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BROKE AND BROKEN: How Money Laundering Ruins Lives

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For the second time in his life, Moses Okudo walked into a sight he never thought he would have to see again. It was a gloomy Tuesday morning in October 2015 when he walked to an Imperial Bank branch and found the doors closed. Unlike the fifteen people he found there, he didn’t need to read the notice on the glass door to know what had happened. He had seen this scene in 2006. His bank, like one before it, was now under receivership.

Okudo first got in touch with me as I was working on an investigative piece on the collapse of Imperial Bank. He is an entrepreneur at the helm of a medium-sized enterprise he has grown since 1999. He wanted to know whether it was true that his money had been stolen. A few weeks later, he asked whether it was true his bankers had been moving illicit money through the banking system. The answer wasn’t as simple, I explained.

What I didn’t tell him at the time was that the two banks whose closure had affected his life, Charterhouse and Imperial Bank, were more interlinked than he thought. Both of them had all the signs of having been used to launder money, meaning they would probably never be revived.

The Banks of the Underworld

Just a month earlier, international forensics firm FTI Consulting had sent Central Bank its first interim report on Imperial Bank. The report, dubbed “Project Stork” focused solely on one of the bank’s clients, W.E Tilley (Muthaiga) Ltd, and its 12 subsidiaries. In total, the group had 73 bank accounts within the bank, including two accounts held by individual directors. At the bare minimum, it seemed as if this consortium had received loans (plus interest) totalling Sh. 34 billion without any form of security.

‘Unlike the fifteen people he found there, he didn’t need to read the notice on the glass door to know what had happened. He had seen this exact scene in 2006. His bank, like one before it, was now under receivership.

Overdrafts would be converted into loans to clear the account, starting the cycle all over again. Inward receipts came from a total of 12 countries, which didn’t at first seem unusual for an international company. But it was because the only known business the company has engaged in its lifetime is fish mongering. That core business had barely grown enough to warrant such massive capital injections.

This was W.E. Tilley in its element. Just a decade before, in 2006, it was named as one of the companies at the centre of money laundering and tax evasion activities at Charterhouse Bank. Its accounts were flagged because it had moved five times the amount of money it had reported in its annual revenues. But it was one of the minor players in a much larger network built purposely to clean illicit money.

The case of Charterhouse epitomizes the economics of money laundering in Kenya. In 2001, five years before it was finally closed, the bank came into the limelight because of a single transaction. An account holder by the name Crucial Properties received USD 25 million from Liechtenstein in one transaction. The transfer sent all arms ringing mainly because the account holder, Crucial Properties, had largely been dormant in the five years the account existed. Even more so was the fact that its owner, Humphrey Kariuki’s, only known business was a small eatery in Nairobi.

The case of Charterhouse epitomizes the economics of money laundering in Kenya. In 2001, five years before it was finally closed, the bank came into the limelight because of a single transaction.

The explanations didn’t make sense (and never have), and all the money disappeared when the court order freezing the account was temporarily lifted. That case ended there.  Three years later, Peter Odhiambo, an internal auditor at Charterhouse, blew the whistle on an elaborate money-laundering and tax evasion scheme within the bank.

It’s through his leaks that we now know how the bank cleaned dirty money.

Charterhouse had a small number of real and fake account holders who transacted huge amounts over time. Sometimes, they moved money more than 10 times their bank balance, and through nameless and temporary accounts. One forensic report flagged 839 accounts with no paper trail despite moving billions of shillings.

What’s more interesting though is that Charterhouse, founded in 1996, had a common or related shareholding with several iconic Kenyan companies. One of its majority owners, Ram Trust, also owned Kingsway Tyres, Village Market and Nakumatt Supermarkets. The holding company itself was domiciled in Liechtenstein, the same tax haven from where the 2001 transfer originated. Among the things Odhiambo noticed, according to US Diplomatic Cables later leaked by Wikileaks, was that funds were being diverted from Nakumatt Supermarket to personal accounts. At the face of it this was about underreporting the retailer’s revenues to avoid taxes while boosting cash flow to indicate business was booming.

Charterhouse had a small number of real and fake account holders who transacted huge amounts over time. Sometimes, they moved money more than 10 times their bank balance, and through nameless and temporary accounts.

But there was another layer above it; Odhiambo also noticed a daily deposit of Sh10 million to accounts under either Nakumatt or another retailer, Tusker Mattresses. It would then be transferred as part of the larger tax evasion scam, infusing it into the economy with as little cost as possible.

At its prime, Charterhouse Bank broke all prudential limits and rules in place. For example, just two borrowers, Triton Petroleum and Nakumatt Holdings, held loans worth more than the prescribed 25% of the bank’s capital limits. Triton would be at the core of a Sh7 billion petroleum scandal two years later, drawing even more attention to just how networked the bank was to the economy.

In essence, Charterhouse Bank, like Imperial Bank already was by then, had become the bank for the underworld.

The Imperial Betrayal

The illicit money flowing in Kenya originates from many places; smuggling, drugs, and corruption are the most prominent. Most of it exists in hard cash that has to find its way to the formal economy by any means necessary, which is where bankers, retailers and other layers come into play. The process itself has two pitfalls layered atop each other.

First is the real possibility, as happened with Charterhouse and Imperial Banks that the lenders will be closed and innocent depositors will suffer. The second, a lot less subtle, is just how the successful transfer of such money affects the economy.

In essence, Charterhouse Bank, like Imperial Bank already was by then, had become the bank for the underworld.

Okudo was just one of more than 50, 000 account holders, most of them innocent, who found themselves broke that morning in 2015. He has never accessed the money he had at Charterhouse, meaning this double misfortune now meant he was rich and broke at the same time. Another depositor, Aleya Kassam wrote about her family’s experience. Imperial Bank had failed with her entire family’s life savings: “three generations, amounting to over 155 years’ worth of working hard.” In the month after the bank collapsed, she wrote, “Entire families have had to beg and borrow money to put food on their tables and pay rent. Children have had to be recalled from university and businesses have been paralysed.” For them, like for Okudo, the experience was direct and painful. It wasn’t just a paragraph in a news story or a spot on the evening news.

