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Crony Capitalism and State Capture: The Kenyatta Family Story

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With business interests in the heart of the Kenyan economy, how has Uhuru Kenyatta’s presidency benefited The Family? Has Kenya benefited from the Kenyattas? DAVID NDII looks at the numbers.

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Crony Capitalism and State Capture: The Kenyatta Family Story
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Nothing is more dangerous than the influence of private interests in public affairs, and the abuse of the laws by the government is a less evil than the corruption of the legislator, which is the inevitable sequel to a particular standpoint. In such a case, the State being altered in substance, all reformation becomes impossible. ~ Jean Jacques Rousseau

In November 2013, seven months into Uhuru Kenyatta’s presidency, one of the dailies carried a story profiling what it termed as the Kenyatta family business “expansion drive”. “Uhuru Kenyatta’s presidency” it averred, “has injected fresh energy into his family’s commercial empire, putting a number of units on an expansion mode that is expected to consolidate its position as one of the largest business dynasties in Kenya.” The paper listed interests in hospitality, dairy healthcare, media, banking and construction. The feature went unremarked in public debate. Conflict of interest is not part of Kenya’s political lexicon.

At the time, Brookside Dairy, the family’s flagship business, was completing an acquisition spree that has swallowed up all the large private milk processors leaving only the state-supported and erstwhile processing monopoly, Kenya Cooperative Creameries (KCC), and the farmer-owned Githunguri Dairies (owner of the “Fresha” brand) as serious competitors.

The pay-off has been remarkable. During Uhuru Kenyatta’s first term the consumer price of milk increased 67 percent (from KSh 36 to KSh 60 per half-litre packet), while producer prices remained unchanged at KSh 35 per litre), effectively increasing processors’ gross margin by 130 percent (from KSh 37 to KSh 85 per litre). Given the industry’s 400m litre annual throughput and Kenyatta family’s market share, which stands at 45 percent, the consumer squeeze translates to an increase of the Kenyatta Family’s turnover from KSh 13 billion to KSh 22 billion, and gross margin from KSh 6.7 billion to KSh 15 billion a year.

Two years ago, it emerged that the president’s sister and cousin (or niece) had abused procurement reserved for disadvantaged women and youth to supply the health ministry. The company involved was registered after Kenyatta assumed office. The website, which has since been taken down, listed their business as supplying healthcare products, building materials, construction equipment, dry foods and supplementary foods to “government entities, parastatal entities, non-governmental organizations, corporates and counties”. It also advertised investment consultancy and “facilitation” services, also known as influence peddling. The business was set up specifically to profit from Kenyatta’s presidency.

During Uhuru Kenyatta’s first term the consumer price of milk increased 67 percent (from KSh 36 to KSh 60 per half-litre packet), while producer prices remained unchanged at KSh 35 per litre), effectively increasing producers’ gross margin by 130 percent (from KSh 37 to KSh 85 per litre). Given the industry’s 400m litre annual throughput and Kenyatta family’s market share, which stands at 45 percent, the consumer squeeze translates to an increase of the Kenyatta Family’s turnover from KSh 13 billion to KSh 22 billion, and gross margin from KSh 6.7 billion to KSh 15 billion a year.

Koto Housing, associated with Uhuru’s sister and specialising in expanded polysterene (EPS) modular construction technology was cashing in on police housing. No sleuthing is required to establish this— it’s on the company’s website. Since then, the family has established an even bigger EPS building company C-MAX, which also showcases police housing on its website. Instructively, the website also markets “affordable housing” as one of the product lines. Affordable housing is one of Kenyatta’s “big four” agenda.

That the Kenyatta family would set up businesses to trade with the government during his tenure, and have no qualms showcasing government business on their websites, is astounding. But nothing brings home the family’s obliviousness to conflict of interest than its entanglement with the Rai family, the timber and sugar merchants now embroiled in the contaminated sugar import scandal. Parallels have been drawn between Kenyatta’s engagement with Rai and the South African Gupta state capture saga.

Two years ago, it emerged that the president’s sister and cousin (or niece) had abused procurement reserved for disadvantaged women and youth to supply the health ministry. The company involved was registered after Kenyatta assumed office.

Sometime in the early 90s, the Rai siblings sued one of their brothers, Jaswant Rai, alleging that he had secretly been siphoning money from the family business and investing it on his own. They alleged that the money was invested in two Kenyatta Family businesses: Timsales, a timber merchant, and the Commercial Bank of Africa.

