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The Investors That Stole Our Future: Uganda’s Illusory Fiscal Policies

10 min read. With Uganda’s history of poor public administration and disastrous debt management, corruption, and increasing civil unrest and repression, what was the basis of the IMF’s optimism? The organisation has a permanent office in the Ministry of Finance and its headquarters sends multiple missions every year to monitor economic progress. To solve Uganda’s perennial economic distress, citizens must first understand the IMF’s mission in Uganda.

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The Investors That Stole Our Future: Uganda’s Illusory Fiscal Policies
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There was a time when the root causes of Uganda’s economic failure were so mercurial that one could never quite locate them. The evidence sometimes suggested incompetence; other times corruption; often a combination of the two. Examining the fiscal policy at a granular level reveals the method in the madness: there is now incontrovertible proof that incompetence is an essential part of – and is often allowed to flourish in order to facilitate – grand corruption. We are not talking about small players operating out of cramped government offices but about the country’s top leadership and their foreign and domestic partners.

In an old story, President Mobutu Sese Seko is said to have approached donors for assistance with Zaïre’s out-of-control external debt. By that time, his history of raiding the treasury was widely known and the donors facetiously suggested he lend the government the money they needed out of his personal resources. He is said to have answered, “I can’t trust them to pay me back.” (This is only funny when it is not happening in your own country.)

Uganda is in a similar situation. Unsustainable debt is rising in direct proportion to the wealth of the top leaders. When payment of the over UGX 3 trillion balance on over 20 loans (Table 1 below) commences in 2020, the country’s debt-to-revenue ratio will jump from 44% to 65%. In 2015, when Uganda’s debt repayments stood at 38% of GDP, between 26% and 36% of the population was undernourished. Undernourishment has made steady progress, rising by 1% a year between 2006 and 2011 and accelerating to two percentage points plus every year from 2011 (World Bank). Nothing has happened since 2016 to ensure undernourishment does not increase; in fact, it rose from 39% in 2015 to 41% in 2016. In contrast, world undernourishment fell 14 percentage points over the same period and is on a downward trend except for a short rise in 2015-2016.

Despite trends in the increasingly unsustainable loan portfolio, on the one hand, and erratic public administration on the other, the IMF has assessed Uganda as a low risk for external debt distress. It says the risk was not increased by significant risks stemming from domestic public and/or private external debt.

As a justification for further borrowing, President Yoweri Museveni and Ministry of Finance officials claim that the debt-to -GDP ratio is within the historically safe limit of under 50%. The Auditor General has been of the contrary view, saying debt levels are “unfavourable when debt payment is compared to national revenue collected which is the highest in the region at 54%.”

That argument has been overtaken by events. Current International Monetary Fund (IMF) projections show that debt-to-GDP will hit 49.5% in 2021. Furthermore, it is guaranteed to deteriorate as the outstanding balances on the loans will increase as the shilling continues to slide against the dollar and as further non-concessional (high-interest) loans are taken in the domestic market, such as the $104 million to be spent on security cameras and loans for ad hoc investments like the revival of Uganda Airlines at $388 million.

Table 1: Uganda's Unsustainable Debt

Table 1: Uganda’s Unsustainable Debt

Despite trends in the increasingly unsustainable loan portfolio, on the one hand, and erratic public administration on the other, the IMF has assessed Uganda as a low risk for external debt distress. It says the risk was not increased by significant risks stemming from domestic public and/or private external debt. (Debt Sustainability Analysis).

They went on to claim, “Uganda’s economic performance remains strong, but has moderated in recent years.” Further, “Government finances remain on a sound footing…” The only suggestion in the Debt Sustainability Analysis (DSA) that all may not be well (inserted no doubt as a basis for claims to due diligence to be made after the economy crashes) was “… though expenditure composition can be of concern.” Expenditure composition includes items not part of the National Development Plan e.g. a national airline and a network of security cameras. In the same year, the Auditor General pointed out a serious barrier to attaining development targets: loans were performing poorly. He could not have been clearer when he warned that interest payments were becoming unsustainable (Auditor General 2016 p. 14).

“Several loans appeared to be performing poorly, with some nearing expiry; while others reached the closing date without fully disbursing. As at 30th June 2016, committed but un-disbursed debt stood at UGX 18.1 trillion [approximately US$5 billion]. Such low levels of performance undermine the attainment of planned development targets and render commitment charges of UGX20.9 billion (US$5.9 million) paid in respect of undisbursed funds nugatory [i.e. wasteful or of no value] (Auditor General 2016, p.72).” In other words, borrowed funds were not being put to use.

The problem has persisted in 2017 and 2018. This gives the lie to the IMF’s DSA 2016 finding that Uganda is scaling up infrastructure for future economic growth. The IMF admitted a risk to growth goals would be “failure to realize the envisaged growth dividend from the increased investment is a key risk”. What they did not mention was that the contingency had already materialised. A 2015 special audit of the Uganda Support to Municipal Structure Development (USMID) project (financed with a $150 million loan) showed under-utilisation of loan funds accompanied by incomplete projects requiring funds. The risk is that idle balances will eventually be diverted, as has happened in Hoima Municipal Council.

We are not far from a full admission that Uganda is in debt distress although there are still the persistent and irrelevant claims of on-target economic growth (of 6.3%). Irrelevant because it was during the past periods of alleged high economic growth that universal primary education was degraded to the point where the drop-out rate was 60%.

The current situation is that 95% of the UGX100 billion disbursed under USMID for municipal development and capacity building grants remains idle (Auditor General 2018, p. 5). Understaffing in specialised technical areas is one reason municipalities are unable to utilise infrastructural development loans. (Understaffing is a result of a cap on recruitment enforced by the IMF.) Yet for the past three years the Treasury has only been able to release UGX417 billion of the UGX800 billion required annually to maintain the feeder roads so crucial to farmers (Auditor General 2017, p. 33).

Uganda’s fiscal policy is ‘a moving target’

In 2019 the IMF is leaning towards the Auditor General’s point of view. They now say that rising interest payments reduce resources available for education and health (human development). Their latest assessment states, “The current ratio of interest payments to revenue is comparable to what countries with high risk or in debt distress typically face.”

We are not far from a full admission that Uganda is in debt distress although there are still the persistent and irrelevant claims of on-target economic growth (of 6.3%). Irrelevant because it was during the past periods of alleged high economic growth that universal primary education was degraded to the point where the drop-out rate was 60%. During high economic growth, inequality, and especially rural-urban equality, deepened. High economic growth preceded the current phase of social unrest. According to the IMF, “In each of the last three macroeconomic assessments of Uganda, the projected debt path was revised upwards. Having a clear direction for fiscal policy would help budget planning and execution.”

Nevertheless, the IMF continues to claim that the risk of debt distress remains low, provided domestic revenue can be mobilised. The set target under the National Development Plan II and medium-term Sustainable National Development Plan is to increase the tax-to-GDP ratio from 14% to 16% by 2019/20. If this cannot be achieved through job creation, it can only translate into more taxes and austerity measures.

The question arises: With Uganda’s history of poor public administration and disastrous debt management, corruption, and increasing civil unrest and repression, what was the basis of the IMF’s optimism? The organisation has a permanent office in the Ministry of Finance and its headquarters sends multiple missions every year to monitor economic progress. To solve Uganda’s perennial economic distress, citizens must first understand the IMF’s mission in Uganda.

In any event, the grace period on over 20 loans expires in 2020 and debt is now of concern. On top of expenditure on projects in the Public Investment Plan, there is significant expenditure arising from unplanned projects, such as the revival of Uganda Airlines, requiring $380 million. Lubowa International Hospital, initially planned as a public-private partnership with Finasi (a commodities trader) it eventually became a contract for Finasi to build and operate a hospital funded 100% by the Government of Uganda.