Another depositor wrote that it wasn’t just a cry for help but “a questioning of everything.” Woefully, he asked himself “We have never taken a cent from anyone…. We paid our taxes, obeyed the law. We always believed that the laws are there to protect us. Were we wrong?” Yet another told me how his wife was due with their child in December 2015, and he woke up to find himself without any access to the savings they had made in readiness. “I was in a daze the entire month,” he said as we spoke over the phone. “At first, I was angry at the bankers and their friends, then at myself for not preempting it.” Then he paused, and with a chuckle, added, “I think at some point I was even irrationally angry at the entire structure of money, and banking.”

Although they accessed most of their money after, the damage had already been done. For them, the results of money laundering were raw and immediate.

For the rest of us, the effects tend to look far-off. Illicit money flows frustrate the legitimate economy and corrupt the financial system. It does this not just do this by illegally adding money into the economy, but also by encouraging tax evasion. Since money laundering is a derivative crime, its success also means that it encourages the activities that yield the money in the first place.

Okudo was just one of more than 50, 000 account holders, most of them innocent, who found themselves broke that morning in 2015.

All these may still look cryptic. But consider the sectors that epitomize the success of money laundering in Kenya. Nakumatt Holdings, the retailer at the epicentre of the 2006 crash of Charterhouse Bank, is currently facing unprecedented liquidity problems. The retail market as a whole, after a period of ambitious expansion, is struggling. It’s mainly cash economy makes it hard to track the flow of illicit money within, and how they are contributing to the current burst.

For Nakumatt specifically, then the lingering question remains why a previously thriving retailer is the only one on its knees. There’s the rapid unchecked expansion argument, but that seems to only be superficial especially in light of the 2006 leaks. Add to that the fact that one (now former) minority shareholder was linked by at least two governments to drug dealing, and there’s a likelihood Nakumatt’s current woes stem from or were at least exacerbated by dirty money and tax evasion. Today, no investor will save it and a concerted effort to get a government bailout has not been successful. The retailer’s branches are shutting down faster than its executives can save it, leading to thousands of job and revenue losses in Kenya and Uganda. How this will affect the dynamics in the retail sector remains to be seen.

One of the best places to see the true effects of money laundering in Kenya is in the real estate sector. In the last decade, land prices in and around Nairobi have more than quadrupled. In some places, the prices have grown five-fold in less than five years. At the socio-economic level, the unchecked rise has distorted growth rates. Nairobi is now teeming with buildings built for the “middle class” but which are so expensive that even their targeted market can’t afford them.

Those that have been built for the poor are built as cheaply as possible, meaning, as economist Kwame Owino says, “…a cheap house will necessarily be a bad house.”

As Patrick Gathara observed in this article in March 2016, the result is a city with one of the most expensive property rates in the world, but none of the socio-economic growth to show for it. It is an unsustainable situation that has also strained government resources necessary to ensure buildings are up to standard. Those that have been built for the poor are built as cheaply as possible, meaning, as economist Kwame Owino says, “…a cheap house will necessarily be a bad house.” Since 2006, more than 12 buildings under construction have collapsed in Nairobi and its metropolis, killing over 60 people in total. The reasons have been the same; building owners and contractors cutting corners and ignoring the building code in a rush to complete the structures. The results have also been the same-arrests followed by shoddy prosecutions that eventually leaves the situation unsolved. The economics of crime dictate that if the profit is greater than the punishment, then the crime will be committed. Again and again.

In Plain Sight

The curious case of the 2001 transaction to Charterhouse Bank shows why the economy of money laundering has thrived. As is, the Kenyan society does not seem to consider ill-gotten wealth a bad thing. Humphrey Kariuki, the man behind the company at the centre of the case, is now a celebrated tycoon with interests in multiple industries. The same can be said of the beneficiaries of corrupt networks, politicians and non-politicians alike.

In a parliamentary debate in November 1995, a legislator equated our dalliance with money laundering to the drug kingpins of Columbia. Like the Colombian kingpins, he said, Kenya’s financial criminals dish out money to acquire legitimacy. The solution, he offered, is that “We need to create a culture where if you do acquire wealth, the Kenyan community should be able to have some morals or norms that stigmatizes money acquired through crooked ways.”

Money made from smuggling suppresses legitimate business and denies the government much-needed revenue. Drug trafficking and smuggling has direct effects on the health of users and undermines law enforcement and social mores.

One of the ways to drive such a change would be to link money laundering directly to its preceding crime and its resultant woes. The Sh130 billion stolen by President Moi and his corrupt network was meant for government spending and projects. Lost to the economy, it translated to higher food prices, empty medicine cabinets and incomplete or ignored infrastructure. It also promoted money laundering conduits within the banking system, triggering a chain of events that connects a transaction at Charterhouse in April 2000 with the plight of Okudo, Aleya, and 53,000 other account holders who couldn’t access their money at Imperial Bank in October 2015.

Money made from smuggling suppresses legitimate business and denies the government much-needed revenue. For retailers, it means stakeholders such as suppliers and Kenya Revenue Authority cannot be paid. It also means rent and salaries are also delayed as everything else falls apart. Drug trafficking and smuggling has direct effects on the health of users and undermines law enforcement and social mores. If it is indeed true that the gambling industry is built on illicit money, then its effects on individuals and households is multiplied by the fact that it has been so successful. So successful, in fact, that winners are feted as national heroes.

The unchecked flows of illicit money are not only ruining the economy, they are also ruining lives. For Moses Okudo the employer, the money in his corporate account was stuck until the bank was resolved, if ever. He had to fire two-thirds of his staff and reduce his office space just to keep afloat. Although he had finally gotten some of his money back, the closure of the bank had dealt considerable damage to his business.

For Okudo the individual, he was effectively broke. He had to use his personal savings to save his business, meaning that his personal life would need to take a hit as well.  This would affect how his family’s lifestyle, including meeting rent, food and school fees obligations.

