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Tales of State Capture: Goldenberg, Anglo Leasing, and Eurobond

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WACHIRA MAINA examines three major corruption scandals during the Moi, Kibaki and Kenyatta eras that demonstrate how state capture facilitates the massive looting of public funds, and allows the culprits to get away scot-free.

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Tales of State Capture: Goldenberg, Anglo Leasing, and Eurobond
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Corruption and politics, never the twain shall part

Politics and corruption have always been intimates in Kenya since independence. Little wonder that the first commission of inquiry appointed after independence, the 1965 Chanan Singh Maize Commission of Inquiry, was triggered by a corruption scandal involving Paul Ngei, the then Minister for Marketing and Cooperatives.

Mr Ngei had permitted his wife Emma Ngei, through her company Uhuru Millers of Kangundo (commonly referred to at the time as Emma Stores) to directly buy maize from farmers, bypassing the Maize Marketing Board, which he chaired. This was despite the fact that the law did not allow Kenyans to buy maize straight from farmers (which was cheaper than buying from the government). Worse still, Ms Ngei was permitted to buy 2,000 bags of maize, but she refused to pay for them; she wrote “return to sender” on payment demands. In addition, she refused to remit the difference between the farmers’ price and the government price to the Board, which was also against the law.

Widespread speculation in maize by well-connected individuals, coupled with the government’s failure to import more maize in time, eventually led to a national shortage. The Chanan Singh commission of inquiry was appointed by President Jomo Kenyatta to investigate the cause of the maize shortage. Because of his relationship with Uhuru Millers, Mr Ngei was briefly suspended from the cabinet but was later reinstated.

Maize, then, before and since has had a long career in both politics and corruption. That first scandal set the tone for future graft: the politically connected rigging the system to benefit themselves, their relatives and their cronies and when unmasked, resorting to inconclusive methods of investigation, such as commissions of inquiry, task forces or inept prosecutions. The difference between that early corruption and the corruption described here as state capture is that most of it involved abuse of discretion and conformed closely to Robert Klitgaard’s definition: Corruption = Monopoly + Discretion – Accountability

The first corruption scandal encompassing major characteristics of state capture was the Turkwel Gorge hydroelectric power project between 1986 and 1991. Many aspects of the process of contracting for this project entailed rigging and repurposing legal processes for the benefit of President Daniel arap Moi and his cronies. According to an internal European Commission Memorandum of March 1986 written by Achim Kratz, the then Commission’s delegate to Kenya, the contract price for the project was more than double the amount Kenya’s government would have paid under a competitive international tender. The memo stated that the government knew that the price of the French contractor Spie Batignolles was extortionate, but hired them nevertheless, “because of high personal advantages”. Those “personal advantages” were millions of dollars paid to President Daniel Arap Moi and to the then Minister of Energy, Nicholas Biwott. Moreover, companies associated with people close to Moi and Moi’s family were sub-contracted to execute many elements of the Spie Batignolles contract.

The first corruption scandal encompassing major characteristics of state capture was the Turkwel Gorge hydroelectric power project between 1986 and 1991. Many aspects of the process of contracting for this project entailed rigging and repurposing legal processes for the benefit of President Daniel arap Moi and his cronies.

The effect of the combination of personal interest and inattention to geological and hydrological factors was that when the project was finally commissioned by President Moi in October 1993, the reservoir was under 25 per cent full and the project had already consumed three times the estimated cost. The knock-on effect was probably even greater: the Turkwel corruption provoked donors to cut funding to the energy sector, which would eventually generate the crippling power outages of the mid-1990s to the early 2000s.

Some of the lessons learnt from the Turkwel Gorge saga on repurposing state institutions and lawful processes to extract regime and personal gain would be applied with a vengeance to the first unambiguous case of state capture: the Goldenberg scandal.

Goldenberg: Designing the methods of state capture

In 1991 and 1992 Kenya underwent a foreign exchange crunch. The proximate cause for this was mounting pro-democracy pressure by the opposition and civil society groups, to which the government responded with violent crackdowns. Political repression and donor concern about corruption, combined with poor export performance of the leading foreign exchange earners of coffee, tea and tourism, led to a significant drop in hard currency reserves.

The government responded to this with an export promotion scheme in which exporters who deposited their hard currency earnings would not only receive the Kenya shilling equivalent of their deposits, but also an additional 20 percent “export incentive”. Goldenberg International, a company jointly owned by Kamlesh Pattni and the then director of the special branch (Kenya’s secret service), James Kanyotu, concocted a scheme to export gold and diamonds to three companies in Dubai and Switzerland on an understanding that they would be paid 35 per cent “export compensation”. The problem with this arrangement was that gold and diamonds were not covered in the Export Compensation Act and the “incentive” paid to the company was 15 per cent above the lawful limit.

The real scandal, though, was that Kenya had no diamonds and its gold mining was insignificant. In the beginning, Goldenberg International exports turned out to be entirely made up of gold smuggled from the Democratic Republic of the Congo (formerly Zaire). Later, the company stopped smuggling gold altogether and merely completed export declaration forms, produced fake hard currency deposit slips and got paid, not only the coupon amount on the fake deposit slips, but also the 35 per cent export compensation.

The total cost of the scandal is unknown, but some estimates indicate that up to 10 per cent of Kenya’s GDP was lost. The 2006 Bosire Commission of Inquiry into the scandal concluded that up to Sh158.3 billion of Goldenberg money was transacted with 487 companies and individuals. This is probably a gross underestimate, as in fact Goldenberg was a series of inter-connected financial scandals rather than the phantom exports of gold and diamonds that most investigations have focused on since 1992. (The scandal was first revealed in the Controller and Auditor General’s reports for 1991 and 1992.) According to various affidavits sworn by the main suspect in Goldenberg and associated scandals, the beneficiaries of these dealings included the President, the Vice President and his business associates.

Notwithstanding revelations in the Controller’s and Auditor General’s reports, together with whistleblower accounts covered in the media, the government initially stonewalled. This prompted the Law Society of Kenya (LSK) to seek the permission of the High Court to file a private prosecution to remedy the inaction of the Attorney General (AG).

The AG, Amos Wako, suddenly bestirred himself, asking to join the LSK case as a friend of the court. He promptly opposed the LSK’s application, arguing that he had been delayed by investigation reports, and requested the LSK to hand him such evidence as they had so that he may act. Backed by an affidavit by Japhet Masya, the Clerk to the National Assembly, the AG also argued that the High Court had no jurisdiction on Goldenberg given that the issue was before a committee of Parliament.

The total cost of the scandal is unknown, but some estimates indicate that up to 10 per cent of Kenya’s GDP was lost. The 2006 Bosire Commission of Inquiry into the scandal concluded that up to Sh158.3 billion of Goldenberg money was transacted with 487 companies and individuals.

Mr Wako’s pleas were both inexplicable and disingenuous: Parliament has no criminal jurisdiction and any policy issue on Goldenberg pending before one of its committees can have no effect on an indictment for corruption. The AG sounded more like a defence attorney than the head of public prosecutions and guardian of public interest that he was.