Incompetence in industrialisation and job creation

A recent round of commissioning of factories and other infrastructure has proven that infrastructural development is a chimera. The Isimba Dam launched in March may generate but does not transmit power. Together with Karuma, to be launched later in the year, it cannot do so without further expenditure of $3.5 billion to extend the grid. The Nile Bridge had to undergo major remedial work owing to poor construction only days after commissioning. The president’s electioneering took in at least one factory many years old and employing a miniscule number of Ugandans. Nile Agro Industries Ltd has been producing soap, wheat flour, cooking oil, bottled water, lint bales, and fortification and industrial plastics since 1999. Yet it was commissioned and “launched” on 7th May 2019.

The Soroti Fruit Factory was founded in 2014 and funded by the government and a grant of $7.4 million from Korea. Last year’s audit listed the factory as un-operational after accumulated public investment of UGX 13,353,129,943. The factory was commissioned by the President on 13th April 2019. It was reportedly closed on 10th May owing to a lack of operating capital for fruit from about 1,000 farmers and salaries for the 123 Ugandan employees. The government’s investment arm, Uganda Development Corporation, has been advised annually for at least three years by the Auditor General against making investments without feasibility studies but in Soroti it was the usual case of ignoring professional advice and pandering to the president’s whims.

“The corporation incurred expenditure amounting to Shs.9,000,026,869 during the year in undertaking industrial development investments in the areas of fruits in Luwero, Soroti and processing in Kabale and Kisoro. However, the Corporation did not undertake investment strategic studies assessment prior to undertaking investments for purposes of assessing the marketability and commercial viability of the final products processed from fruits like mangoes, oranges and tea plantations. The investment may not achieve anticipated results.” (my emphasis) (Auditor General 2016 p. 519)

Apart from Soroti Fruit Factory, other warnings have related to Kampala Industrial and Business Park, Namanve, where UGX 1,000,000,000 for a feasibility study was diverted. Over UGX 131 billion is outstanding on loans for four industrial parks, including Namanve. Although National Information Technology Authority-Uganda (NITA-U) carried out a feasibility study for Commercialisation of the National Data Transmission Backbone Infrastructure (NBI) and E-government Infrastructure (EGI), it did not factor in the costs of its maintenance. “As a result, it was difficult to assess the economic sense of the project as Management lacked sufficient benchmark to assess the bid proposals on contract aspects such as the cost of maintaining the NBI, revenue sharing ratios and price of internet services.” (Auditor General, 2017, p. 53)

It is indicative of the general problem pointed out by the Auditor General, who concluded that ignoring planning procedures is a major weakness within the Ministry of Finance “and presents a risk of funding projects which are not feasible and are not aligned to the National Development Plan (NDP).”

New projects are required to undergo four stages prior to being included in the Public Investment Plan (PIP) and commencement: (i) Prepare a project concept in line with NDP, (ii) Prepare a Project Profile demonstrating key results, (iii) Undertake a pre-feasibility study, and (iv) Conduct a feasibility study. But the auditor found that “some projects obtained project codes and admission into the PIP without proper project vetting as stated in without vetting them”.

It is indicative of the general problem pointed out by the Auditor General, who concluded that ignoring planning procedures is a major weakness within the Ministry of Finance “and presents a risk of funding projects which are not feasible and are not aligned to the National Development Plan (NDP).” (Auditor General, 2017, p. 15)

Foreign direct investment

To attract foreign direct investment (FDI), many countries around the world privatised their telecommunications sectors – some voluntarily and others, like Uganda, under an IMF structural adjustment programme. In the UK in the 1990s, public awareness-raising of the move involved repeated assurances that after unbundling postal and telecoms services, 51% of shares in British Telecom would be sold to the private sector but with the proviso that 34.3% would be sold to the general public. Furthermore, in the interests of promoting share ownership, the shares were priced at £130, a price considered below their value.

Kenya sold its telecoms sector, reserving 60% of the shares for the Kenyan state, of which 30% were later sold directly to the public. The new entity, Safaricom, went on to become the most profitable private company in the East African region.

Cross the border into Uganda where income from the lucrative telecoms sector is enjoyed only by a narrow oligarchy. Although the government was to retain 49% of the shares in Uganda Telecom, it currently holds only 31%. Much has been written about how MTN went from being the second national operator to a virtual monopoly and regulator of the sector.

MTN is the biggest player, with 54% of the telecoms market. Only 5% of MTN shares are Ugandan-owned, (the Ugandan being an individual with board membership in at least two privatised entities, including the defunct Rift Valley Railway.) It is only in the past few months that the president began to press MTN to make some of its shares available to the public.

Uganda Telecom, the entity that was supposed to retain residual rights in the sector, was only created after Celtel and MTN (the first and second national operators) had been running for a while. This has meant that MTN has the technology to permit or bar new indigenous competitors from the market, which reportedly it does. Indigenous Ugandan start-up Ezeemoney, a mobile money platform designed to allow banking over different platforms (i.e. between MTN, Africell and other service providers), was awarded over two billion shillings in a suit against MTN for refusing to provide them with access to the network.

Tax evasion and illicit transfers

Returning to the objectives of privatisation and incentivising foreign direct investment, greater efficiency and cash inflows may have been achieved but the benefits have been annihilated by illicit outflows mainly facilitated through tax evasion.

Another 13 foreign investors have been found to have used a lacuna in the law to avoid taxes for years, a fact the IMF was in a position to know. Thirteen of the investors owe UGX 353.5 billion. Some have been beneficiaries of FDI incentives, another has been operating in Uganda since 1969 (and therefore not in need of incentives). One is in possession of the infrastructure that is the privatised Nytil textile manufacturing plant (founded in 1954). A fourteenth is a joint venture once touted as the only manufacturer of ARVs in Africa. It was founded to supply ARVs for domestic consumption and export to Burundi, the DRC, Kenya, Rwanda, South Sudan, Tanzania, Cameroon, Comoros, Namibia and Zambia. The majority shareholding is foreign-owned; the three major Ugandan shareholders own less than 10% of the shares and 18% were sold on the stock exchange in 2018. It turns out that the company may really be in the business of acquiring government tenders for a parent company in India.

In response to the discovery that opportunities to increase the tax-to-GDP ratio are being systemically undermined by tax evasion by investors, the Ministry of Finance this month tabled a proposal in Parliament to give the offenders a waiver of taxes owed on the basis that it would be unwise to drive FDI away by collecting the arrears.

Returning to the Mobutu story, it is not just African despots who have sufficient illicit funds to make a significant dent in their countries’ public debt; the taxes owed by foreign investors could clear it. MTN’s tax arrears (of UGX 2.8 trillion as extrapolated from data recovered during litigation) could clear 73.6% of the current UGX 3.4 trillion outstanding balance on the loans which Uganda will begin to repay in 2020.

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Mary Serumaga is a Ugandan essayist, graduated in Law from King's College, London, and attained an Msc in Intelligent Management Systems from the Southbank. Her work in civil service reform in East Africa lead to an interest in the nature of public service in Africa and the political influences under which it is delivered.

Politics

Maendeleo ya Wanawake and the Politics of Silencing Women

7 min read. The main objective of Kenya’s largest women’s organisation has been to subdue women’s voices and to control the constituency of women, a purpose that was both necessary and effective in an undemocratic state. That it is being revived may indicate the type of politics the elite envision for Kenya’s women.

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Maendeleo ya Wanawake and the Politics of Silencing Women
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MYWO has always existed to subdue women’s voices and to control the constituency of women, a purpose that was both necessary and effective in an undemocratic state. That it is being revived may indicate the type of politics the elite envision for the foreseeable future

We are witnessing the Kenyan government’s attempt to reimpose silence as the preferred political language in this next phase of politics. These attempts are hidden in plain sight. Take for instance the Maendeleo Ya Wanawake Organisation (MYWO)’s recent public censure of the Member of Parliament for Kandara constituency, Alice Wahome, for criticising the president, or the Women’s League of the Kikuyu Council of Elders demanding that the Building Bridges Initiative (BBI)’s popularisation is the preserve of those aligned to the president.