By Owaahh
Owaahh is the pseudonym of a blogger based in Nairobi.

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Owaahh is the pseudonym of a blogger based in Nairobi

Politics

Congo-Brazzaville Strongman Buys Secret Weapons Haul from Azerbaijan

Congo-Brazzaville’s repressive government has quietly bought an arsenal from Azerbaijan. Opponents of President Denis Sassou-Nguesso say one recent cache is designed to tighten his grip on the nation.

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Congo-Brazzaville Strongman Buys Secret Weapons Haul from Azerbaijan
Photo: Marco Longari/AFP
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First published by our partner OCCRP and Mail & Guardian (South Africa, in English).

In January 2020, at the Turkish port of Derince on the eastern shores of the Sea of Marmara, a huge cache of weapons was loaded onto the MV Storm. Registered in the tax haven of Vanuatu, the ship set sail with an arsenal of mortar shells, multiple launch rockets, and explosives, en route from Azerbaijan to the Republic of the Congo, better known as Congo-Brazzaville.

In total, more than 100 tons of weaponry wound its way to a building that appears to be the headquarters of Congo-Brazzaville’s elite Republican Guard, according to a confidential cargo manifest obtained by OCCRP. The cargo, estimated to be worth tens of millions of dollars, was just the latest in a series of at least 17 arms shipments sent by Azerbaijan’s Ministry of Defense to the regime of President Denis Sassou-Nguesso since 2015, according to flight plans, cargo manifests, and weapons inventories obtained by OCCRP.

Saudi Arabia was listed as the “sponsoring party” on several of the cargo manifests reviewed by reporters. It’s unclear what that sponsorship entailed, but it could mean that Riyadh paid for the weapons or the cargo deliveries.

Credit: Edin Pasovic/OCCRP Key sites for arms deals between the Republic of the Congo and Azerbaijan.

Key sites for arms deals between the Republic of the Congo and Azerbaijan. Credit: Edin Pasovic/OCCRP

There are no public records of Azerbaijan exporting these weapons, and no similar records of Congo-Brazzaville importing them. The latest transfer has sparked opposition concerns that Sassou-Nguesso is prepared to use force if necessary to maintain power as the country’s March 21 election nears.

His well-armed security services are a key reason he has ruled the Central African country for 36 years, split between two separate terms, making him one of the world’s longest-serving leaders. His party looms large over parliament, which recently changed the constitution to allow Sassou-Nguesso to run for office again, sparking local and international condemnation. The move means the 77-year-old could, in theory, run in every election for the rest of his life.

OCCRP has obtained confidential documents showing that in the eight months preceding the March 2016 election, and for over a year after it, Sassou-Nguesso’s security services bought more than 500 tons of arms from Azerbaijan in 16 separate shipments. Just weeks after the vote, the government began a brutal campaign against a militia from an opposition stronghold that lasted for more than a year.

President Denis Sassou-Nguesso is seen in 2014. Credit: Wikimedia Commons/Amanda Lucidon/White House

President Denis Sassou-Nguesso is seen in 2014. Credit: Wikimedia Commons/Amanda Lucidon/White House

Opposition leaders claim the Republican Guard used the Azerbaijani weapons in that post-election conflict, spurring a humanitarian emergency which the United Nations said affected around 140,000 people in the region of Pool, in the country’s south. Satellite imagery obtained by international media outlet The New Humanitarian appears to show widespread destruction caused by weapons like rocket launchers and explosives. (There is no way to be certain that these weapons were from Azerbaijan, since Congo-Brazzaville does not declare its arms imports.)

Since 2015, Congo-Brazzaville has bought a huge weapons stockpile from Azerbaijan, with over 500 tons of weapons delivered to the country in multiple shipments.

Sassou-Nguesso’s regime is facing one of Africa’s most severe debt crises, raising questions about how these arms shipments have been financed. Documents show that at least two consignments delivered between 2016 and 2017 were sponsored by Saudi Arabia, at a time when Riyadh was vetting Congo-Brazzaville’s application to join the Organization of the Petroleum Exporting Countries (OPEC). Given Congo-Brazzaville’s significant oil reserves, the kingdom had an incentive to have a compliant Sassou-Nguesso government in the Saudi-dominated club, according to leading arms expert Andrew Feinstein, author of The Shadow World: Inside the Global Arms Trade.

The world’s biggest arms importer, Saudi Arabia is also an unremorseful supplier of weapons to global conflict zones including Yemen, where it is fighting Iranian-backed Houthi rebels.

Flight manifests list Saudi Arabia as a “sponsoring party” on multiple arms shipments to Congo-Brazzaville, dispatched in 2016 and 2017, as Congo-Brazzaville was on the verge of OPEC membership.

Described by critics as an oil cartel whose members must be compliant with Saudi output demands, OPEC helps the kingdom dominate global oil supply. The effect this has on oil prices, in turn, can boost petroleum revenues in member states.

OPEC’s 13 members include Africa’s biggest producers, Nigeria, Angola, and Algeria. Congo-Brazzaville, which eventually joined OPEC in 2018, would have been seen as a coveted member because it is one of the continent’s top oil producers, which gives OPEC even more heft.

Azerbaijan is not a full OPEC member but it is a significant oil producer.

Feinstein added that the latest Azerbaijan shipment could have been intended to give Sassou-Nguesso the arms to enforce his political will.

“The timing of this shipment is extremely suspicious, given Sassou-Nguesso’s previous crackdowns around elections,” he said. “The government is likely preparing to quash any dissent around the polls.”

A spokesman for Congo-Brazzaville’s government did not respond to multiple requests for comment. Azerbaijan’s Ministry of Defence did not respond to a reporter’s email seeking comment, and neither did a ministry representative listed on multiple documents. Saudi Arabia’s Ministry of Defense did not respond to questions about the nature of their sponsorship of the arms deals.

Boulevard Denis Sassou-Nguesso

The most recent weapons load, addressed to the Republican Guard at 1 Boulevard Denis Sassou-Nguesso in Brazzaville in January 2020, included 775 mortar shells and over 400 cases of rockets designed to be launched out of Soviet-era trucks, the confidential cargo manifest shows. The consignment from Azerbaijan was loaded onto the MV Storm at Derince, about 1,000 kilometers southeast of Istanbul.