Dr Willy Mutunga, then the chair of the LSK, feared that Mr Wako’s ruse was proof that the government was “determined to complete the Goldenberg cover-up”. Mr Wako, he predicted, would continue to act like “counsel for all the accused persons” and would engineer “protracted delays”, “mention after mention, adjournment followed by adjournment”, ending in a “dramatic withdrawal of the cases”.

So it proved. The magistrate, Uniter Kidullah, appointed the Director of Public Prosecutions (DPP) after her decision in this case, rendered a rude and intemperate judgment, combining otiose proceduralism with personalised insults against the LSK: Mr Mutunga’s pleadings were inadmissible because he, rather than the secretary, had signed them; the LSK had no legal standing to file a private prosecution since it could not show how its interests had been harmed by the Goldenberg scandal and, so far as she could see, the LSK had acted outside its statutory mandate. Finally, she concluded that the only knowledge LSK seemed to have was that of “stealing from . . . clients”.

There the Goldenberg scandal would have died but for the government’s continuing hard currency crisis. The International Monetary Fund (IMF) and the World Bank warned Kenya that no new programme would be agreed with the country until the government took credible action on corruption in general and on Goldenberg in particular. It was this threat that spurred Attorney General Amos Wako to indict Pattni and his co-accused in 1997, five years after the scandal first broke.

But the charge was not meant to result in effective prosecution. Against the advice of his DPP, Bernard Chunga, the AG framed more than 90 counts in one charge in the face of clear precedent that so many counts would invalidate the charges. Knowing this, in July 1997, Kamlesh Pattni challenged the charges as illegal and was granted an order of prohibition by the High Court, stopping the trial. Donors, aghast at this turn of events, refused to lift the conditions they had imposed on aid to Kenya until Goldenberg was properly prosecuted.

A chastened AG filed new charges in August 1997, calculated to be good optics for an IMF mission that was expected in Nairobi in early 1998. In the meantime, Mr Pattni had concocted a new fraud to defeat any fresh charges that the AG might bring against him. Using forged papers, fake sale agreements backdated to 1992 with the connivance of the Registrar of Companies (in the Attorney General’s Chambers) Mr Pattni purported to be the owner of World Duty Free (WDF), the Isle of Man company to which he claimed to have sold the gold and diamonds. He then obtained court orders allowing him to take over management of WDF shops in Kenya.

The point of this devious scheme was that in a future prosecution Pattni could argue that as the owner of WDF he couldn’t be forced to testify against himself. Armed with this new civil suit, he challenged the fresh indictments, claiming these charges should be stopped as they were prejudicial to the WDF civil case. The court agreed with this risible claim, even though legal principle works the other way: where a criminal case raises the same issues as a civil case, the criminal case is heard first. There are two reasons for this: one, the public interest should be vindicated before the private interest and, two, given that the standard of proof in criminal cases – beyond reasonable doubt – is much higher than the standard in civil cases – on the balance of probabilities – it is more efficient to hear the criminal case first, since facts proved need not be proved again in the related civil case. This botched 1998 prosecution was the last action that the Moi government took to resolve the Goldenberg scandal.

In 2003, Mwai Kibaki succeeded Daniel arap Moi. He quickly set up a commission of inquiry into the Goldenberg scandal, ironically at just about the same time that his own cronies were busy siphoning monies out of Kenya under the Anglo Leasing scandal. The commission was chaired by Justice Samuel Bosire, who would later be declared as unfit to be a judge during the vetting of magistrates and judges mandated by the 2010 Constitution.

The point of this devious scheme was that in a future prosecution Pattni could argue that as the owner of WDF he couldn’t be forced to testify against himself. Armed with this new civil suit, he challenged the fresh indictments, claiming these charges should be stopped as they were prejudicial to the WDF civil case.

The Bosire Inquiry established what everyone always knew but could not prove, because the AG, Amos Wako, had developed feet of clay. Goldenberg, the commission concluded, involved the highest levels of President Moi’s government and Moi had personally authorised two Goldenberg-related payments. After the inquiry, the government imposed travel bans on people named by the commission as connected to Goldenberg. Bosire also recommended that retired President Moi’s role in Goldenberg be investigated. Nothing came of either the travel ban or the Moi investigation. In August 2006, the credibility of the report was seriously dented when Professor George Saitoti (formerly Vice President to Moi), who the commission had found culpable enough to warrant an indictment, got a court order expunging his name from that list of shame.

In the end, no one was ever convicted for any of the Goldenberg crimes. In 2006, six months after the release of the Goldenberg Report, David Munyakei – the man who first blew the whistle on the scandal only to be hounded into destitution for his efforts – died, a lonely and forgotten victim of the forces of state capture.

The Anglo Leasing Scandal

The Goldenberg script would be reprised in the second state capture case, the biggest scandal of the Kibaki era – the 2003 Anglo Leasing scandal. Anglo Leasing was a series of security-related scandals involving 18 state security contracts, collectively worth about $770 million (Sh55 billion), in which the government entered finance lease and suppliers’ credit agreements to pay for forensic facilities, security equipment and support services for Kenya Prisons, the Police Airwing, the police force, the Directorate of Criminal Investigations, the Administration Police, the National Security Intelligence Service (NSIS), and the National Counter-Terrorism Centre. Thirteen of the eighteen contracts were made under President Daniel arap Moi, the other five after 2002 under President Mwai Kibaki. The true identities and whereabouts of the companies remained unclear. Though the immediate investigation that blew open the scandal involved the Anglo Leasing and Finance Company, in truth the scandal involved many more companies owned by the same set of individuals: Deepak Kamani; Anura Perera; Amin Juma; Merlyn Kettering and Ludmilla Katuschenko.

Within these 18 generally irregular contracts, individual contracts were even more blatantly so: the contract for tamper-proof passports granted to Anglo Leasing and Finance Company was described by the Public Accounts Committee (PAC) – ironically chaired by Uhuru Kenyatta – as “an organised, systematic and fraudulent scheme designed to fleece the government through the so-called special purpose finance vehicles for purported security contracts”. How exactly Anglo Leasing became involved in these security contracts is unclear from the records, but the pattern itself is clear.

In 2000, the Department of Immigration did a “computer needs assessment” that concluded that to eliminate fraud, forgery, inefficiencies and revenue loss it would need to procure a passport -issuing system. This was to be done by restricted tender. The Ministerial Tender Committee invited five international firms to submit bids: two British firms, De La Rue Identity Systems and AIT International PLC; South Africa’s Face Technologies; Setec OY of Finland and Johannes Enschede of the Netherlands. Three firms responded. The decision was that AIT International PLC met both the commercial and technical specifications for the award.

However, the ministry’s budget for the 2000/2001 financial year did not cover the Sh622,039,944 contractual sum that AIT International PLC gave as the cost of the system. The procurement was deferred to 2002/2003. Six international firms were now invited to bid, the initial five and GET Group of the USA. Once again, three responded: De La Rue Identity Systems; South Africa’s Face Technologies and GET Group. The previously successful group, AIT International PLC, did not submit a bid.

