of openings for the entrepreneurial fraudster, including ruthless asset-stripping.

It was funny how often the politically connected banks in which state corporations chose to deposit their proceeds collapsed, swallowing up public funds as they expired. And so many other routes remained open.

Import goods duty-free as famine relief or claim they are in transit then sell them locally, undercutting the competition.

Take out a state loan you never intend to repay.

Bid for a government tender your contacts at the ministry tell you is about to come up then get them to ensure that your ridiculously inflated offer is the one approved.

It doesn’t matter if your firm can’t deliver: the invoice will join Kenya’s huge stock of “pending bills” carried over from one government to another and eventually settled with the issue of tradeable treasury bonds.

By the early 1990s Western executives flying in with plans to invest in Kenya quickly realised that their companies would never thrive in the country’s supposedly free-market environment unless a slice of equity was discreetly handed over to a firm owned by a Moi relative, trusted henchman or favoured minister.

Frank Vogl, who runs a communications firm in Washington, caught the flavour when he was approached to set up a presidential press unit.

Summoned by Kenya’s finance minister to discuss the idea he flew to Nairobi and went to the minister’s offices.

“It was so full I could barely squeeze in the door. The entire reception area was jammed with about 20 or 30 people who were all trying to reach the secretary sitting at reception.

I finally managed to catch her attention and said: ‘I have a 10 o’clock appointment with the minister.’ ‘So does everyone else,’ she said. ‘You’ll have to wait your turn.’ These were all businessmen waiting to have their one-on-ones with the minister – and you can imagine just what was going on during those conversations. It was no longer a secret by then: if you wanted to do business in Kenya you had to do a deal with the top man concerned.”

And spanning every regime was land-grabbing, which pushed so many African buttons. Swathes of supposedly protected game parks, plots already owned by state-run corporations and municipal bodies, prime sites on the coast, chunks of gazetted virgin forest lusted after by timber merchants were snatched, fenced off and sold on again.

The practice was so widespread that even the leaders of Kenya’s churches, mosques and temples – society’s supposed moral arbiters – joined in. The grabbers did not hesitate to seize plots set aside for national monuments or already used as cemeteries, simply throwing the bodies onto the street.

The phenomenon peaked before elections as the president of the day thanked his cronies in advance for their support. Inquiries would reveal some 300 000 hectares of prime land to have been seized since independence, with only 1.7% of the original 3% of national territory gazetted as forest remaining – jeopardising a thirsty nation’s very water table.

But “eating” surely touched its nadir with the Goldenberg scandal, the Moi presidency’s crowning disgrace.

Dreamt up by Kamlesh Pattni, a Kenyan Asian with a lick of glossy black hair and the overconfidence of a 26-year-old millionaire, this three-year scheme was once again a reflection of its times.

Launched in 1991 it tapped into the government’s hunger for foreign exchange, threatened by aid cuts from Western donors determined to see multi-party elections in Kenya.

Pattni’s firm, Goldenberg International Ltd, started by claiming – under a government compensation scheme meant to encourage trade – for exports of gold and diamonds Kenya did not produce and the firm never actually carried out.

Approved by Central Bank staff Pattni’s fraudulent export forms – the infamous CD3s – only marked the start of this multilayered scam. Setting up his own bank he used the leverage granted by his finance ministry contacts to mop up available foreign exchange under a pre-shipment finance scheme.

He bought billions of shillings in treasury bills on credit and cashed them in as though they had been paid for and borrowed money from a range of complicit “political banks” to place on overnight deposit.

The various schemes not only enriched senior officials, they provided slush funds for what the ruling party knew would be fiercely contested elections.

Pattni ploughed his profits into the construction of the Grand Regency, a five-star hotel in central Nairobi as gilded and ornate as Cleopatra’s boudoir.

The ordinary Kenyan lost anywhere between $600 million (about R4.3 billion) and $4 billion as his country’s foreign exchange reserves, rather than being boosted, were systematically hoovered up by the well-connected.

Goldenberg pushed the country’s inflation into double digits, caused the collapse of the Kenya shilling and a credit squeeze so severe it led to business closures and mass sackings and left the government unable to pay for oil imports and basic health and education.

The resulting recession was still being felt 15 years later. Goldenberg captured the very essence of Kenyan corruption. For if only a tiny elite got obscenely rich on the back of it the sleek Pattni carefully shored up his enterprise with a liberal distribution of gifts: a form of insurance.

The astonishing extent of wider Kenyan society’s complicity would only be exposed in 2004, when i

nvestigators published a list of those alleged to have benefited from Pattni’s largesse.

Gado, the nation’s brilliant cartoonist, captured the moment with one of his sketches.

“Anybody who has not received Goldenberg money please raise your hand,” runs the caption. Below, a variegated cross-section of Kenyan society stares at the reader, boggle-eyed, uncomfortable, shifty: a bewigged lawyer, a Muslim preacher, a portly mzungu, a stout matron, a notebook-wielding journalist, a uniformed nurse, a scruffy panhandler.

No one moves. All, at one point, have benefited from Goldenberg. The “list of shame”, as it was dubbed, ran to 1?115 entries.

» This is an extract from It’s Our Turn to Eat by Michela Wrong


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