Raiply, the Rai family’s flagship plywood manufacturing business came to prominence for what appeared to be a carte blanche license to log public forests during Moi’s tenure. The case confirmed what the public had long suspected: that Moi had a stake in the business. Kabarak Limited, a name synonymous with Moi, had a 1.4 percent stake in Raiply. Moi banned logging of hardwoods from indigenous forests in 1986. According to the task force the Jubilee administration appointed recently, the Kenya Forestry service has continued to give Raiply licenses to log these invaluable forests for plywood.

Rai’s clout in the Jubilee administration became apparent during the disposal of the bankrupt Pan Paper Mills, Kenya’s lone pulp paper mill and a monument to failed import substitution industrialisation. Established in 1971 as a joint venture between the Government and an Indian investor, Pan Paper’s claim to fame is that it has never made a profit, even though during the pre-liberalization era, the Indian investors paid themselves handsomely through transfer pricing, management fees and royalties. Pan Paper collapsed in 2009, was bailed out and reopened by the government in 2010, but it closed down again a year later. A second revival failed.

In 2014, Pan Paper’s receiver managers resigned abruptly, protesting that a powerful hidden hand was manipulating the transaction to ensure that Pan Paper’s assets were sold cheaply to Rai. A new receiver was promptly appointed and the assets, reportedly worth KSh 18 billion were sold to Rai, for KSh 900 million – even less than the Ksh 1 billion the government had injected in the failed revival.

Sometime in the early 90s, the Rai siblings sued one of their brothers, Jaswant Rai, alleging that he had secretly been siphoning money from the family business and investing it on his own. They alleged that the money was invested in two Kenyatta Family businesses: Timsales, a timber merchant, and the Commercial Bank of Africa.

Kenya’s current sugar production according to Kenya National Bureau of Statistics data is in the order of 600,000 tons a year, against a consumption of 830,000 metric tonnes, making for an annual deficit of 230,000 tons. Kenya has been accorded safeguards to protect the domestic sugar industry by COMESA trading partners, but these safeguards dictate that Kenya imports the deficit from COMESA countries. Also, it was the practice, as I remember it, that preference was given to the domestic millers in proportion to their market share.

It has now come to light that mid last year, in the run-up to the election, the government, citing drought, opened the floodgates and allowed all and sundry to import sugar duty-free. The KNBS data shows 990,000 tons imported during the year—more than a year’s consumption. To be sure, 376,000 tons, the volume of domestic production, was well below normal, but this translates to a deficit in the order of 450,000 tons – less than half of what was imported. Moreover, it is unclear why duty was waived—sugar withdrawal symptoms are not fatal.

Sugar importation was the Moi era’s default election financing racket. In those days, the racket was a closed shop controlled by a small cabal of Moi’s associates known as the “sugar barons”, not the feeding frenzy we are witnessing today. Jubilee’s dynamic duo may be Moi’s political children but one among the many things they did not learn from him was disciplined corruption. Little wonder that Moi once described them as “ndume hawajakomaa”.

Domestic sugar industry protection in these parts borders on the irrational. Sugar is classified as a “sensitive item” under the EAC’s Common External Tariff, which means it attracts punitive import duties, set at 100% or US$460 a ton, whichever is higher. With sugar currently trading at U$265 a ton on the world market, the applicable rate is US$460, which is effectively an import duty rate of 170 percent. Regular goods are taxed at 0,10 and 25 percent while rates for other sensitive items range from 35 to 60 percent.

Sugar importation was the Moi era’s default election financing racket. In those days, the racket was a closed shop controlled by a small cabal of Moi’s associates known as the “sugar barons”, not the feeding frenzy we are witnessing today.

But even with the punitive import duty, the landed cost still works out to between KSh 80-85 a kilo, which allowing for distribution costs and trade margins, would still have put sugar on the shelf in the KSh 110 to Ksh 120 range at which it has been selling. In effect, the foregone duty has been pocketed by the importers. For 960,000 tons, we are talking US$ 455 million (KSh 45.5 billion). If the importation had been done by the sugar millers, and at the right quantity, a duty waiver would have translated to revenue in the order of KSh 20 billion – enough, if properly managed, to turn the struggling mills around. Instead, when they most needed the financial cushion, the government let the dogs out.