A technical committee of the Government Information Technology Services concluded that none of the bids were responsive and subsequently recommended that they not only be disqualified but also that, “the system be redesigned and expanded to cover other aspects of the work of the Immigration Department, such as border controls and immigration monitoring”. It was now agreed that the expanded system would have five components: 1) high security new generation passports; 2) a secure passport issuing system; 3) high security new generation visas; 4) a high security visa-issuing system; and 5) computerisation of machine-readable immigration records. One consequence of expanding the system was a spiking of costs, which would require the Treasury to seek donor funds.

That is how matters stood when on 1 August 2003, a firm named Anglo Leasing and Finance Ltd of Alpha House, 100 Upper Parliament Street, Liverpool L19 AA, UK, sent an unsolicited technical proposal to the permanent secretary (PS) in the Vice President’s Office to supply and install an “Immigration Security and Document Control System, (ISDCS)”. The installation would be done by a sub-contractor of Anglo Leasing, François-Charles Oberthur Fiduciaire SA of Paris, France. To ease the funding problem, Anglo Leasing would offer a facility of €31,890,000 (Sh2.67 billion) to be repaid at an interest of 5% (later 4%) over a 62-month period.

On review, the PAC thought this highly irregular: a financing firm had prepared a detailed proposal for a project very similar to the one recommended by the Government Information Technology Services without a request from the government and, most curiously, in a manner that strongly suggested that the firm “had fore-knowledge of the recommendation to enhance and expand the system”.

Nonetheless, a month later, on 5 September 2003, the Vice President’s Office asked the Treasury to contract Anglo Leasing. That permission came through on 25 November 2003. Also on 5 September, the Vice President’s Office sought legal clearance from the AG’s Chambers, and in a letter dated 18 September 2003, the AG advised the ministry to do due diligence. For example, how many projects of this magnitude had Anglo Leasing successfully undertaken? What was the firm’s credit rating? The PAC did not see any evidence that tests had been undertaken or that the ministry had assessed the “authenticity, capacity, experience and track record of François-Charles Oberthur Fiduciaire”.

On review, the PAC thought this highly irregular: a financing firm had prepared a detailed proposal for a project very similar to the one recommended by the Government Information Technology Services without a request from the government and, most curiously, in a manner that strongly suggested that the firm “had fore-knowledge of the recommendation to enhance and expand the system”.

Even with all these things still outstanding, the government signed the Suppliers Services and Financing Credit Agreement for the ISDCS on 4 December 2003, and two months later, on 4 February 2004, a sum of Sh91,678,169.25 (described variously as “arrangement”, “commitment” and “administration” fees) was paid out to Anglo Leasing.

According to John Githongo’s dossier to the President, all the Anglo Leasing-type shell companies were probably established by one Pritpal Singh Thethy, an accountant and engineer who was associated with Anura Perera. These companies routinely won large contracts to supply goods and services at inflated prices to the security services and were notorious for paying generous kickbacks.

The unravelling of Anglo Leasing began when Maoka Maore, the MP for Ntonyiri, tabled documents in Parliament in April 2004, showing that Anglo Leasing and Finance Company Limited had been paid a Sh91 million commitment fee, amounting to 3 per cent of a Sh2.7 billion contract to produce the tamper-proof passports. The Department of Governance and Ethics, headed by John Githongo, tried to get to the bottom of the affair.

In that same month, whilst on a visit to the United Kingdom he asked Kroll Associates to do some due diligence on Anglo Leasing and discovered that no such company existed. Githongo had begun to suspect that very senior officials in the Kibaki administration were involved. Early suspects included Vice President Moody Awori, Minister for Justice and Constitutional Affairs Kiraitu Murungi, Minister for Finance David Mwiraria, Minister for Internal Security Chris Murungaru, Home Affairs Permanent Secretary Sylvester Mwaliko, Finance Permanent Secretary Joseph Magari, Internal Security Permanent Secretary David Mwangi, Alfred Getonga, Deepak Kamani and Jimmy Wanjigi.

From an early stage in a series of private meetings, the Vice President, as well as the ministers for justice and finance, assiduously tried to stop the investigation, partly based on the theory that “the Vice President had already given a parliamentary statement”. The scale of Anglo Leasing and the depth of its penetration into the inner sanctum of power would become much clearer over the next few months. It turned out that even as investigations kicked off, additional payments and commitment fees were being processed.

When these stories hit the media, the then Secretary to the Cabinet, Francis Muthaura, said that Anglo Leasing had contacted him and promised to repay the monies they had already received. Shortly thereafter, on 14 May 2004, Anglo Leasing and Finance Ltd wired back €956,700 from Schroder & Co Bank AG in Zurich.

Investigations would reveal even more dirt. By early June, inquiries had established that Anglo Leasing had been paid $5 million for a forensic laboratories contract for which they had done no work. The brains behind the revival of this Moi-era contract were Deepak Kamani, Jimmy Wanjigi, Chris Murungaru, Dave Mwangi, Alfred Getonga, and C. Oyula, the Financial Secretary. It was clear that there were many more Anglo Leasing type contracts, and eventually 16 of them would become public.

From an early stage in a series of private meetings, the Vice President, as well as the ministers for justice and finance, assiduously tried to stop the investigation, partly based on the theory that “the Vice President had already given a parliamentary statement”. The scale of Anglo Leasing and the depth of its penetration into the inner sanctum of power would become much clearer over the next few months.

The case of two of these Anglo Leasing-type companies – Sound Day Corporation and Apex Finance Corporation – closely followed the conspiratorial modus operandi of the contracts for the tamper-proof passports. The two companies, which were managed by Brian Mills, a US national, had signed four contracts, cumulatively worth more than $145 million. According to newspaper accounts, the three Kamanis – Chamanlal Kamani, Deepak Kamani and Rashmi Kamani – became directors of Sound Day in April 1990. Sound Day, like other Anglo Leasing companies, was to provide credit, as well as supply the equipment to be financed through that credit. However, the contract terms were that the equipment would not be supplied until the government paid the first instalment. Sound Day provided no credit, but charged 3 per cent interest on this “financing” whilst, in fact, the financing was the money that had been advanced by the Kenyan government in the first place. This Byzantine arrangement was later described in court as a “classic case of reverse financing”.

As Anglo Leasing unravelled, the attempts to stop investigations became both frantic and menacing. The Minister for Finance, David Mwiraria, indicated that he would not lay before Parliament a damning special audit report compiled by the Controller and Auditor-General until the Treasury had made some “major changes”. The Minister for Justice, Kiraitu Murungi, weighed in with the caution that Mr Githongo should be careful not to “knock out key political people” like Alfie (Alfred Gitonga) and Murungaru given that both were “key players at the very heart of government”. He would later add that, “if Chris [Murungaru] is dropped and Alfie [Gitonga] is dropped we are in trouble, the enemy will have won”. According to him, people were concerned that John Githongo “did not appreciate the political costs of his work”.