The exact price paid by the Congolese regime for the arms shipment could not be verified, although an expert who examined the cargo manifests said it would be worth tens of millions of dollars. A former senior diplomat with access to information about arms inventories, who asked to remain anonymous for fear of reprisal from authorities, confirmed the authenticity of the cargo manifest and other documents and noted the sale price for the arms was likely well below market value.

The port of Derince in Turkey, where the most recent arms shipment set off for Brazzaville. Credit: Wikimedia Commons

The port of Derince in Turkey, where the most recent arms shipment set off for Brazzaville. Credit: Wikimedia Commons

The documents included end-user certificates, which are issued by the country importing the arms to certify the recipient does not plan to sell them onward.

In January 2020, more than 100 tons of weaponry was sent from Azerbaijan to Congo-Brazzaville’s Republican Guard, including 775 mortar shells and over 400 cases of rockets designed to be launched out of trucks.

Pieter Wezeman, a senior researcher at the Stockholm International Peace Research Institute, said arms received at a discount are often either surplus weapons or those produced in Bulgaria or Serbia, which are both known for their cheap ordnance.

“It would be less likely that Congo-Brazzaville would be able to buy some of this equipment from … other European countries which have more restrictive arms export policies,” he said.

The Pool Offensive

The 100-ton shipment from Derince was significant, but separate documents reveal another arsenal sent from Azerbaijan between 2015 and 2017 that dwarfed it — and may have had terrifying consequences.

In total, over 500 tons of weapons, including hand grenades, mortar systems, and millions of bullets, were sent to Congo-Brazzaville in 16 shipments during those years, according to documents including inventories, end-user certificates, and cargo manifests obtained by reporters.

One end-user certificate shows five thousand grenades imported for the purposes of “training, anti-terrorism, security and stability operations.” It was signed by a special adviser to President Sassou-Nguesso on March 3, 2016, just days before the election.

After the vote, the opposition claimed the government had rigged the election in favor of Sassou-Nguesso, and unrest broke out in the capital, Brazzaville. The government blamed the unrest on a militia known as the Ninjas, made up of people mainly from the Lari ethnic group and based in the Pool region, which partially surrounds Brazzaville.

A burnt-out vehicle is seen on the road from Brazzaville to Kinkala. Credit: Philip Kleinfeld/IRIN, via The New Humanitarian

A burnt-out vehicle is seen on the road from Brazzaville to Kinkala. Credit: Philip Kleinfeld/IRIN, via The New Humanitarian

 

The weapons from Azerbaijan were then used, an opposition leader claims, to help fuel a prolonged armed conflict in Pool targeting the Ninjas. Amnesty International condemned the offensive as “an unlawful use of lethal force by the country’s security forces.” As the government pursued the Ninjas, witnesses to the carnage told Amnesty that dozens of bombs were dropped from helicopters, hitting a residential area and even a school.

“During the violence in Pool, the regime deployed a scorched earth strategy,” said Andréa Ngombet Malewa, leader of the Incarner l’Espoir political party. “The weapons that they bought from Azerbaijan went straight to that operation.”

The Baku-Brazzaville Connection

Azerbaijan has emerged as a key foreign ally of Congo-Brazzaville, providing its regime with discount arms and, perhaps more importantly, secrecy.

Azerbaijan’s Ilham Aliyev, right, is seen with Turkish leader Recep Tayyip Erdogan at a 2018 parade in Baku. Credit: Wikimedia Commons/Government of Azerbaijan

Azerbaijan’s Ilham Aliyev, right, is seen with Turkish leader Recep Tayyip Erdogan at a 2018 parade in Baku. Credit: Wikimedia Commons/Government of Azerbaijan

Buying from Ilham Aliyev, strongman of the notoriously opaque South Caucasus nation, Congo-Brazzaville could do so in the knowledge that the sales wouldn’t be reported.

Congo-Brazzaville has not reported any arms imports for more than three decades, and since there’s no arms embargo in place against the country, it isn’t required to do so. Nonetheless, a trail exists, with disclosures by other countries showing Sassou-Nguesso has been active in the arms market. In 2017, Serbia reported exporting 600 assault rifles to Congo-Brazzaville. Bulgaria sent 250 grenade launchers.

Opposition figures claim that previous shipments of weapons from Azerbaijan were used to fuel a brutal post-election offensive in 2016 that led to a humanitarian crisis.

But the Azeri weapons shipments have never been publicly reported, even though documentation seen by OCCRP shows Azerbaijan has been exporting lethal weapons to Sassou-Nguesso since at least as far back as September 2015. Some of the weapons were sourced from Transmobile, a Bulgarian company authorized to trade weapons for Azerbaijan, while others were bought from Yugoimport, a Serbian manufacturer. Neither company responded to requests for comment.

The first shipments of arms arrived in Brazzaville on Azerbaijani Air Force planes, but starting in 2017 a private carrier, Silk Way Airlines, began flying the weapons in instead. As a private carrier, Silk Way would have likely received less scrutiny than its military counterpart.

A Silk Way Airlines Boeing-737 leaves Hong Kong in 1999. Credit: Wilco

A Silk Way Airlines Boeing-737 leaves Hong Kong in 1999. Credit: Wilco

Silk Way is registered in the British Virgin Islands, a tax haven, and was previously linked to the Aliyev family. As well as previously winning lucrative contracts with the U.S. government to move ammunition and other non-lethal materials, Silk Way was found, in leaked correspondence reported by Bulgarian newspaper Trud, to have used flights with diplomatic clearance to secretly move hundreds of tons of weapons around the world, including to global conflict zones, between 2014 and 2017. The airline did not respond to a request for comment.

Braced for a Crackdown

As his regime heads to the polls on March 21, strongarm tactics mean Sassou-Nguesso is expected to win. He will reportedly face Mathias Dzon, his former finance minister from 1997 to 2002, and Guy-Brice Parfait Kolélas, who finished second in the 2016 presidential election, among others.