According to its website, MYWO is a non-governmental organisation of over 25,000 affiliate women’s groups and over 4 million individual members. Registered in 1952 by a group of white settler women as part of the colonial government’s Department of Community Development and Rehabilitation, its purpose was to focus on women’s social welfare, which it did through organising women’s self-help groups around the country. In central Kenya where the movement for land, freedom and independence (the Mau Mau) was active, MYWO was treated with suspicion and there were rumours it was used to collect information on Mau Mau activities.

MYWO was initially funded by the colonial government and later the independence government and continued to focus primarily on social welfare and development. The post-independence MYWO continued to act as an appendage of the state, going so far as to merge with the ruling Kenya African National Union (KANU) party in 1987. MYWO, therefore, has deep roots in the state and the state as an institution for the control of people. It is an organisation by women but not for women; its purpose is to serve the interests of the state.

MYWO has never deviated from its historical roots and purpose. It has never been an independent women’s organisation, nor has it ever been invested in women’s political agency. Despite being founded and growing as a social welfare and “development” organisation, MYWO gained political relevance as a voice for the ruling party KANU during President Daniel arap Moi’s repressive 24-year single-party rule.

Because women were for all intents and purposes excluded from mainstream politics, MYWO was one of the few spaces for politically active women. Thus, some of its chairpersons include such politically active women as: Hon. Phoebe Asiyo, who was first elected in 1980 and was also the first person to table a bill for affirmative action for women’s representation in elective politics in 1997; Jael Ogombe Mobogo, who almost beat Mwai Kibaki in the race for Member of Parliament for Bahati Constituency in the 1969 elections; and Ruth Habwe, who was expelled from KANU in 1966 after she dared to run against KANU as an independent. Other chairpersons of MYWO include such prominent women as Hon. Zipporah Kittony, who was first nominated by President Moi as a KANU MP in 1988 and again by Gideon Moi, President Moi’s son and the Chairman of KANU, to the Senate 25 years later in 2013; and Jane Kiano, who was also a patron of the organisation until her death in 2018.

Despite being founded and growing as a social welfare and “development” organisation, MYWO gained political relevance as a voice for the ruling party KANU during President Daniel arap Moi’s repressive 24-year single-party rule.

However, MYWO’s influence began to decline during the “second liberation” as demands for multipartyism grew and civic space expanded. As the public space for women expanded, including through the promulgation of the Constitution in 2010, MYWO continued to shrink. Its resurgence to chastise Alice Wahome for criticising the president is, therefore, worth reflection.It is also worth noting that President Uhuru Kenyatta first ran on a KANU ticket and his political mentor was President Moi.

For the first time in our history, men and women form a class of citizens, neither with superior status, and both with the right to representation in elective and appointive bodies. Yet over the past decade, and especially in the last seven years, we have witnessed some of the most hardened resistance by the state to women as citizens — from systematic violations of the Constitution to exclude women from Parliament, Cabinet, and parastatal and ambassadorial appointments (as required by the Bill of Rights Article 27) to laws undermining their equality in marriage and the increase in violence against women by men in the public and private spheres.

In other words, there has been no shortage of “women’s issues” over the past decade. Women and women’s organisations working in women’s interests have had to demand, advocate and fight for women against the state despite the law – from court cases challenging these unconstitutional actions by Parliament and by the president to public advocacy for compliance with the rule of law to ensure women’s full representation in public space and politics. Women working for and on behalf of women have been at the forefront of challenging state illegalities that harm women, undermine their citizenship and limit their opportunities. During this time MYWO has been missing in action.

The loud silence of MYWO and others, including the Women’s League of the Kikuyu Council of Elders, is because they aren’t concerned with or working in the interests of Kenyan women generally; they are working for and in the interests of the state and a minority of women within the establishment. MYWO certainly does not protect the interests of women as a class of citizens. This isn’t to argue that their position is invalid or does not deserve a platform but to provide context and to assert it is not the women’s position.

MYWO was established to subdue women’s voices and to control the constituency of women, a purpose that was both necessary and effective in an undemocratic state. That it is being revived may indicate the type of politics the elite envision for the future of women in the country. The Kikuyu Council of Elders is the preserve of men, and the emergence of a “women’s league” in a notoriously misogynistic institution is probably a sign that the interests and positions being advanced are those of men.

The homogenisation of women

Women have been speaking for the past decade on issues of national importance. Where are those voices of women who have been speaking when it wasn’t convenient or politically expedient? Indeed, what the 2010 Constitution did to the consternation of the political elite is to create opportunities for the largest number of women in Kenyan politics – women who demand public space and national platforms without apology and on the same terms as men, women who speak against the state’s failure to protect women.

The loud silence of MYWO and others, including the Women’s League of the Kikuyu Council of Elders, is because they aren’t concerned with or working in the interests of Kenyan women generally; they are working for and in the interests of the state and a minority of women within the establishment.

But the way in which women who have been speaking for and on behalf of women against the state are being covered today is an attempt to homogenise women, to deny women the right to multiple and diverse opinions (see how this is consistent with a view of women as not real citizens). A small class of politically active women are also trying use the media to manipulate the public into seeing them as the “leaders” of the constituency of women so that they can leverage this standing to secure positions in the negotiated politics that is the fashion post-BBI.

Women are insulted, raped and killed and MYWO is silent, but a woman politician doing politics in a way that upsets the establishment is a cause for national statements. No woman with an issue – from the alienation of inheritance land or rape of her daughter in a public high school, or even the death of her daughter allegedly by a governor – runs to MYWO. However, the state runs to MYWO when it has issues with women.

To deny women diverse political opinions is to deny us the fullness of citizenship; it serves to infantilise us as well as to deny us agency at a time when the political elite is most vulnerable. Our politics is bad but it isn’t simple.  Attempts by the political elite to gloss over differences or muzzle dissent should be met with suspicion.The only way citizens can influence the direction or agenda of politics is through critical political engagement not mere acquiescence.

MYWO’s resurgence, especially in the role of the disciplinarian of women doing politics, is a harbinger of a politics without basic freedoms: freedom of association and speech, not just for women, but all citizens. The nature of our popular, predominately male, political analysis is to render anything articulated by a woman as peripheral to the national discourse and only for the consumption of other women. Whereas men speak and do politics for the public, women speak and do politics only for other women.

This analytical framework fails to take cognisance of changes in society, as well as the expanded public and political role of women, especially post-2010. In addition, it is stubbornly ahistorical, ignoring this administration’s history of violating women’s rights as a prelude to more expansive and systematic repression. We see the same modus operandi with court orders. The Parliament and the president have consistently violated court orders on the two-thirds gender rule, including refusing to enact legislation on women’s representation and naming an unconstitutional cabinet. Now court orders are violated to deny some citizens the right to enter the country, as well as release them on bail.

We would do well to broaden our political analysis to take women’s role seriously as citizens with agency and with diverse political perspectives and, therefore, as proponents of both progressive and regressive politics. Part of what is most threatening in the current context is diversity of political opinion, complexity and nuance among all citizens, not just women.

MYWO and organisations like it are telling women what the proper political position is, thus pulling women back from complicating the public space by demanding to be heard. This is especially damaging for women because women as a class of citizens have legitimate litigated grievances that challenge the legality and legitimacy of any proposed referendum or constitutional amendment processes.

Why women are critically important is because none of the legal processes to amend the Constitution are available because these institutions are unconstitutional as they exclude women. We have an unconstitutional cabinet, an unconstitutional Parliament, an unconstitutional electoral body and a political elite that have all but admitted that elections are hijacked by those in power. The scope of the current illegalities would seem to exclude the current holders of those positions from initiating or overseeing any constitutional amendment process. Instead of an unconstitutional government overseeing amendments to the Constitution, what we should have is an independent transitional government. But the political elite know that this political moment works in their collective interest only if it is a binary choice, uncomplicated by facts and the law.