A different politician was later to emphasise these warnings, saying that if Githongo’s investigations threatened the “stability of the regime” then the President would stop backing him. Both Mwiraria and Kiraitu said that they hoped that the investigations would stop as soon as Anglo Leasing repaid the money. Over time, the cover-up efforts would turn bizarre: Francis Muthaura even questioned the legal authority of the Kenya Anti-Corruption Commission (KACC) to conduct the investigation and implied that the Anti-Corruption and Economic Crimes Act was not reasonable legislation, ostensibly because of the broad powers it gave to the KACC.

What the pressure on Githongo and the repayment of the money on the publicly known contracts revealed was a clever ploy to head off investigators from the other numerous yet to be known contracts by issuing a mea culpa on what was then publicly known.

One issue surrounding the scandal is what President Kibaki knew and when he knew it. For instance, on the forensic labs contract, the Secretary to the Cabinet had indicated to Githongo that he had briefed the President on this contract, but when Githongo met the President on 29 May 2004 Kibaki said that no one had briefed him and asked to be furnished with a copy of the contract. Two days later, Muthaura would insist that the President had been fully briefed and that it had been agreed that all payments were to be stopped and that the authorities must establish who Anglo Leasing were.

Later still, Mwiraria would claim that the President had requested that they “go easy” on Anglo Leasing given that the money had now been returned. Mwiraria and Kiraitu would argue that if the public were to know that there were other corrupt deals of this magnitude, “our government would fall”. Had the President in fact said this or were Mwiraria and Kiraitu using the authority of the Presidency to smother inquiries? Had the President lied when he told Githongo that he had not been briefed?

From the determined opposition to his inquiries, the lukewarm support he received from the President and the threatening messages that he received throughout this early phase of the investigation, Githongo feared for his life and went into self-imposed exile in the United Kingdom in 2005. His conclusion was that the Anglo Leasing scandal went all the way to the top and that its baseline was a scheme to finance the 2007 election.

One issue surrounding the scandal is what President Kibaki knew and when he knew it. For instance, on the forensic labs contract, the Secretary to the Cabinet had indicated to Githongo that he had briefed the President on this contract, but when Githongo met the President on 29 May 2004 Kibaki said that no one had briefed him and asked to be furnished with a copy of the contract.

In November 2005, President Mwai Kibaki finally acted. He dropped Chris Murungaru from the Cabinet. On 1 February, he dropped David Mwiraria and a fortnight later he had “accepted” Kiraitu Murungi’s resignation. Although 80 MPs demanded that the President fire his Vice President, Moody Awori, the President demurred. As with Goldenberg, the government imposed the usual travel bans on the principals and announced that it would also freeze their assets. Whether this happened or not is unclear; there is no official indication that it did.

In 2007, the UK’s Serious Fraud Office tried to get to the bottom of a $30 million transfer made by Apex Finance, one of the Anglo Leasing companies, between April 2002 and February 2004 through the Channel Island tax havens of Jersey and Guernsey. But by 2009 this effort had petered out, partly due to obstruction by Kenya. That same year, authorities in Switzerland launched investigations into Swiss companies named in the scam and froze their bank accounts. It, too, came to naught. By the time President Kibaki had served out his two terms in 2013, no action had been taken on Anglo Leasing.

The next time Anglo Leasing would be in the news was in early 2014, ahead of the country’s debut launch of a $2 billion sovereign bond, half of which would disappear into thin air in the biggest scandal of the Uhuru Kenyatta presidency. The facts were as follows. Kenya had lost a lawsuit in Geneva filed by two Anglo Leasing companies linked to Anura Perera – First Mercantile Securities Corporation and Universal Satspace. (Perera was one of the suspects named in the 2006 special audit of Anglo Leasing.) It then turned out that the country had to pay Sh1.4 billion to improve its credibility with international markets by clearing its (ostensible) debts in preparation for the launch of its debut in the foreign sovereign bond market, the Eurobond.

This was odd for two reasons. First, there was also a contrary judgment from the High Court in Kenya. Justice Mathew Anyara Emukule had ruled in 2012 that the two companies were non-existent entities that could not sue. Second, the government had claimed that the contract was vitiated by bribery and there was a PricewaterhouseCoopers (PWC) audit showing that the goods were over-priced and some had never been delivered, even though payments had been made. The Geneva court rejected these PWC findings.

As a matter of Kenyan law, the government had paid this large sum to non-existent parties. According to Treasury Cabinet Secretary Henry Rotich, it was necessary to pay out this amount lest the country suffer huge interest penalties. The Deputy Solicitor General, Muthoni Kimani, buttressed the Treasury’s argument with the claim that the Anura Perera litigation in Switzerland had adversely affected the issuing of the sovereign bond. Hot on the heels of this payment, National Treasury Permanent Secretary Kamau Thugge told the Public Accounts Committee that Mr Perera was now demanding an additional Sh3.05 billion for services given to the National Security Intelligence Service, now known as the NIS. (According to Thugge, Perera’s new demand related to another project, Flagstaff National Counter Terrorism Centre,that the government had contracted in 2004 at a cost of $41,800,000.)

A payment of $16.4 million to Deepak Kamani in 2014, also purportedly to facilitate the launch of the Eurobond, seems to have triggered the government’s interest in prosecuting the Anglo Leasing principals. In March 2015, 11 years after the scandal broke, 13 people connected to Anglo Leasing, including businessman Deepak Kamani and former minister Chris Obure, now a senator, were indicted.

The prosecution might be explained by President Kenyatta’s fury at the $16.4 million (Sh1.6 billion) Kamani payment and the extra Sh3.05 billion being demanded by Perera. In addition, some pressure seems to have come from Switzerland. Jacques Pitteloud, the Swiss ambassador to Kenya, told the Financial Times that Switzerland was tired of suffering reputational loss as a safe haven for stolen money. But the real political reason could well be that prosecuting Anglo Leasing deflected attention from scandals involving the friends and relatives of Mr Kenyatta. None of the targets of the Anglo Leasing indictments were connected to the Kenyattas.

As with Goldenberg, none of the arrests and indictments have so far led to convictions. This script of never holding to account those involved in state capture scandals would be replayed by Uhuru Kenyatta, as President, when he was himself caught up in the Eurobond scandal.

The Eurobond Scandal

Less than a year after the election of President Uhuru Kenyatta in March 2013, Kenya went to the international money markets to issue Kenya’s first sovereign bond worth $2.75 billion. This was done in two tranches. The first issue raised $2 billion (Sh176 billion at the time) and the second $815 million (Sh74 billion) for a total of $2.8 billion (Sh250 billion). The government said that the money would be used to reduce official borrowing from the domestic market, which would spur private investment by lowering interest rates.

According to an analysis by economist David Ndii, the government executed two transactions from the offshore account into which the $2 billion had been credited. It paid off a pending loan of $604 million (Sh53 billion) and then transferred $394 million (Sh35 billion) to the exchequer, leaving $1.002 billion (Sh88 billion) in that account. The government has never accounted for this money.