Saudi Arabia was listed as a “sponsoring party” in at least two arms consignments sent in 2016 and 2017, around the same time Congo-Brazzaville’s admittance to OPEC was being negotiated.

In 2016 he claimed 60 percent of the vote, with Kolélas securing just 15 percent. The U.S. slammed the government for “widespread irregularities and the arrests of opposition supporters.”

Then-U.S. Secretary of State John Kerry greets Denis Sassou Nguesso at a U.S.-Africa Summit in Washington, D.C., on August 6, 2014. Credit: U.S. Department of State/Flickr

Then-U.S. Secretary of State John Kerry greets Denis Sassou Nguesso at a U.S.-Africa Summit in Washington, D.C., on August 6, 2014. Credit: U.S. Department of State/Flickr

Experts don’t believe the opposition will fare any better this time around. Abdoulaye Diarra, a Central Africa Researcher for Amnesty International, said the government is carrying out a pre-election campaign of intimidation, harassment and arbitrary detention against its political opponents.

Fears that press freedom could be under threat ahead of the polls have risen after Raymond Malonga, a cartoonist known for satirical criticism of the authorities, was dragged from his hospital bed by plainclothes police at the beginning of February.

And now, the weapons haul from Azerbaijan has the opposition concerned about the prospect of violence around the polls.

“We are worried that the weapons that Sassou-Nguesso’s regime bought from Azerbaijan could be used to crack down on the opposition during the upcoming election,” said opposition leader Ngombet.

“They don’t want the world to see how much the Congolese people are eager for political change.”

Simon Allison, Sasha Wales-Smith, and Juliet Atellah contributed reporting.

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Politics

A Class That Dare Not Speak Its Name: BBI and the Tyranny of the New Kenyan Middle Class

Even as they exert coercive power in Kenya, members of this class remain largely unrecognised as a class with its own economic interests and one that holds contemptuous and racist views of Africans despite being made up of Africans.

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A Class That Dare Not Speak Its Name: BBI and the Tyranny of the New Kenyan Middle Class
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Despite many Kenyans’ opposition to the Building Bridges Initiative there is a sense that politicians are moving with the project full steam ahead and there is nothing the people can do about it. More perplexing is the fact that with elections just over a year away, the fear of what supporting BBI could do to their political careers does not seem to faze the politicians. What explains this powerful force against democracy?

I argue here that the aspect of the BBI — and its charade of public participation — that most passes under silence is the role of the civil service and the intelligentsia. Behind the spectacle of car grants to members of the County Assemblies is an elite that is growing in influence and power, and is pulling the puppet strings of the political class. The bribery of MCAs would have been impossible without the civil service remitting public funds into their accounts. The president would not succeed in intimidating politicians if there were no civil servants — in the form of the police and prosecutors — to arrest politicians and charge them with corruption.

The academy’s contribution to the BBI has been in controlling the social discourse. The mere fact that it was written by PhD holders brought to the BBI an aura of technical expertise with its implied neutrality. Using this aspect of BBI, the media and academics tried to tone down the political agenda of the document. They demanded that discussion of the BBI remain within the parameters of academic discourse, bombarding opponents with demands of proof that they had read the document and exact quotations, refusing to accept arguments that went beyond the text to the politics and actors surrounding the initiative. Discussing the politics of BBI was dismissed as “irrelevant”.

Two cases, both pitting male academics against women citizens, illustrate this tyranny of technocracy and academics. In both cases, the professors implicitly appealed to sexist stereotypes by suggesting that the women were irrational or uninformed. In one debate in February last year, political science professor and vice-chair of the BBI task force, Adams Oloo, singled out Jerotich Seii as one of the many Kenyans who had “fallen into a trap” of restricting her reading of the document to only the two pages discussing the proposed prime minister’s post, while leaving out all the goodies promised in the rest of the document. Jerotich was compelled to reply, “I have actually read the entire document, 156 pages.”

Likewise, earlier this month, Ben Sihanya sat at a desk strewn with paper (to suggest an erudite demeanour) and spoke in condescending tones about Linda Katiba, which was being represented by Daisy Amdany. He harangued Linda Katiba as “cry babies”, demanded discussions based on constitutional sociology and political economy, and declared that no research and no citation of authorities meant “no right to speak”. He flaunted his credentials as a constitutional lawyer with twenty years’ teaching experience and often made gestures like turning pages, writing or flipping through papers as Amdany spoke.

The conversation deteriorated at different moments when the professor accused Linda Katiba of presenting “rumors, rhetoric and propaganda”. When Amdany protested, Sihanya called for the submission of citations rather than “marketplace altercations”. The professor referred to the marketplace more than once, which was quite insensitive, given that the market is the quintessential African democratic space. That’s where ordinary Africans meet, trade and discuss. And women are often active citizens and traders at the market.

Meanwhile, anchor Waihiga Mwaura did too little too late to reign in the professor’s tantrums, having already taken the position that the media is promoting, which is that every opposition to BBI is a “No” campaign, essentially removing the opposition from the picture on the principle of a referendum taking precedence.

Both cases reveal a condescending and elitist attitude towards ordinary Kenyans expressing opinions that run counter to the status quo. The media and academy have joined forces in squeezing out ordinary voices from the public sphere through demands for academic-style discussions of BBI. When discussions of BBI first began in 2020, these two institutions bullied opponents of the process by imposing conditions for speaking. For instance, in the days before the document was released, opponents were told that it was premature to speak without the document in hand. In the days following the release of the document, demands were made of Kenyans to read the document, followed by comments that Kenyans generally do not read. The contradiction literally sounded like the media did not want Kenyans to read the BBI proposals. Now it has become typical practice for anchors and the supporters of BBI to challenge BBI opponents with obnoxious questions such as “You have talked of the problems with BBI, but what are its positive aspects?” essentially denying the political nature of BBI, and reducing the process to the cliché classroom discussion along the lines of “advantages and disadvantages of …”

Basically, what we are witnessing is autocracy by the media, the academy and the bureaucracy, where media and the academy exert symbolic power by denying alternative voices access to public speech, while the civil service intervenes in the material lives of politicians and ordinary people to coerce or bribe them into supporting BBI. Other forms of material coercion that have been reported include chiefs forcing people to give their signatures in support of the BBI.