As citizens we would do well to be suspicious of those seeking to silence us or to mould us into well-packaged constituencies, whether they be organised around ethnicity, gender or age, for sale to the highest bidder. We are being encouraged to consider political choices that are both illegal and ahistorical and questioning the framing is considered heresy. We seem to have learned nothing from the silencing of critics and the faux “tyranny of numbers” scenario.

Shrinking the political space, especially the space to disagree and oppose the status quo, is bad for citizens and great for politicians. The politics of silence is the politics of oppression; it merely starts with women but will eventually silence and oppress all citizens equally.

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Politics

How Moi Manipulated Luo Politics to Entrench His Authoritarian Rule

11 min read. An assessment of South Nyanza’s politics suggests that President Moi owed his long rule partly to the Luo elite’s internal divisions and rivalries. The Moi era is also a study on how authoritarian leaders sustained their grip on power during the Cold War.

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How Moi Manipulated Luo Politics to Entrench His Authoritarian Rule
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Daniel arap Moi, Kenya’s second and longest-serving post-independence president, was buried at his Kabarak home on February 12th. His death, eulogy and press coverage by the big commercial media outlets have stoked divisive debates and ambivalent recollections of the past, which recall Fyodor Dostoevsky’s observations that “while nothing is easier to denounce than an evildoer, nothing is more difficult than to understand him.”

How does one understand the evils of the Nyayo government if Moi was solely responsible for some of the evils of his government, but not all the evils were exclusively his? And what if some of the evils Moi is rightly condemned for, such as crony capitalism, sabotaging democracy, resisting political reforms, political murders and corruption, are also the evils that were perpetuated by his predecessors, Jomo Kenyatta and Mwai Kibaki, and even his successor, Uhuru Kenyatta?

Perhaps one way is not to see Moi as the African Big Man, which Moi’s death has brought back into circulation. Though convenient, the Big Man or strongman reference conceals rather than reveals the kind of state power an authoritarian ruler wields, and the internal and external political forces that also shape the politics of authoritarian regimes. It conceals the wellspring of crimes committed by an evil leader in charge of a highly centralised and unitary state, one where the executive’s power has been concentrated in the presidency in particular, without the mitigating effect of the counter-balancing powers of an independent Parliament and judiciary.

Moi’s evil rule dominated every aspect of Kenya’s political life because his rule, like Jomo Kenyatta’s, was absolute state power, which post-independent statecraft has often wrapped in the rhetoric of sovereignty, patriotism, discipline, order, and development.

Moi’s authoritarian rule wasn’t solely a product of a unique character trait in him as an individual; rather, it was a handmaiden of the statecraft of an unreformed highly centralised and unitary state. By using this form of state power to reward and punish, he adroitly exploited the national or regional political needs of Kenyans and the political schemes and rivalries among his political rivals, and astutely manipulated the greed and the cravings of the clergy, the intelligentsia, and bureaucrats.

Moi’s evil government also had the support of the West during the Ronald Reagan and Margaret Thatcher eras, which kept his repressive, corrupt and incompetent government going. Britain and the United States were clear about who the enemies of the West were during the Cold War: communism and radical nationalisms in Africa. They wanted to reconfigure African economies through neoliberalism. So his was hardly a one-man show.

Perhaps the politics of the South Nyanza district in the 1980s, which resonated with the politics of the other marginalised regions of Kenya, offers some answers. At that time, Kenyan elites were jostling for positions in the new political order under Moi, and the Nyanza elite were no exception. Signaling a political truce and an intention to bring back the ostracised Kenya People’s Union politicians back into the fold, Moi appointed Jaramogi Oginga Odinga as the Chairman of the Cotton Lint and Seed Marketing in 1980.

Moi’s evil rule dominated every aspect of Kenya’s political life because his rule, like Jomo Kenyatta’s, was absolute state power, which post-independent statecraft has often wrapped in the rhetoric of sovereignty, patriotism, discipline, order, and development.

But, as Anyang’ Nyongo regretfully explained in the Star, despite their concerted efforts to keep Jaramogi Oginga Odinga out of the limelight, Jaramogi granted Hillary Ng’weno of the Weekly Review an ill-timed interview. Moreover, in Mombasa, Jaramogi “denounced Kenyatta as a land grabber”. These successive events, as Nyongo notes, torpedoed what would have been the Moi-Odinga rapport because Moi was beholden to the very Jomo Kenyatta era forces that had forced Jaramogi Oginga Odinga out of government and that had jailed him.

After the Jaramogi Oginga Odinga debacle, Moi looked to South Nyanza for new leaders who did not have autonomous political constituencies such as Odinga’s, and leaders who would owe him their allegiance. Moi found willing accomplices in some South Nyanza elite with whom he could fend off political enemies, run a brutal and repressive state security apparatus, and build an alternative political base to Jaramogi Oginga Odinga’s. It was a move that stirred the undercurrents of the intra-Luo and inter-district elite competition, resentment, and envy.

Moi understood the Luo intra-ethnic political undercurrents, its elites’ vanities, greed, and opportunism and their region’s developmental challenges. He played one individual’s ambitions against another individual’s ambitions, or one district’s elite faction against another faction, thus keeping his would-be enemies busy and preoccupied with siasa ya kuchimbana.

Legacy of the Seventh Day Adventists

For years, the South Nyanza elite had felt that the district had lagged behind Kisumu and Siaya districts in terms of social and economic development. The area was beleaguered with a huge disease burden and high mortality rates. In Freedom and After, Tom Mboya, suggested that this had partly been the social cost of the Seventh Day Adventist (SDA) mission’s anti-educated African attitude and miniscule investment in the education sector.

Referring to a time when the education of the Africans was mainly left to Christian missionaries, Mboya lamented:

There were also churches—for instance, the Seventh Day Adventists—which thought it immoral to give Africans any academic education, and believed all they should learn was the Bible from the first page to the end, and perhaps how to do some woodwork and manual labour. Until a few years ago the Seventh Day Adventists thought it un-Christian for an African to want to go to high school and university. I know of many cases of Africans who were openly condemned in church for trying to get further academic education. In some cases Africans who defied the church on these matters lost their teaching jobs or the employment. As a result, you have today very few highly educated Africans among the Seventh Day Adventists.”

Mboya’s beef with the SDA mission, the dominant Christian mission in South Nyanza and the islands of Lake Victoria (locally known as Lolwe), can’t be dismissed as the coloured view of a Roman Catholic; missionary education was racially-biased across denominations. But the SDA church of the colonial times, with its Kenyan headquarters at Gendia mission in Kendu-Bay, and its roots in the millennial religions of white North Americans, seemed to have exported America’s virulent racist attitudes towards “free” black people. The SDA church of colonial times seemed to have resolved that the type of education the “natives” needed was apolitical education – the teaching of “technical” or functional education, the kind that would not stir political agitation, but would be good enough for the immediate needs of the white-dominated colonial economy.

Mboya’s beef with the SDA mission, the dominant Christian mission in South Nyanza and the islands of Lake Victoria (locally known as Lolwe), can’t be dismissed as the coloured view of a Roman Catholic; missionary education was racially-biased across denominations.

In an era when the colonial government assigned various Christian missions particular geographical locations – ostensibly to forestall religious conflicts – only the Anglicans (the Queen’s church) could establish a mission anywhere they fancied. Thus a Christian mission’s formal or informal policy could have a great impact on a region’s socio-economic (mis)fortunes. The white missionaries’ preference for high altitudes and cooler climates meant that there were very few missions and missionary schools in South Nyanza’s mostly hot, mosquito- and tsetse fly-infested areas.