When inconsistencies were pointed out, the government responded with both lies and insults. The lies were that up to Sh120 billion had been used partly to pay pending bills to road contractors and for budget support. But as Ndii points out, the recurrent budget for the 2014/2015 financial year was funded by domestic revenues: the government raised Sh1.106 trillion in revenues, of which Sh229 billion was transferred to the counties. That left Sh877 billion for national government functions. The national government’s recurrent budget for that year was Sh897 billion, a mere Sh20 billion more than the revenue, reflecting no inflow of the Sh120 billion as claimed. According to this logic, the national government required only Sh20 billion more than what it had earned through revenue, so there was no way it could have used the Sh88 billion from the bond.

In its first public statement on the matter, the Treasury promised to give information on the projects that the Eurobond money had funded. It subsequently gave ministries three weeks to furnish the relevant information. Five weeks later, in an interview with Business Daily, the Cabinet Secretary for Finance lamented that “the ministries cannot differentiate whether the money they have received from the Exchequer came from VAT, income taxes, customs duties, excise taxes, domestic borrowing or the Eurobond”. This is true but irrelevant to the issue. Treasury should have been able to provide the answer. As Ndii points out, the government has a monitoring and evaluation responsibility. “For the Treasury to disburse a huge external loan, the biggest ever, without expenditure tracking seems downright irresponsible,” he commented.

In the following months, the government would “torture” the figures to show that the missing Eurobond money had indeed financed development projects. This was done by “wildly” (Ndii’s word) inflating the cost of nine projects in the energy sector that showed overruns of nearly Sh67 billion. Rural electrification of primary schools was said to have cost Sh34 billion rather than the Sh9.9 billion that had been budgeted. An unbudgeted item for the financial year, military modernisation, gobbled up another Sh62.8 billion. The point of cooking the figures, Ndii surmised, was to create a plausible storyline to explain the missing Eurobond money. “How high up does this fraud go?” he asked.

The government couldn’t – or rather wouldn’t – answer this question directly but its conduct in the coming years had the guilty air of an adulterer caught in flagrante delicto. As David Ndii explained, the government’s real problem was that it could not account for the Eurobond money that it had not spent and still manage to balance its accounts. In the 2014/15 financial year, it partially pulled off this miracle by reducing domestic borrowing for the year from Sh251 billion to Sh110 billion. The Sh140 billion reduction covered the exact amount of Eurobond money that it claimed to have carried forward from 2013/14. Unfortunately, this voodoo accounting was undone by the Central Bank accounts on domestic borrowing and was flatly contradicted by the interest that the government reported having paid on domestic borrowing for the year.

In the following months, the government would “torture” the figures to show that the missing Eurobond money had indeed financed development projects. This was done by “wildly” (Ndii’s word) inflating the cost of nine projects in the energy sector that showed overruns of nearly Sh67 billion.

In 2016 the Auditor General, Edward Ouko, tried to get to the bottom of the affair by conducting a forensic audit of Eurobond transfers from the Federal Reserve Bank of New York. As part of his preparations, he told Parliament that he had already made appointments with top US and UK financial institutions involved in the transactions. Mr Ouko promised to send forensic auditors to scrutinise transaction data at JP Morgan, the Federal Reserve Bank, City Transaction Services New York, JP Securities, Barclays Bank, ICB Standard Bank, Qatar National Bank and other banks that had handled the $2 billion Eurobond transactions.

Mr Kenyatta promptly blocked the investigation, arguing, implausibly, that by saying that “the Eurobond money was stolen and stashed in the Federal Reserve Bank of New York”, Mr Ouko was implying that the Kenyan government and the United States had colluded. “Who is stupid here?” the President scornfully asked.

In the next few years, the government became cockier and more belligerent. With the Auditor General not allowed to follow the international money trail, he was reduced to informing Parliament at the end of each audit year that “investigations into the receipts, accounting and use of funds related to the Sovereign/Eurobond are still ongoing and the accuracy of the net proceeds of Kshs 215,469,626,035.75 is yet to be ascertained”.

As Ndii’s analysis pointed out, unravelling this mystery should not have been as complicated as the Auditor General’s laconic conclusion might suggest and the Treasury’s effort to explain the mystery only compounded it, even with the IMF weighing in to support the official explanation. But as the Mozambique Eurobond story shows, the IMF has been criminally negligent in these matters.

In this case, the IMF’s attempt to aid the government was unavailing. The Fund showed that Eurobond money was received and spent in the 2013/14 financial year. But given that the Eurobond money was received in the last week of that financial year, it would not have been possible for it to be spent in that year. There was no drawdown until the first week of July, which was the start of the 2014/15 financial year. The difference between the Fund’s fiddling and the Treasury’s fiddling was that the IMF reported a domestic borrowing figure of Sh251 billion for 2014/15 domestic borrowing, whilst the Treasury showed one of Sh110 billion. As Ndii noted, “The IMF cooks the books one way, and the Treasury, the other”.

Mr Kenyatta promptly blocked the investigation, arguing, implausibly, that by saying that “the Eurobond money was stolen and stashed in the Federal Reserve Bank of New York”, Mr Ouko was implying that the Kenyan government and the United States had colluded. “Who is stupid here?” the President scornfully asked.

But the Treasury’s lies were also compounded by the mandarins’ poor memory. By 2015/2016, they seemed to have forgotten the 2014/2015 numbers. Now the Treasury reported Sh251 billion as the correct domestic borrowing figure. With Sh251 billion confirmed as the correct amount, the only way to account for the Eurobond Sh140 billion was to show the projects in which it was invested. That no such projects have been named implies that at least $1 billion of the Eurobond money has disappeared into thin air. The conclusion that it has most likely been stolen by some very senior untouchables is compelling.

With investigations never having been started, the Auditor General, beaten down by the President, and the marked lack of enthusiasm from the United States (particularly the New York Federal Reserve), it is unlikely that we will know who stole nearly $1billion of taxpayers’ money.

This is Part 3 of an abridged version of State Capture: Inside Kenya’s Inability to Fight Corruption, a report published by the Africa Centre for Open Governance (AfriCOG) in May 2019.

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Wachira Maina is a constitutional lawyer based in Nairobi, Kenya.

Politics

Who Won Kenya’s “Nominations”?

Being nominated rather than selected by party members may undermine grass-roots legitimacy but it is hard not to suspect that some of the losers in the nominations process might feel a little bit relieved at this out-turn.

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Who won Kenya’s “nominations”, the tense and often unpredictable political process through which parties select which candidates they want to represent them in the general election scheduled for 9 August? That may sound like a silly question. Social media is full of photographs of smiling candidate clutching their certificates of nomination—surely we need to look no further for the winners?

But maybe we do. Beyond the individual candidates in the contests for nominations, there are other winners. One may be obvious: it seems the general feeling is that Deputy President William Ruto came out better from the nominations than did his principal rival in the presidential race, former opposition leader Raila Odinga—about which more below. However, for some, coming out on top in the nominations may prove a poisoned chalice. Where nominations are seen to have been illegitimate, candidates are likely to find that losing rivals who stand as independents may be locally popular and may gain sympathy votes, making it harder for party candidates to win the general election. This means that there are often some less obvious winners and losers.