In both these domains of speech and interactions in daily life, it is those with institutional power who are employing micro-aggression to coerce Kenyans to support BBI. This “low quality oppression”, which contrasts with the use of overt force, leaves Kenyans feeling helpless because, as Christine Mungai and Dan Aceda observe, low-quality oppression “clouds your mind and robs you of language, precision and analytical power. And it keeps you busy dealing with it so that you cannot even properly engage with more systemic problems.” In the end, despite the fact that there is no gun held to their heads, Kenyans face BBI with literally no voice.

But beyond the silencing of Kenyans, this convergence of the media, the academy and the civil service suggests that there is a class of Kenyans who are not only interested in BBI, but are also driven by a belief in white supremacy and an anti-democratic spirit against the people. I want to suggest that this group is symptomatic of “a new middle class”, or what Barbara Ehrenreich and John Ehrenreich have referred to as the “professional managerial class”, which is emerging in Kenya.

For the purposes of this article, I would define this class as one composed of people whose managerial positions within institutions give them low-grade coercive power to impose the will of the hegemony on citizens. The ideology of this class sees its members as having risen to their positions through merit (even when they are appointed through familial connections), and holds that the best way to address problems is through efficient adherence to law and technology, which are necessarily neutral and apolitical. This class also believes that its actions are necessary because citizens do not know better, and that by virtue of their appointment or their training, the members of this class have the right to direct the behaviour of ordinary citizens. Basically, this class is anti-political.

The worst part about this class is that it is a group of people who cannot recognise themselves as such. As Amber A’Lee Frost puts it, it is “a class that dare not speak its name.” This means that even as they exert coercive power in Kenya, members of this class remain largely unrecognised or discussed as a class with its own economic interests.

Even worse, this is a class that holds contemptuous – and ultimately racist – views of Africans despite being made up of Africans. For example, Mohammed Hersi, chair of the Kenya Tourism Federation, has been at the forefront of proposing the obnoxious idea that Kenya should export her labour abroad, the history of the Middle Passage notwithstanding. Despite a history of resistance to the idea that Africans should not receive any education beyond technical training, from the days of WEB Dubois to those of Harry Thuku, the Ministry of Education has introduced the Competency Based Curriculum (CBC), a new education system affirming that ideology. A few months ago, Fred Matiang’i waxed lyrical about the importance of prisons with these words which I must repeat here:

“To Mandela, prison was a school; to Malcolm X, a place of meditation; and to Kenya’s founding fathers, a place where visions of this country were crystallised. We’re reforming our prisons to be places people re-engineer their future regardless of the circumstances they come in.”

How is it possible for educated Africans to talk in public like this?

One factor is historical legacy. The civil service and institutions such as the mainstream media houses were established during colonial rule and were later Africanised with no change in institutional logic. This factor is very disturbing given that the media and the civil service in Kenya opposed nationalist struggles. During colonialism, it was the civil service, its African employees in the tribal police and the local administrations (such as chiefs and home guards), who crushed African revolt against oppression. This means that the Africans who were in the civil service were necessarily pro-colonial reactionaries with no interest in the people’s freedom.

Essentially, Kenyan independence started with a state staffed with people with no economic or political allegiance to the freedom and autonomy of Africans in Kenya. The better-known evidence of this dynamic is the independence government’s suppression of nationalist memories through, for instance, the assassination of General Baimungi Marete in 1965. What remains unspoken is the fact that the colonial institutions and ideologies remained intact after independence. Indeed, certain laws still refer to Kenya as a colony to this day.

It is also important to note that colonial era civil servants were not even European settlers, but British nationals sent in from London. This meant that the primary goal of the civil service was to protect not the settlers’ interests both those of London. Upon the handover of the state to Africans, therefore, this focus on London’s interests remained paramount, and remains so to this day,  as we can see from the involvement of the British government in education reforms, from TPAD (Teacher Performance Appraisal and Development) to the curriculum itself. This dynamic is most overt in the tourism and conservation sector, where tourism is marketed by the government using openly racist and colonial tropes, including promises to tourists that in Kenya, “the colonial legacy lives on”.

There was also a practical aspect to the dominance of these kinds of Africans in the civil service. As Gideon Mutiso tells us in his book Kenya: Politics, Policy and Society, the Africans who were appointed to the civil service had more education than the politicians, because as other Africans were engaged in the nationalist struggles, these people advanced in their studies. Upon independence, Mutiso says, the educated Kenyans began to lord it over politicians as being less educated than they were.

Mutiso’s analysis also points us to the fact that colonial control remained in Kenya through the management of the state by people whose credentials and appointments were based on western education. The insidious role of western education became that of hiding the ideology of white supremacy behind the mask of “qualifications”. As such, Africans who had a western education considered themselves superior to fellow Africans, and worse, British nationals remained civil servants in major positions even a decade into independence, under the pretext that they were technically more qualified.

Less known, and even less talked about, is the virulent anti-African dispensation in the post-independence government. The new government not only had within its ranks Africans who had fought against African self-determination during colonial rule, but also British nationals who remained in charge of key sectors after independence, among them the first minister of Agriculture Bruce McKenzie. Similarly, the only university in Kenya was staffed mainly by foreigners, a situation which students complained about during a protest in 1972.

The continuity of colonial control meant that civil servants were committed to limiting the space for democratic participation. Veteran politicians like Martin Shikuku and Jean-Marie Seroney complained that the civil service was muzzling the voice of the people which was, ideally, supposed to have an impact through their elected representatives. In 1971, for instance, Shikuku complained that the government was no longer a political organ, because “Administrative officers from PCs have assumed the role of party officials [and] civil servants have interfered so much with the party work.” Shikuku Inevitably arrived at the conclusion that “the foremost enemies of the wananchi are the country’s senior civil servants.” For his part, Seroney lamented that parliament had become toothless, because “the government has silently taken the powers of the National Assembly and given them to the civil service,” reducing parliament to “a mere rubber stamp of some unseen authority.” Both men where eventually detained without trial by Jomo Kenyatta.