The rise and rise of Hezekiah Oyugi

Tom Mboya’s rise as the ultimate champion of post-independence modernity held great hopes for South Nyanza. But his assassination on July 5, 1969 robbed the region of a grand patron and an impatient moderniser who felt that the colonial government had dealt the region an unfair card. Orphaned by Tom Mboya’s murder, South Nyanza, more than any other district, was a region yearning for a patron and inclusion in government.

But South Nyanza elites’ ambitions and popular needs, a laggard elite formation, poor social and economic welfare, especially when compared with the other Luo-dominated districts of Kisumu and Siaya, played into Daniel Moi’s Machiavellian hands. The failed Oginga Odinga and Moi rapport paved the way for Moi to shift the centre of gravity of Nyanza’s Luo community politics.

No one personified Daniel arap Moi’s attempt to shift the centre of gravity of Nyanza politics and to control it more than the late Hezekiah Nelson Oyugi Ogango, aka “Kalam Maduong” or the Big Pen. Oyugi’s nickname attested to the might of Oyugi’s powers, which he derived from his lofty position in the Provincial Administration, and later as Permanent Secretary in charge of internal security, an office he held at the pleasure of President Moi.

Hezekiah Oyugi’s meteoric rise in Moi’s government came as a big surprise, especially after another Hezekiah, and a Luo to boot, Hezekiah Ochuka Rabala, a senior private in the Kenya Air Force, was named as being at the centre of the 1982 abortive coup that was said to have had the blessing of Jaramogi Oginga Odinga. No one expected another Luo to come close to state power, and certainly not close to a national security organ.

A Homa Bay legend has it that in the 1980s, a goat had spoken to Hezekiah Oyugi when he was serving as a Provincial Administrator in the Rift Valley. The goat had told him to warn the Kenyan government or the president of an impending drought or famine and request them to build a buffer against such an eventuality. Oyugi promptly relayed the message. President Moi heeded the prophetic warning by building a grain reserve, thus averting a famine. The legend’s Old Testament undertones cast Oyugi as Joseph, the interpreter of dreams in the Pharaoh’s court.

Hezekiah Oyugi’s meteoric rise in Moi’s government came as a big surprise, especially after another Hezekiah, and a Luo to boot, Hezekiah Ochuka Rabala, a senior private in the Kenya Air Force, was named as being at the centre of the 1982 abortive coup that was said to have had the blessing of Jaramogi Oginga Odinga.

Oyugi, like Simeon Nyachae, was an ambitious workaholic and a stickler for rules who zealously served the Moi government while pursuing his own regional political ambitions and development agenda, especially in South Nyanza. Tired of the streetwise, honey-tongued and rib-tickling political orators with dismal “development” records, such Olouch Kanindo, Oyugi attempted to remake South Nyanza’s politics in the 1980s.

The Moi-Oyugi line-up of the favoured Members of Parliament included politicians such as Peter Nyakiamo, Dalmas Otieno and one maverick – if ever there was one – Professor Ouma Muga, and other loud and loutish Nyayo loyalist types. The new crop of leaders had expansive worldviews, were educated and experienced as administrators of big corporate or academic institutions, and were above all Nyayo loyalists.

In the mid-1980s, Moi came calling at Homa Bay. The KANU’s brass band was bigger and better than St John Seminary Rakwaro’s, which often graced Homa Bay town’s national day celebrations. South Nyanza, it was said, had topped the list of the districts with the highest number of registered KANU supporters for the two consecutive years preceding the presidential visit. This wasn’t entirely voluntary. During those years, KANU youth wingers forcibly recruited party members. They had laid siege at the entrances and exits of the town’s markets and the main bus park, letting in only those who had a KANU membership card and the annual KANU membership stamp (worth five or ten shillings) affixed to it. In addition, the KANU Maendeleo Ya Wanawake women, the party stalwarts who could secure more than five kilos of pishori rice or unga ngano, went door to door, making sure that every adult was a registered and duly paid card-carrying member of the ruling party.

With the rise and rise of Hezekiah Oyugi as the PS in charge of internal security, the fortunes of other Luo leaders, such as David Okiki Amayo (KANU’s national chairman), ministers Dalmas Otieno, James Okwanyo, and Peter Nyakiamo, and several assistant ministers, such as Professor Ouma Muga and Ochola Mak’Anyengo, appeared to be on the rise too. But were they?

When the tide of Nyayoism receded from the shores of South Nyanza in the early 1990s, a mixed bag of harvest was revealed. Some educational institutions, notably Kanga High School and the Migori Institute of Science and Technology, were established. There was employment in the Provincial Administration and the Administration Police. There were other goodies, such as a school bus and a few church buildings.

However, the region faced deepening economic decline: bad roads, collapsed marine transport, beleaguered cotton, sugarcane and fisheries sectors, declining public sector employment or retrenchment (popularly known as “the golden handshake”), and an increasing disease and healthcare burden. Moi’s government was also balkanising the old South Nyanza district, dividing it along its dominant language and clan cleavages, namely, Rachuonyo, Migori, Suba, and Kuria districts.

Around that time, Hezekiah Oyugi had also died mysteriously, which was quite common during the Nyayo era. And Moi was openly and widely resented.

Representation without development

In 1993, the MP for Kasipul Kabondo, Otieno K’Opiyo, asked the Minister of Health why there were no Nyayo wards built in the former South Nyanza district. Yet, in his words, “if you consider the proximity of the previous leaders of South Nyanza, all of them were in cabinet and were very, very close to and were co-operating with the KANU government, but in spite of all this cooperation by nine ministers, nothing was done…why did they not consider South Nyanza where they had the heartbeat of KANU throbbing day in day out?”

Although many Nyayo wards were never completed in several parts of the country, and the Moi government later said that the wards were supposedly mainly a self-help and a partially government-sponsored project, South Nyanza did not get a Nyayo ward despite the fact that Peter Nyakiamo, the MP for Mbita, was the Minister of Health when the Nyayo ward project was initiated.

How could this happen? Can this paradox of good cabinet representation without local development explain the kinds of tweets posted on the debate on Moi’s legacy, but informed by the former North Eastern Province’s harsher experiences? Rashid Abdi stated on Twitter:

He [Moi] kept North under emergency law, deepened hatred of the ethnic Somalis, forced discriminatory pink card on them, looked on as his troops massacred civilians in Wagalla, ran a prosperous country aground, disappeared & killed ForMin [foreign minister]. Whose legacy history will look to kindly it is Raila Odinga. Raila made his mark in the struggle for democracy, new constitution and devolution (notwithstanding qualms about BBI), on the one hand.”

And then there was Ahmednasir Abdullahi SC’s ambivalent reaction:

Despite the history of NFD, the Independence Referendum of 1963, the war of independence (the shifta wars) and Section 124? Of the constitution that imposed state of emergency on NFD from 1963 to 1992, BABA Moi made Somalis, Borana, Gabra, Rendille et al to part of Kenya.”

Dr Sally Kosgei, Nyayo’s last Head of Civil Service and Secretary to the Cabinet, in her eulogy at Kabakak during Moi’s funeral, put her finger on this paradox of cabinet representation without development when she noted without any sense of irony that Moi “managed the affairs of the state with his civil servants”. (Note: Moi’s civil servants, not Kenya’s civil service.)

It was clear to all that in Moi’s government, cabinet positions were largely symbolic and ministers were dispensable. The KBC 1 o’clock news bulletin announcing the sacking of ministers hung over the cabinet ministers’ heads like a guillotine.

In nearly all-key institutions of Kenya’s highly centralised state power, the locus of power was not the elected public face of any particular institution. Rather, Kenya’s state power was deliberately designed to subvert its citizens’ democratic will and aspiration. In some instances, the bureaucrats and henchmen who wielded the most power were invisible or largely unknown beyond their private spheres of influence.