One reason for this is that nominations shape how voters think about the parties and who they want to give their vote to, come the general election. Research that we conducted in 2017, including a nationally representative survey of public opinion on these issues, found that citizens who felt that their party’s nomination process had not been legitimate were less likely to say that they would vote in the general election. In other words, disputed and controversial nomination processes can encourage voters to stay away from the general election, making it harder for leaders to get their vote out. In 2017, this appeared to disadvantage Odinga and his Orange Democratic Movement (ODM), whose nomination process was generally seen to have been more problematic—although whether this is because they were, or rather because this is how they were depicted by the media, is hard to say.

In the context of a tight election in 2022, popular perceptions of how the nominations were managed may therefore be as significant for who “wins” and “loses” as the question of which individuals secured the party ticket.

Why do parties dread nominations?

The major parties dreaded the nominations process—dreaded it so much, in fact, that despite all their bold words early on about democracy and the popular choice (and despite investments in digital technology and polling staff), most of the parties tried pretty hard to avoid primary elections as a way of deciding on their candidates. In some cases that avoidance was complete: the Jubilee party gave direct nominations to all those who will stand in its name. Other parties held some primaries—Ruto’s United Democratic Alliance (UDA) seems to have managed most—but in many cases they turned to other methods.

That is because of a complicated thing about parties and elections in Kenya. It is widely assumed—and a recent opinion poll commissioned by South Consulting confirms this—that when it comes to 9 August most voters will decide how to cast their ballot on the basis of individual candidates and not which party they are standing for. Political parties in Kenya are often ephemeral, and people readily move from one to another. But that does not mean that political parties are irrelevant. They are symbolic markers with emotive associations – sometimes to particular ideas, sometimes to a particular regional base. ODM, for example, has been linked both with a commitment to constitutional reform and with the Luo community, most notably in Nyanza. So the local politician who wants to be a member of a county assembly will be relying mostly on their personal influence and popularity—but they know that if they get a nomination for a party which has that kind of emotive association, it will smoothen their path.

Disputed and controversial nomination processes can encourage voters to stay away from the general election, making it harder for leaders to get their vote out.

This means that multiple candidates vie for each possible nomination slot. In the past, that competition has always been expensive, as rival aspirants wooed voters with gifts. It occasionally turned violent, and often involved cheating. Primary elections in 2013 and 2017 were messy and chaotic, and were not certain to result in the selection of the candidate most likely to win the general election. From the point of view of the presidential candidates, there are real risks to the primary elections their parties or coalitions oversee: the reputational damage due to chaos and the awareness that local support might be lost if a disgruntled aspirant turns against the party.

This helps to explain why in 2022 many parties made use of direct nominations—variously dressed up as the operation of consensus or the result of mysterious “opinion polls” to identify the strongest candidate. What that really meant was an intensive process of promise-making and/or pressure to persuade some candidates to stand down. Where that did not work, and primaries still took place, the promise-making and bullying came afterwards—to stop disappointed aspirants from turning against the party and standing as independents. The consequence of all that top-down management was that the nominations saw much less open violence than in previous years.

So who won, and who lost, at the national level?

Despite all the back-room deal-making, top-down political management was not especially successful in soothing the feelings of those who did not come out holding certificates. That brings us to the big national winners and losers of the process. Odinga—and his ODM party—have come out rather bruised. They have been accused of nepotism, bribery and of ignoring local wishes. This is a particularly dangerous accusation for Odinga, as it plays into popular concerns that, following his “handshake” with President Kenyatta and his adoption as the candidate of the “establishment”, he is a “project” of wealthy and powerful individuals who wish to retain power through the backdoor after Kenyatta stands down having served two-terms in office. In the face of well-publicised claims that Odinga would be a “remote controlled president” doing the bidding of the Kenyatta family and their allies, the impression that the nominations were stage-managed from on high in an undemocratic process was the last thing Azimio needed.

Moreover, perhaps because Odinga seems to have been less active than his rival in personally intervening to mollify aggrieved local politicians, the ODM nominations process seems to have left more of a mess. That was compounded by complications in the Azimio la Umoja/One Kenya Alliance Coalition Party (we’ll call it Azimio from now on, for convenience). Where Azimio “zoned”—that is, agreed on a single candidate from all its constituent parties—disappointed aspirants complained. Where it did not zone, and agreed to let each party nominate its own candidate for governor, MP and so on, then smaller parties in the coalition complained that they would face unfair competition come the general election. That is why the leaders of some of these smaller groups such as Machakos Governor Alfred Mutua made dramatic (or theatrical, depending on your view) announcements of their decision to leave Azimio and support Ruto.

Despite all the back-room deal-making, top-down political management was not especially successful in soothing the feelings of those who did not come out holding certificates.

So Ruto looks like a nomination winner. But his success comes with a big price tag. His interventions to placate disgruntled aspirants involved more than soothing words. A new government will have lots of goodies to distribute to supporters—positions in the civil service and parastatals, diplomatic roles, not to mention business opportunities of many kinds. But the bag of goodies is not bottomless, and it seems likely that a lot of promises have been made. Ruto’s undoubted talents as an organizer and deal-maker have been useful to him through the nominations—but those deals may prove expensive for him, and for Kenya, if he wins the presidential poll.

Money, politics, and the cost of campaigns

Those who “won” by being directly nominated to their desired positions may also come to see this process as something of a double-edged sword. In the short term, many of them will have saved considerable money: depending on exactly when the deal was done, they will have been spared some days of campaign expenses—no need to fuel cars, buy airtime for bloggers, pay for t-shirts and posters, and hand out cash. But that will be a brief respite. The disappointed rivals who have gone independent will make the campaigns harder for them—and likely more expensive. The belief that they were favoured by the party machinery may mean that voter expectations are higher when it comes to handouts and donations on the campaign trail. And the fact they were nominated rather than selected by party members may undermine their grass-roots legitimacy.

Others may experience a similar delayed effect. Among the short-term losers of the nominations will have been some of the “goons” who have played a prominent physical role in previous nominations: their muscular services were largely not required (although there were exceptions). The printers of posters and t-shirts will similarly have seen a disappointing nominations period (although surely they will have received enough early orders to keep them happy, especially where uncertainty over the nomination was very prolonged). The providers of billboard advertising may have seen a little less demand than they had hoped for, although they too seem to have done quite well from selling space to aspirants who—willingly or not—did not make it to the primaries. But where the general election will be fiercely contested, entrepreneurs will likely make up any lost ground as the campaigns get going. In these cases, competition has been postponed, not avoided.

Those in less competitive wards, constituencies or counties—the kind in which one party tends to dominate in the general election—are unlikely to be able to make up for lost time. These “one-party” areas may be in shorter supply in 2022 than in the past, due to the way that the control of specific leaders and alliances over the country’s former provinces has fragmented, but there will still be some races in which it is obvious who will win, and so the campaigns will be less heated.