However, the scenario was no different in the education sector. As Mwenda Kithinji notes, major decisions in education were made by bureaucrats rather than by academics. It was for this reason, for example, that Dr Josephat Karanja was recalled from his post as the High Commissioner to the United Kingdom to succeed Prof.  Arthur Porter as the first principal of the University of Nairobi, going over the head of Prof. Porter’s deputy, Prof. Bethwell Ogot, who was the most seasoned academic in Kenya with a more visionary idea of education.

Unfortunately, because the appointment went to a fellow Kikuyu, reactions were directed at Dr Karanja’s ethnicity, rather than his social status as a bureaucrat. Ethnicity was a convenient card with which to downplay the reality that decisions about education were being removed from the hands of academics and experts and placed in the hands of bureaucrats.

And so began the long road towards an increasingly stifling, extremely controlled administrative education system whose struggles we witness today in the CBC. As Kithinji observes, government bureaucrats regularly interfered in the academic and management affairs of the university, to the point of demanding that the introduction of new programmes receive approval from the Ministry of Education. Other measures for coercing academics to do the bidding of civil servants included imposing bonding policies and reducing budgetary allocations.

In the neoliberal era, however, this ideology of bureaucracy expanded and coopted professionals through managerial and administrative appointments. For instance, the practice of controlling academic life was now extended to academics themselves. Academics appointed as university managers began to behave like CEOs, complete with public relations officers, personal assistants and bodyguards. The role of regulating academic life in Kenya has now been turned over to the Commission for University Education whose headquarters are in the plush residential suburb of Gigiri. CUE regularly contracts its inspection work to academics who then exercise power over curriculum and accreditation under the banner of the commission.

With neoliberalism, therefore, bureaucrats and technocrats enjoy an increase in coercive power, hiding behind the anonymity provided by technology, the audit culture and its reliance on numbers, and concepts such as “quality” to justify their power as neutral, necessary and legitimate. However, the one space they now need to crack is the political space, and by coincidence, Kenya is cursed with an incompetent and incoherent political class. Life could not get better for this class than with the BBI handshake.

BBI therefore provided an ideal opportunity for an onslaught of the managerial class against the Kenyan people. The document under debate was written by PhD-holders, and initial attempts by professors and bureaucrats to defend the document in townhall debates hosted by the mainstream media backfired spectacularly. These technocrats were not convincing because they adamantly refused to answer the political questions raised around BBI, so they have taken a back seat and sent politicians off to the public to give BBI an air of legitimacy. Behind the scenes, however, support for BBI brings together the bureaucrats and the foot soldiers who are behind Uhuru, and the educated intelligentsia that is behind Raila.

And as if things could not get more stifling, Kenyans are looking favourably at the declared candidacies of Kivutha Kibwana, a former law academic, and Mukhisa Kituyi, a former United Nations bureaucrat, in the next presidential election. The point here is not their winning prospects, but the belief that maybe people with better paper credentials and institutional careers might do better than the rambling politicians. However, this idea is dangerous, because it places inordinate faith in western-educated Africans who have not articulated their political positions about African self-determination in an age when black people worldwide are engaged in decolonisation and the Black Lives Matter movement.

Basically, BBI is camouflaging the attack on politics and democracy in Kenya by a new managerial class. We are paying a heavy price for not decolonising our institutions at independence. Since independence, bureaucrats have whittled away at our cultural and institutional independence through police harassment, underfunding, the tyranny of inspections and regulatory control, and through constriction of the Kenyan public and cultural space. Even the arts and culture are tightly regulated these days, with the Ministry of Education providing themes for schools’ drama festivals and the government censoring artists in the name of morality. Worse, this new managerial class collaborates with foreign interests in a shared contempt for African self-determination.

Kenyans must be wary of academics and bureaucrats who use their credentials, acquired in colonial institutions, to bully Kenyans into silence. We must not allow bureaucrats and technocrats to make decisions that affect our lives without subjecting those decisions to public debate. We must recognise and reproach the media for legitimising the bullying from this new managerial class. And we must continue to recognise the Kenyan government as fundamentally colonial in its logic and practice and pick up the failed promise of the NASA manifesto to replace the master-slave logic of the Kenyan civil service. Most of all, we must learn to demystify education, credentials and institutional positions. Kenya is for everybody, and we all have a right to discuss and participate in what happens in our country.

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For J.M’s Ten Million Beggars, the Hustler vs Dynasty Narrative is a Red Herring

Hon. William Ruto’s hustler vs dynasty narrative is a shrewd way of redefining Kenyan identity politics in order to avoid playing the tribal card in his quest for the presidency.

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For J.M’s Ten Million Beggars, the Hustler vs Dynasty Narrative is a Red Herring
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Stifling the “hustler” vs “dynasty” debate will not save us from the imminent implosion resulting from Kenya’s obscene inequalities. While the debate is a welcome distraction from our frequent divisive tribal politics, leaders in government and society are frightened that it might lead to class wars. Our sustained subtle, yet brazen, war against the poor has made class conflict inevitable. If only we had listened to Hon. J. M. Kariuki, the assassinated former Member of Parliament for Nyandarua (1969-1975), and provided the poor with the means to develop themselves, perhaps the prospect of revolt would now be remote.

Could this be the angry ghost of J.M. Kariuki coming back to haunt us? Listen to his voice still crying from the grave, as did his supporters at a rally in 1974: “We do not want a Kenya of ten millionaires and ten million beggars. Our people who died in the forests died with a handful of soil in their right hands, believing they had fallen in a noble struggle to regain our land . . . But we are being carried away by selfishness and greed. Unless something is done now, the land question will be answered by bloodshed” (quoted by Prof. Simiyu Wandibba in his book J.M. Kariuki). Fired by this speech, his followers set ablaze 700 acres of wheat on Mzee Jomo Kenyatta’s farm in Rongai and slaughtered cattle with malice. Thus did J.M. invite his death.