It was clear to all that in Moi’s government, cabinet positions were largely symbolic and ministers were dispensable. The KBC 1 o’clock news bulletin announcing the sacking of ministers hung over the cabinet ministers’ heads like a guillotine.

The locus of power lay in the office of a bureaucrat appointed directly or indirectly by the president, often without security of tenure or with superficial security of tenure. (“His civil servants.”) So it was the Treasury, not the National Assembly, that allocated national resources. Within the National Assembly, the clerk had more authority than the speaker. In the justice sector, it was the Attorney General, not the Chief Justice, who was the ultimate legal authority. In any given ministry, it was the Permanent Secretary, not the minister, who made the important decisions. In local governments, it was the various clerks who wielded power. In the districts, the District Commissioners called the shots as chairmen of the District Development Committees and the District Security Committees. In the villages, it was the chiefs, not the elected councillors, who were the kingpins. Nearly all the elected leaders were subservient to the president’s appointed bureaucrats who had the “Authority to Incur Expenditure” behind the scenes.

An assessment of South Nyanza’s politics in the first decade of Moi’s presidency suggests that the former Kenyan president owed his long rule partly to the Luo elite’s internal divisions and rivalries – often ignited by none other than Moi himself. Moi adroitly and carefully co-opted the regional elite from marginalised ethnic groups, cynically exploiting their yearning for “development”, and keeping them happy and slavish. However, their appointment to key positions did little to bring “development” to their regions.

South Nyanza’s experience also suggests that Moi stayed in power for long because of his brutal repression of the opposition, because of the atomising fear and despondency that his regime of terror induced in the population, as well as because of the international financial support his government received from or through the West, especially Britain and the United States. Kenya under Moi’s authoritarian rule was the proverbial crocodile’s lair where no freedom fighter or radical nationalist sought refuge.

Daniel arap Moi may have fancied himself as an African statesman – and was even eulogised as one by many – but his reign is a study on how authoritarian leaders sustained their grip on power during the Cold War. The evils of the Nyayo era recall Lord Acton’s maxim: absolute power corrupts absolutely.

To think of Moi as either a “Big Man” or a “strongman” is to ignore the institutional distortions that enabled him to rule over Kenya with an iron fist, and the domestic and international support that sustained his presidency.

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Revisiting the Goldenberg Ghosts

14 min read. The Goldenberg scandal did not just negatively impact the Kenyan economy, it also left in its wake damaged and destroyed lives. Central Bank of Kenya employees who raised queries about the massive fraud were quickly sacrificed. These individuals and their families have hauntingly traumatic memories of Moi and his government.

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Revisiting the Goldenberg Ghosts
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As a curious child growing up in the early 1990s, I had a general idea from reading the newspapers that my father brought home that Daniel arap Moi’s Kenya was not a place to play around. Then, in August 1992, these abstract ideas became realities. One evening, my visibly distressed mother brought home a newspaper bearing the photo of her elder brother appearing unconscious and lying on a bed at Nairobi Hospital. The caption had my uncle’s name, Francis Lukorito (whom we called Uncle L), followed by an explanation that the hospitalised Central Bank of Kenya employee had been arrested days earlier in relation to the mysterious death of the multiparty stalwart Masinde Muliro.

Pius Masinde Muliro, the founding member of the Forum for the Restoration of Democracy (FORD), had been declared dead on a Nairobi-bound flight from London, where he had gone to fund-raise for the party. FORD was a serious contender in the 1992 general election following the repeal of Section 2(a) of the constitution, abolishing Moi’s one-party state. That newspaper, with the usually charming Uncle L appearing bruised, swollen and defeated, became part of family memorabilia, in remembrance of the day my uncle became an enemy of the state.

Uncle L was a tall, heavily built and worldly individual who people aspired to become. He finished his high school education at Lenana School and proceeded to undergraduate Bachelor of Commerce studies at the University of Nairobi. He was an impressionable 23-year-old when the Central Bank of Kenya came calling in 1976. He was first sent to Milan, then to Washington, D.C. for further training. Within a short period of time, he became the bank’s superintendent, then the senior Superintendent. The future was supposed to be bright – until August 1992 happened.

As narrated to the Judicial Commission of Inquiry into the Goldenberg Affair, where Uncle L took the witness stand on 14 January 2004, the truth was that Muliro and Uncle L came a long way. When Muliro was attending school in Tororo, Uganda, before proceeding to the University of Cape Town in South Africa, he made a habit of passing by my grandfather’s home at the Kenya-Uganda border, not too far from Tororo, where he spent time with my grandfather, who was his age-mate. Since then, Muliro remained a regular visitor to my late grandfather’s home, in the process becoming my uncle’s guardian.

On 14 August 1992, while minding his business at work, Uncle L received a call from a friend who informed him that Muliro was dead. Shocked and in disbelief, he left for Muliro’s Nairobi residence in Upper Hill, where he confirmed the news. As Muliro’s children contemplated their next move in dealing with their patriarch’s death, it was decided that Uncle L would become the treasurer for the funeral organising committee. Uncle L drove back to work, unaware that his association with Muliro was about to be conveniently used as a scapegoat to kick him out of the Central Bank – in a bigger game of chess that was being played at Moi’s State House.

Five days later, on 19 August 1992, three plainclothes policemen showed up at the Central Bank. With them was Mr. H. H. Njoroge, Uncle L’s head of division, and a Mr. Karanja, the bank’s chief security officer. The men requested Uncle L to accompany them. No explanations were given. Since the bank officials were aware of what was transpiring, Uncle L obliged. Outside the bank building, on Haile Selassie Avenue, Uncle L saw a Special Branch Peugeot 504 station wagon with two more men inside. There and then, in Moi’s Kenya of detention without trial, he knew his goose was cooked. Multiparty politics had been begrudgingly restored, and although it appeared the democratic space was expanding, in Uncle L’s world, there lurked a monster which was about to cripple the Kenyan economy, an ogre which he and a few others had tried to slay, but which had now come back to haunt them.

As senior superintendent, Uncle L had to scrutinise all export compensation scheme-related CD3 forms submitted to the Central Bank by commercial banks on behalf of their exporting customers. Uncle L worked with Mr. David Meader, an Australian national seconded to the bank from the International Monetary Fund. The duo flagged a whopping 17 billion shillings, which they considered an irregular payout to a company called Goldenberg International, which was purporting to be exporting massive amounts of gold and diamonds on a daily basis to Europe, the Middle East and Asia (even though Kenya had no known commercial deposits of either). For every US dollar earned in the purported sales abroad, Goldenberg was under a statutory export compensation claim where it was paid thirty US cents by the Central Bank in Kenya shillings as a reward for boosting Kenya’s exports.

However, proof of sales and exports of gold and diamonds later turned out to be forgeries.

By mid-1992, six months prior to the first multiparty presidential election in three decades, the flow of CD3 forms intensified. At that time, Uncle L and Mr. Meader raised red flags about what they believed was fraud by writing to the Central Bank’s chief banking manager, the director of research, the deputy governor and the national debt office. As they kept scrutinising more CD3 forms, more anomalies surfaced. Unknown to Uncle L and Mr. Meader, the scheme involved some of the most powerful individuals in Kenya, including the Head of the Special Branch (Kenya’s intelligence service), who was a partner in Goldenberg International, a company owned by Kamlesh Pattni.

Two decades later, while answering a question posed by the Goldenberg Commission’s lead counsel, Dr. John Khaminwa, Uncle L admitted that he and Mr. Meader suspected that they were in the middle of a multi-billion financial scandal, which was being executed right in front of their eyes. As it would later emerge, some of the individuals whom they wrote to complain about the 17 billion shillings and other irregularities were in fact part of the action.

Khaminwa: Why do you believe Mr. Riungu, Mr. Waiguru and Mr. Karanja were responsible for your arrest? 