Those who “won” by being directly nominated to their desired positions may also come to see this process as something of a double-edged sword.

More definite losers are the parties themselves. In some ways, we could say they did well as institutions, because they were spared the embarrassment of violent primaries. But the settling of many nominations without primaries meant not collecting nomination fees from aspirants in some cases, and refunding them in others. That will have cost parties a chunk of money, which they won’t get back. That may not affect the campaigns much—the money for campaigns flows in opaque and complex ways that may not touch the parties themselves. But it will affect the finances of the parties as organizations, which are often more than a little fragile.

Are the losers actually the biggest winners?

Some losers, however, are really big winners. Think about those candidates who would not have won competitive primaries but were strong enough to be able to credibly complain that they had been hard done by due to the decision to select a rival in a direct process. In many cases, these individuals were able to extract considerable concessions in return for the promise not to contest as independents, and so disrupt their coalition’s best laid plans. This means that many of the losers—who may well have been defeated anyway—walked away with the promise of a post-election reward without the expense and bother of having to campaign up until the polls.

It is hard not to suspect that some of them might feel a little bit relieved at this out-turn. In fact, some of them may have been aiming at this all along. For those with limited resources and uncertain prospects at the ballot, the opportunity to stand down in favour of another candidate may have been pretty welcome. Instead of spending the next three months in an exhausting round of funerals, fund-raisers and rallies, constantly worrying about whether they have enough fifty (or larger) shilling notes to hand out and avoiding answering their phones, they can sit back and wait for their parastatal appointment, ambassadorship, or business opportunity.

For those with limited resources and uncertain prospects at the ballot, the opportunity to stand down in favour of another candidate may have been pretty welcome.

For these individuals, the biggest worry now is not their popularity or campaign, but simply the risk that their coalition might not win the presidential election, rendering the promises they have received worthless. Those whose wishes come true will be considerably more fortunate—and financially better off—than their colleagues who made it through the nominations but fall at the final hurdle of the general election.

Separating the winners of the nominations process from the losers may therefore be harder than it seems.

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Politics

Asylum Pact: Rwanda Must Do Some Political Housecleaning

Rwandans are welcoming, but the government’s priority must be to solve the internal political problems which produce refugees.

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The governments of the United Kingdom and Rwanda have signed an agreement to move asylum seekers from the UK to Rwanda for processing. This partnership has been heavily criticized and has been referred to as unethical and inhumane. It has also been opposed by the United Nations Refugee Agency on the grounds that it is contrary to the spirit of the Refugee Convention.

Here in Rwanda, we heard the news of the partnership on the day it was signed. The subject has never been debated in the Rwandan parliament and neither had it been canvassed in the local media prior to the announcement.

According to the government’s official press release, the partnership reflects Rwanda’s commitment to protect vulnerable people around the world. It is argued that by relocating migrants to Rwanda, their dignity and rights will be respected and they will be provided with a range of opportunities, including for personal development and employment, in a country that has consistently been ranked among the safest in the world.

A considerable number of Rwandans have been refugees and therefore understand the struggle that comes with being an asylum seeker and what it means to receive help from host countries to rebuild lives. Therefore, most Rwandans are sensitive to the plight of those forced to leave their home countries and would be more than willing to make them feel welcome. However, the decision to relocate the migrants to Rwanda raises a number of questions.

The government argues that relocating migrants to Rwanda will address the inequalities in opportunity that push economic migrants to leave their homes. It is not clear how this will work considering that Rwanda is already the most unequal country in the East African region. And while it is indeed seen as among the safest countries in the world, it was however ranked among the bottom five globally in the recently released 2022 World Happiness Index. How would migrants, who may have suffered psychological trauma fare in such an environment, and in a country that is still rebuilding itself?

A considerable number of Rwandans have been refugees and therefore understand the struggle that comes with being an asylum seeker and what it means to receive help from host countries to rebuild lives.

What opportunities can Rwanda provide to the migrants? Between 2018—the year the index was first published—and 2020, Rwanda’s ranking on the Human Capital Index (HCI) has been consistently low. Published by the World Bank, HCI measures which countries are best at mobilising the economic and professional potential of their citizens. Rwanda’s score is lower than the average for sub-Saharan Africa and it is partly due to this that the government had found it difficult to attract private investment that would create significant levels of employment prior to the COVID-19 pandemic. Unemployment, particularly among the youth, has since worsened.

Despite the accolades Rwanda has received internationally for its development record, Rwanda’s economy has never been driven by a dynamic private or trade sector; it has been driven by aid. The country’s debt reached 73 per cent of GDP in 2021 while its economy has not developed the key areas needed to achieve and secure genuine social and economic transformation for its entire population. In addition to human capital development, these include social capital development, especially mutual trust among citizens considering the country’s unfortunate historical past, establishing good relations with neighbouring states, respect for human rights, and guaranteeing the accountability of public officials.

Rwanda aspires to become an upper middle-income country by 2035 and a high-income country by 2050. In 2000, the country launched a development plan that aimed to transform it into a middle-income country by 2020 on the back on a knowledge economy. That development plan, which has received financial support from various development partners including the UK which contributed over £1 billion, did not deliver the anticipated outcomes. Today the country remains stuck in the category of low-income states. Its structural constraints as a small land-locked country with few natural resources are often cited as an obstacle to development. However, this is exacerbated by current governance in Rwanda, which limits the political space, lacks separation of powers, impedes freedom of expression and represses government critics, making it even harder for Rwanda to reach the desired developmental goals.

Rwanda’s structural constraints as a small land-locked country with no natural resources are often viewed as an obstacle to achieving the anticipated development.

As a result of the foregoing, Rwanda has been producing its own share of refugees, who have sought political and economic asylum in other countries. The UK alone took in 250 Rwandese last year. There are others around the world, the majority of whom have found refuge in different countries in Africa, including countries neighbouring Rwanda. The presence of these refugees has been a source of tension in the region with Kigali accusing neighbouring states of supporting those who want to overthrow the government by force. Some Rwandans have indeed taken up armed struggle, a situation that, if not resolved, threatens long-term security in Rwanda and the Great Lakes region. In fact, the UK government’s advice on travel to Rwanda has consistently warned of the unstable security situation near the border with the Democratic Republic of Congo (DRC) and Burundi.

While Rwanda’s intention to help address the global imbalance of opportunity that fuels illegal immigration is laudable, I would recommend that charity start at home. As host of the 26th Commonwealth Heads of Government Meeting scheduled for June 2022, and Commonwealth Chair-in-Office for the next two years, the government should seize the opportunity to implement the core values and principles of the Commonwealth, particularly the promotion of democracy, the rule of law, freedom of expression, political and civil rights, and a vibrant civil society. This would enable Rwanda to address its internal social, economic and political challenges, creating a conducive environment for long-term economic development, and durable peace that will not only stop Rwanda from producing refugees but will also render the country ready and capable of economically and socially integrating refugees from less fortunate countries in the future.