What Hon. William Ruto propounds in his hustler vs dynasty debate is a shrewd way of redefining Kenyan identity politics. Ruto is re-directing the political narrative from the “us” vs “them” of tribalism, to one characterised by the poor and desperate (hustlers) who have seen subsequent governments betray their hopes for a better life, pitted against “them”, Ruto’s rivals, the offspring of politicians born to unfair and unearned privilege.

Wycliffe Muga, the Star newspaper columnist, has eloquently described them as the “sons of a hereditary political elite who absorbed all the benefits that came with independence, leaving ‘the rest of us’ destitute and having no choice but to beg for the crumbs under their table.” By opting for an alternative approach, Ruto hopes to avoid playing the tribal card to attain the presidency. For, besides his own, he would need the support of at least one other of the five big tribes who often reserve support for their own sons unless there is a brokered alliance. But even then, the underlying logic of Kenyan politics remains that of identity politics, which creates a binary narrative of “us” against “them”.

Meanwhile, Ruto has not only radicalised the poor, but he has also hastened the country’s hour of reckoning — judgement for the years of neglect of the poor — and this may ignite the tinder sooner we imagine.

In their article in The Elephant, Dauti Kahura and Akoko Akech observe that, “Ruto might have belatedly discovered the great socio-economic divide between the walala-hoi and the walala-hai in Kenya”. Ruto has galvanised the poor and their plight around the banner of the “hustler nation”, a nation aspiring to erase the tribal or geographical lines that have kept Kenyans apart. As a result the poor are restless as they compare their state with the ease of the lives of the affluent. But Ruto is not organising to awaken class-consciousness among the exploited.  ‘As Thandika Mkandawire, citing Karl Marx, observed, “The existence of class may portend class struggles, but it does not automatically trigger them. It is not enough that classes exist in themselves, they must also be for themselves”’, Kahura and Akech further reiterate.

The problem kicks in immediately he points to the “dynasty”. In juxtaposing the hustlers and dynasty, the poor find a target of hate, an object of their wrath. This situation can easily slide into violence, the violence emerging only when the “us” see themselves as all good and the “them” as all evil.

I worry this controversy has led us to that radicalisation stage where the poor see themselves as the good children of light fighting evil forces of darkness. In our case, the so-called hustler nation believe they are against the deep-state which doesn’t care about them but wants to give to the dynasty that which is due to them. They believe that this collusion between deep-state and dynasty is preventing them from reaching prosperity and so they blame their situation on those who they perceive to be the cause of their wretchedness. Interestingly, the colonial state always feared the day when the masses would rise up and topple it. Unfortunately, Ruto is using the crisis of the underclass created by the colonial state and perpetuated by the political class for political expediency and for his own self-advancement.

By declaring himself the saviour of the hustlers from the dynasties, Ruto — who is devoid of any pro-democracy and pro-suffering citizens political credentials — is perceived to be antagonising the Kenyatta family’s political and financial interests. He has with precision stoked the anger of the poor against particular political elites he calls dynasties and the Odingas, the Kenyattas, the Mois and their associates have become the hustler nation’s enemy. So, one understands why President Uhuru Kenyatta considers Ruto’s dynasty vs hustler debate “a divisive and a major threat to the country’s security”, which he fears may degenerate into class warfare.

Hon. Paul Koinange, Chairman of the Parliamentary Administration and Security Committee errs in his call to criminalise the hustler vs dynasty narrative. If this is hate speech, as Koinange wants it classified, then neglect of the poor by their government is a worse form of hate speech. The application of policies favouring tender-preneurs at the expense of the majority poor, landless and unemployed will incite Kenyans against each other faster than the hustler vs dynasty narrative. The failure to provide public services for the poor and the spiralling wealth of the political class must be confronted.

We have been speeding down this slippery slope for years. According to the Kenya National Bureau of Statistics (KNBS) data released in December 2020, only 2.92 million Kenyans work in the formal sector, of which 1.34 million or 45.9 per cent earn less than Sh30,000. If we accept that the informal sector employs another 15 million Kenyans, an overwhelming majority (71 per cent) would be in micro-scale enterprises or in small-scale enterprises (which make up 26 per cent). This implies that 97 per cent of our enterprises are micro or small, and these are easily wound up. The situation is exasperated by the opulence at the top. The UK-based New World Wealth survey (2014) conducted over 5 years paints a grim picture of wealth distribution in Kenya. Of the country’s 43.1 million people then, 46 per cent lived below the poverty line, surviving on less than Sh172 ($2) a day.

The report shows that nearly two-thirds of Kenya’s Sh4.3 trillion ($50 billion) economy is controlled by a tiny clique of 8,300 super-wealthy individuals, highlighting the huge inequality between the rich and the poor. Without a clear understanding of these disparities, it is difficult to evaluate the currents that are conducive to the widening of this gap not to mention those that would bridge it. Hon. Koinange should be addressing these inequalities that the masses are awakening to rather than combatting the hustler narrative. Our government must be intentional in levelling the playing field, or live in perpetual fear like the British colonials who feared mass revolt across imaginary ethnic lines.

In Kenya, past injustices have yielded gross inequalities. In Reading on inequality in Kenya: Sectoral Dynamics and Perceptions, Okello and Gitau illustrate how state power is still being used to perpetuate differences in the sharing of political and economic welfare. Okello further observes that: “In a country where for a long time economic and political power was/has been heavily partisan, where the state appropriated for itself the role of being the agency for development, and where politics is highly ethnicised, the hypothesis of unequal treatment has been so easy to build.”

This, and not the euphoria of the hustler nation, is the pressure cooker that is about to explode. The horizontal manifestation of inequality stemming from the failure of state institutions and policies that have continued to allow inequalities to fester is what should be of concern to the state. How can the government not see the risk such extreme economic disparities within the population pose for the nation’s stability?

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