Lukorito: Because when I was working on pre-shipment finance papers, Mr. Pattni was very close to Mr. Riungu. On a daily basis, Mr. Pattni would come and see Mr. Riungu. While working on the papers with Mr. Meader, I would see Mr. Pattni going into Mr. Riungu’s office next door.

Upon entering the Peugeot 504, Uncle L was driven to the Nairobi Area Police Headquarters, where he was taken to a basement office. There, he met three policemen – Mr. Kimurgor, Mr. Murage and Mr. Slim – who wanted to know how he knew Muliro, how he came to know about Muliro’s death, how close he was to the opposition leader, and whether he knew where Muliro stayed. Uncle L gave them the history by writing a 16-page statement.

Later that evening, he was thrown into the back seat of the Peugeot, where he was made to lie down on the vehicle’s floor. The policemen sat and stepped on him as they drove along. After a not-so-smooth drive, the vehicle slowed down at what seemed like the entrance of a building. As they pulled Uncle L out, he saw Hotel InterContinental’s beige façade. If he hadn’t expected the worst, then being in the precincts of Nyayo House gave him reason to be afraid.

Two decades later, while answering a question posed by the Goldenberg Commission’s lead counsel, Dr. John Khaminwa, Uncle L admitted that he and Mr. Meader suspected that they were in the middle of a multi-billion financial scandal…As it would later emerge, some of the individuals whom they wrote to complain about the 17 billion shillings and other irregularities were in fact part of the action.

He was taken to an upper floor within Nyayo House where he met a new set of hostile Special Branch interrogators. This time, the story was that he was an opposition mole within the bank. He told them he wasn’t. The beating started. Uncle L collapsed. When he came to, he was in a dark room filled with water that made his skin itchy. His body was swollen and aching all over. Lucky for him, he was picked up later that night and delivered to Parklands Police Station.

The following morning, Uncle L was driven to Nairobi Area Police Headquarters. This time there was not much to talk about other than kicks and blows. He collapsed. When he came to, he found himself at Nairobi Hospital, where the photo in the newspaper my mother brought home was taken. How the media knew who he was, why he had been arrested and where he was hospitalised is anyone’s guess. Uncle L had not been charged with any crime, but he had been badly tarred with a broad brush – he was now a government official caught in the middle of the country’s “dangerous” opposition politics. He stayed bedridden for six days.

The impact of the beatings meted on Uncle L are captured in the 14 January 2004 proceedings of the Goldenberg Commission, which read: (The witness was then referred to a medical report signed by Dr. D. K Gikonyo, a physician and cardiologist, which showed that on admission, among other things, his blood pressure was extremely high – 230/130. (He has since become hypertensive.) After a mandatory two week sick leave, Uncle L was quickly interdicted.

“Following your arrest by the police on 19 August 1992, we write to advise you that it has been decided to interdict you with immediate effect in accordance with Rule 6.35 (b) of the Staff Rules and Regulations,’’ read the letter from the Central Bank of Kenya’s Administration Division, signed by Mr. C.K. Ndubai. ‘‘While on interdiction, you will be paid half your salary and you will be required to report on every working day to the Head, Security Division, where you will sign a register of attendance. You will not leave your place of work except with the permission of the Head of Security Division. The interdiction will remain in force until further notice.” 

This is how a lame game of ping pong at the highest level of Moi’s government started. On 21 September 1992, Uncle L received another letter, ostensibly reversing his earlier interdiction and requesting him to report to the Principal, Development Division, for assignment of duties.

“This is to advise you that it has been decided that your interdiction be lifted with immediate effect and that you report in your former Division. Accordingly, please arrange to report to the Principal, Development Division immediately for assignment of duties.”

On 8 July 1993, Mr. J. K. Waiguru, the Central Bank’s Secretary had some news.

“Following the lifting of your interdiction and posting back to your division, there has been further development in this matter. Would you please report to the Deputy Governor for further instructions.”

When Uncle L went to see the deputy governor, he was advised to go and see the head of the civil service, Prof. Philip Mbithi, who was stationed at Harambee House. Prof. Mbithi told Uncle L to go home and wait. Someone would be sent to him. Uncle L waited for over six months without pay. Then in February 1994, Prof. Mbithi sent someone to Uncle L’s Nairobi home to bring him over. On reaching Harambee House, Prof. Mbithi referred Uncle L to his personal assistant, Mr. S. Z. Ambuka. Mr. Ambuka showed Uncle L a letter dated 10 February 1993 – signed by Mr. Ambuka – addressed to Dr. Wilfred Koinange, the Permanent Secretary in the Ministry of Finance.

You will recall that early this week, I talked to you about the redeployment of the above-named officer who previously worked with the Central Bank and whom we were asked to assist in re-deploying to any of the other banking institutions.

You asked me to check with the Central Bank and confirm [Uncle L’s] status with them before you could take over the case. I had discussions with the bank secretary who confirmed that:

(a) When [Uncle L] had a discipline case with them, he was struck off their payroll.

(b) However, when it was later decided that [he] be forgiven and rehabilitated, he was reinstated in the payroll.

(c) Later on, a decision was made that [Uncle L] be referred to the Office of the President for re-allocation of duties elsewhere. When he was referred to the Office of the President (and subsequently to Treasury), he ceased being in the CBK payroll.

(d) The Bank Secretary advises that [Uncle L] could apply for early retirement from the bank. This early retirement, if approved, would be frozen as [Uncle L] would not be entitled to any retirement benefits until he attains the mandatory age of 50 years.

(e) [Uncle L] would then be available for you to assist him get a fresh placement in any other financial institutions.

[Uncle L] has accordingly been informed and is herewith sent to you for the necessary assistance.”

There it was. Having tried to kick Uncle L out of the Central Bank and failed, his case had now been referred to the country’s top civil servant at Harambee House to enact the final chess move. It was being fashioned as a case of an ill-disciplined employee, but no one at the Central Bank wanted to take administrative responsibility for Uncle L’s predicament. It was all so confusing until Jacinta Mwatela, a witness at the Goldenberg Commission, solved the puzzle.

Khaminwa: Were you forgiven and rehabilitated? 

Lukorito: I do not know that I was supposed to be forgiven because I had committed no offence.

Khaminwa: Something I don’t seem to understand. You were employed by the Central Bank, then how does the Head of the Public Service come into a corporate organisation like CBK?

Lukorito: I do not understand either.

Khaminwa: In Mrs. Mwatela’s statement in Exhibit 111, could you read what she says about you.

Lukorito: [Reads statement.] “I remember Mr. Pattni visiting me in my new office. He arrogantly and proudly reprimanded me for my alleged stupidity in questioning his affairs. He claimed that my stupidity would get me nowhere. I did not reply to him. He specifically referred to one Mr. Lukorito who had been sacked and informed me that no one played about with him and got away with it. I knew he had powerful connections and no purpose would be served in answering him.”

There it was, confirmed in black and white: Goldenberg. Uncle L’s mistake was that he had stood in the way of Kamlesh Pattni, who could leverage state power, including the Office of the Head of the Civil Service, to deal with him firmly.

Having tried to kick Uncle L out of the Central Bank and failed, his case had now been referred to the country’s top civil servant at Harambee House…It was being fashioned as a case of an ill-disciplined employee, but no one at the Central Bank wanted to take administrative responsibility for Uncle L’s predicament. It was all so confusing until Jacinta Mwatela, a witness at the Goldenberg Commission, solved the puzzle.

Unless one lived through it or studied Moi’s state in the 1980s and 1990s, one may be prone to ask: How could Pattni wield so much power within the state, including at the Office of the President, knowing that power was centralised around Moi? More importantly, one may then want to ask: How did Uncle L try to interfere with the Goldenberg pay-outs, and did he have powers to stop Kenya’s biggest economic crime to date? The answer lies in an exchange between Uncle L and lawyer Cecil Miller, appearing for the Deposit Protection Fund at the Goldenberg Commission.