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Politics

Beyond Borders: Why We Need a Truly Internationalist Climate Justice Movement

The elite’s ‘solution’ to the climate crisis is to turn the displaced into exploitable migrant labour. We need a truly internationalist alternative.

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“We are not drowning, we are fighting” has become the rallying call for the Pacific Climate Warriors. From UN climate meetings to blockades of Australian coal ports, these young Indigenous defenders from twenty Pacific Island states are raising the alarm of global warming for low-lying atoll nations. Rejecting the narrative of victimisation – “you don’t need my pain or tears to know that we’re in a crisis,” as Samoan Brianna Fruean puts it – they are challenging the fossil fuel industry and colonial giants such as Australia, responsible for the world’s highest per-capita carbon emissions.

Around the world, climate disasters displace around 25.3 million people annually – one person every one to two seconds. In 2016, new displacements caused by climate disasters outnumbered new displacements as a result of persecution by a ratio of three to one. By 2050, an estimated 143 million people will be displaced in just three regions: Africa, South Asia, and Latin America. Some projections for global climate displacement are as high as one billion people.

Mapping who is most vulnerable to displacement reveals the fault lines between rich and poor, between the global North and South, and between whiteness and its Black, Indigenous and racialised others.

Globalised asymmetries of power create migration but constrict mobility. Displaced people – the least responsible for global warming – face militarised borders. While climate change is itself ignored by the political elite, climate migration is presented as a border security issue and the latest excuse for wealthy states to fortify their borders. In 2019, the Australian Defence Forces announced military patrols around Australia’s waters to intercept climate refugees.

The burgeoning terrain of “climate security” prioritises militarised borders, dovetailing perfectly into eco-apartheid. “Borders are the environment’s greatest ally; it is through them that we will save the planet,” declares the party of French far-Right politician Marine Le Pen. A US Pentagon-commissioned report on the security implications of climate change encapsulates the hostility to climate refugees: “Borders will be strengthened around the country to hold back unwanted starving immigrants from the Caribbean islands (an especially severe problem), Mexico, and South America.” The US has now launched Operation Vigilant Sentry off the Florida coast and created Homeland Security Task Force Southeast to enforce marine interdiction and deportation in the aftermath of disasters in the Caribbean.

Labour migration as climate mitigation

you broke the ocean in
half to be here.
only to meet nothing that wants you
– Nayyirah Waheed

Parallel to increasing border controls, temporary labour migration is increasingly touted as a climate adaptation strategy. As part of the ‘Nansen Initiative’, a multilateral, state-led project to address climate-induced displacement, the Australian government has put forward its temporary seasonal worker program as a key solution to building climate resilience in the Pacific region. The Australian statement to the Nansen Initiative Intergovernmental Global Consultation was, in fact, delivered not by the environment minister but by the Department of Immigration and Border Protection.

Beginning in April 2022, the new Pacific Australia Labour Mobility scheme will make it easier for Australian businesses to temporarily insource low-wage workers (what the scheme calls “low-skilled” and “unskilled” workers) from small Pacific island countries including Nauru, Papua New Guinea, Kiribati, Samoa, Tonga, and Tuvalu. Not coincidentally, many of these countries’ ecologies and economies have already been ravaged by Australian colonialism for over one hundred years.

It is not an anomaly that Australia is turning displaced climate refugees into a funnel of temporary labour migration. With growing ungovernable and irregular migration, including climate migration, temporary labour migration programs have become the worldwide template for “well-managed migration.” Elites present labour migration as a double win because high-income countries fill their labour shortage needs without providing job security or citizenship, while low-income countries alleviate structural impoverishment through migrants’ remittances.

Dangerous, low-wage jobs like farm, domestic, and service work that cannot be outsourced are now almost entirely insourced in this way. Insourcing and outsourcing represent two sides of the same neoliberal coin: deliberately deflated labour and political power. Not to be confused with free mobility, temporary labour migration represents an extreme neoliberal approach to the quartet of foreign, climate, immigration, and labour policy, all structured to expand networks of capital accumulation through the creation and disciplining of surplus populations.

The International Labour Organization recognises that temporary migrant workers face forced labour, low wages, poor working conditions, virtual absence of social protection, denial of freedom association and union rights, discrimination and xenophobia, as well as social exclusion. Under these state-sanctioned programs of indentureship, workers are legally tied to an employer and deportable. Temporary migrant workers are kept compliant through the threats of both termination and deportation, revealing the crucial connection between immigration status and precarious labour.

Through temporary labour migration programs, workers’ labour power is first captured by the border and this pliable labour is then exploited by the employer. Denying migrant workers permanent immigration status ensures a steady supply of cheapened labour. Borders are not intended to exclude all people, but to create conditions of ‘deportability’, which increases social and labour precarity. These workers are labelled as ‘foreign’ workers, furthering racist xenophobia against them, including by other workers. While migrant workers are temporary, temporary migration is becoming the permanent neoliberal, state-led model of migration.

Reparations include No Borders

“It’s immoral for the rich to talk about their future children and grandchildren when the children of the Global South are dying now.” – Asad Rehman

Discussions about building fairer and more sustainable political-economic systems have coalesced around a Green New Deal. Most public policy proposals for a Green New Deal in the US, Canada, UK and the EU articulate the need to simultaneously tackle economic inequality, social injustice, and the climate crisis by transforming our extractive and exploitative system towards a low-carbon, feminist, worker and community-controlled care-based society. While a Green New Deal necessarily understands the climate crisis and the crisis of capitalism as interconnected — and not a dichotomy of ‘the environment versus the economy’ — one of its main shortcomings is its bordered scope. As Harpreet Kaur Paul and Dalia Gebrial write: “the Green New Deal has largely been trapped in national imaginations.”

Any Green New Deal that is not internationalist runs the risk of perpetuating climate apartheid and imperialist domination in our warming world. Rich countries must redress the global and asymmetrical dimensions of climate debtunfair trade and financial agreements, military subjugation, vaccine apartheidlabour exploitation, and border securitisation.

It is impossible to think about borders outside the modern nation-state and its entanglements with empire, capitalism, race, caste, gender, sexuality, and ability. Borders are not even fixed lines demarcating territory. Bordering regimes are increasingly layered with drone surveillance, interception of migrant boats, and security controls far beyond states’ territorial limits. From Australia offshoring migrant detention around Oceania to Fortress Europe outsourcing surveillance and interdiction to the Sahel and Middle East, shifting cartographies demarcate our colonial present.

Perhaps most offensively, when colonial countries panic about ‘border crises’ they position themselves as victims. But the genocide, displacement, and movement of millions of people were unequally structured by colonialism for three centuries, with European settlers in the Americas and Oceania, the transatlantic slave trade from Africa, and imported indentured labourers from Asia. Empire, enslavement, and indentureship are the bedrock of global apartheid today, determining who can live where and under what conditions. Borders are structured to uphold this apartheid.

The freedom to stay and the freedom to move, which is to say no borders, is decolonial reparations and redistribution long due.

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