Miller: Mr. Lukorito, did you question the duplication of CD3s in writing?

Lukorito: Yes. They should be with CBK.

Miller: Who did you write to?

Lukorito: The chief banking manager, the director of research, the deputy governor and the national debt office.

Miller: Did you get a response?

Lukorito: They did not come directly but they came in the form of whether we had agreed on the level of Treasury Bills that we were to advertise for the weekly tenders. If we all agreed on the amount, we would advertise. 

Miller: Am I right in saying that technically you were the final port of call in relation to CD3s and pre-shipment?

Lukorito: Yes my lords.

Miller: If you look at page 17 of your statement, you mention Exchange and Pan African banks. 

Lukorito: Yes my lords. 

Miller: You then proceed to say on page 18; “The funds would be withdrawn from CBK under a currency withdrawal scheme by the two banks and then the amount withdrawn by the beneficiaries at the bank.” Would you know who the beneficiaries were?

Lukorito: I would not know my lords. We would detect the money movement using the open market operations ledger. 

Miller: You raised a concern on page 39 – your memo – on the potential snowball effect on the banking sector. And you got a response which you say you were not satisfied with?

Lukorito: I was not my lords.

Miller: If you look at page 14 of your statement, you list the beneficiaries of the pre-export finance scheme. You left the bank in November 1994. 

Lukorito: I was arrested on August 19, 1992 and from that day I just used to report but I was not working within the bank.

Miller: So you would not know that three of these banks went into liquidation thereafter?

Lukorito: I wouldn’t know. 

Miller: And you would not know whether they had paid their pre-shipment funds by the time? 

Lukorito: I would not know. 

Dr. Wilfred Koinange seemed like a man of few words. ‘‘I have nothing to do with you,’’ he told Uncle L. With that, my uncle was forcibly retired from the Central Bank of Kenya aged 40, an age where he wasn’t entitled to a pension. This is how Kenya is known to treat its best.

‘‘That is all I wish to say in deciding to risk my life by becoming an actor instead of a privileged spectator in the fraudulent deals through CBK during my last years with them.’’ Uncle L told the Commission when wrapping up his testimony. ‘‘And while I can claim a background in central banking, I can only claim a very great interest in the fields of money, banking and finance which would have enabled me to contribute to the economic transformation taking place in our sub-region. It is my hope that someday I will have the opportunity to bring to consummation that interest.’’                                                            

*** 

Sometime in 2014, Uncle L pulled me aside during a family gathering, sat me under a tree and started reading to me a letter of solidarity sent to him during his travails at the hands of the Moi state by a mutual friend he shared with Muliro, who had since moved abroad. The letter was aged, worn thin by the elements and now turning brownish. As he read it, it was as if he was being transported into a different realm. Tears started rolling down his cheeks, but his voice didn’t falter. He was crying, but he wasn’t. I felt both sorry and proud of him, for his endurance, defiance and stoicism. It was an awkward yet special moment. As always, the conversation veered back to Goldenberg. He quickly dispatched his son to bring more documents. He wanted to show me the architects of the 1990-1994 Goldenberg fraud.

Unless one lived through it or studied Moi’s state in the 1980s and 1990s, one may be prone to ask: How could Pattni wield so much power within the state, including at the Office of the President, knowing that power was centralised around Moi?

According to Uncle L, much as it had siphoned billions of shillings, Goldenberg International was not the only guilty party; the Goldenberg Inquiry listed over 500 individuals and companies as recipients of portions of the loot. In the end, the Kenyan public was defrauded to the tune of 158 billion shillings (2.8 billion US dollars at the 1994 exchange rate), the scam transferring the equivalent of over 10% of Kenya’s GDP for the 5 years concerned into private hands. In the process, the Kenya shilling collapsed – dropping from 21 shillings in 1990 to 56 shillings in 1994 against the US dollar. Some of the names Uncle L mentioned, known to those who know within the banking system, left me dumbfounded. But then no one could talk. Those like him who dared speak were unceremoniously pushed to the gutter, their lives turned upside down.

The same fate befell Joseph Mumelo, the Central Bank’s Head of Foreign Exchange, who was married to my mother’s first cousin. As mentioned in the 8 February 2020 Saturday Nation article “Legitimate and dubious means Moi used to build empire”, Uncle Joe was asked not to interfere whenever money was siphoned through the Moi-affiliated Transnational Bank. In 1993, a terrified and non-cooperative Uncle Joe was arrested and detained before being kicked out of the bank.

When I joined Nairobi School in 1999, my family had already moved out of Nairobi, and so I spent my mid-term breaks either at Uncle Joe’s or Uncle L’s. They both had children my age. By then, Uncle L had long moved to his rural home. Uncle Joe retreated to his new home on the outskirts of Nairobi.

Whenever I visited, Uncle Joe and I stayed up until the wee hours of the morning playing Scrabble. He would open up to me about all sorts of things. Through him and Uncle L, I learnt the proper meaning of lying low. Just like Uncle L, Uncle Joe never drove any of his cars. He enlisted the services of a taxi driver who drove a Volkswagen beetle, and unless the guy showed up, Uncle Joe rarely left the house. On some nights, when he was brought home by his friends, Uncle Joe refused to get out of the vehicle until the song playing on the car stereo played to the end. His were little pleasures. Just like Uncle L, with his roaring voice, he cursed loudly at Moi and his men on the rare occasions he watched the news. Everyone knew to stay quiet.

According to Uncle L, much as it had siphoned billions of shillings, Goldenberg International was not the only guilty party; the Goldenberg Inquiry listed over 500 individuals and companies as recipients of portions of the loot. In the end, the Kenyan public was defrauded to the tune of 158 billion shillings (2.8 billion US dollars at the 1994 exchange rate)…

Seeing that Uncle Joe died before he could appear as a witness at the Goldenberg Commission, Uncle L decided to do family duty by adding Uncle Joe’s police statement at the time of his arrest as an annexure to his own, so that Uncle Joe could be heard posthumously. Below, the Commission’s Dr. Khaminwa questions Uncle L about Uncle Joe’s statement on the pay-outs.

Khaminwa: Would you look at your additional statement and read it. 

Lukorito: [Reads statement.]Further to my January 12, 2004 statement, I wish to state that sometime in July 1993, I learnt from the Central Bank of Kenya that one of my former seniors there, Mr. Joseph Mumelo had been arrested by police and was at Kileleshwa Police Station. I visited him and he told me that the previous governor Mr. Kotut had asked him to pass some cheques relating to some banks and when he later on put it in writing, the governor disowned him. I told him that I also had a similar problem with pre–export finance in relation to Goldenberg International. He told me he believed that it was the source of my problem with the bank. I later learnt that he was released and retired from bank service. I have been shown a statement recorded from the late Mumelo on July 23, 1993. The deceased shared the same views as those noted in my memo to Mr. Riungu on January 21, 1992. 

Khaminwa: You state that you had problems with Mr. Kotut regarding pre–export finance, could you remind us what the problem was? 

Lukorito: We got some applications from Goldenberg International but Mr. Riungu was absent. The papers were pushed to Mr. Kotut’s office but we never got any reply. We were not able to proceed because the papers were, to me, very suspect. They had the same CD3 serial numbers from different banks and the amounts were substantial. Mr. Mumelo appeared scared and told me that he was not staying at home because he had been threatened by powerful people. He was moving from hotel to hotel. He cautioned me and from July 1993, I never drove any of my vehicles.

Uncle Joe’s and Uncle L’s well-being – careers, livelihoods, health, family life and their wives’ and children’s welfares and futures – all became collateral damage because they raised queries which had the capacity to unravel Goldenberg. These are the hauntingly traumatic memories some families have of Moi and his government. Sadly, the Goldenberg culprits remain unpunished to date.

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