When the contaminated sugar scandal first broke with a raid on a backstreet operation in Eastleigh (Nairobi’s “Somali Quarter”), with the culprits caught packing the contraband as “Kabras” sugar, it created the impression that this was a crackdown on the Somalia-Kenya border smuggling racket. Kabras is the brand name of the Rai-owned West Kenya Sugar Company. Then, Aden Duale, Jubilee’s motor-mouthed Parliamentary majority leader turned the guns on Rai. This immediately elicited a stern, sanctimonious public statement from West Kenya Sugar. It admitted to importing sugar, but did not disclose how much. It was not long before sugar hoardings popped up in various Rai establishments up and down the country, including Pan Paper.

It has been reported that Rai imported 189,000 tons of sugar, close to a fifth of the total duty free imports last year. The tax benefit to Rai, and loss to the public, for this amount of sugar is in the order of US$86 million (KSh 8.6 billion). We are talking here of the annual budget of an entire county. The sugar itself is worth upwards of US$50 million (KSh 5 billion). Businesses seldom have this kind of cash lying around, so it is most likely that the transaction was bank financed. If so, it would be interesting to know which bank this is.

It is western Kenya’s misfortune that the region was the hub of both the sugar industry and Pan Paper, Kenya’s most disastrous import substitution industries. The people of Webuye, and the larger Western region, have nothing to show for it. A log of wood typically converts to 8000 sheets of A4 paper worth Ksh. 60,000 (US$600). This is about the same as the value of raw timber. The same log converted into furniture will have a final value twenty times that amount (e.g. three dining tables worth KSh 40,000 each) or higher depending on quality. The furniture industry is a relatively low capital requirement, labour intensive industry that would have utilized Webuye’s forest resources for a locally-owned job and wealth-creating industry.

In its lifetime, Pan Paper has consumed 25,000 hectares of public forests — about 600 hectares per year. Pan Paper at its peak employed 1,500 people. A timber-furniture industry cluster utilising the same resource would have created ten times as many jobs, injecting more than Ksh 100 billion a year into the region’s economy.

In a previous column, I posed the question as to what made the leaders of the East Asian Tigers pursue export-led industrialisation going against the dominant development paradigm of the day. I postulated that they did not set out to perform economic miracles, but rather to improve the lot of their people, which led them to the realisation that capital intensive import substitution industries would not create jobs for the masses.

Half a century on, Uhuru Kenyatta, who claims to be inspired by Lee Kuan Yew, is taking the country back to crony capitalist import substitution. In recent months, import tariffs have been raised on timber, vegetable oils and paper products, in all of which the Kenyattas and Rais are players. It was rumored that the Rai purchase of Pan Paper was a Trojan Horse to access public forests for their timber business. The rumour was all but confirmed by the recent appointment of Jaswant Rai to the board of the Kenya Forestry Service. As I opined, “when East Asian leaders were asking prospective investors what they needed to do for them, ours were asking what was in it for them”. Nothing has changed. The “big four” manufacturing pillar is also about profits for Kenyatta & Co. – not about jobs. The president’s bread is buttered on the side of capital, not labour.

Kenyatta’s presidency has increased the profits of his family’s conglomerate by at least Ksh 10 billion a year, and that is not including the side lines of family members’ “tenderprises” such as the sister’s health ministry tenders and the uncle’s NYS fuel supplies. The best-run businesses in competitive markets typically make profits in the order of five percent of turnover. In effect, the presidency translates for the Kenyatta conglomerate the equivalent of a KSh 200 billion turnover business —a business the size of Safaricom (whose hefty earnings are due to inordinate market power).

It should not surprise then that no expense has been spared, no price has been too high not only to keep Uhuru Kenyatta in power, but also to roll back the constitutional dispensation and restore to the presidency the unfettered power on which the family fortune rests.

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David Ndii is a leading Kenyan economist and public intellectual.

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Unlike the Rest of the UN, Is WHO (Finally) Taking Sexual Abuse Seriously?

A disturbing report on the sexual exploitation and abuse of women and children in the DRC has laid bare the failure of UN agencies to protect vulnerable populations.

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Unlike the Rest of the UN, Is WHO (Finally) Taking Sexual Abuse Seriously?
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It is extremely unfortunate that at a time when the World Health Organization (WHO) is spearheading a campaign to get people vaccinated against COVID-19, and pushing rich countries to donate their vaccines to low-income countries instead of hoarding them, it is confronted with revelations that suggest deep systemic failures within the global health agency that have allowed its employees to get away with sexual exploitation and abuse of vulnerable populations.

Last month, WHO released a report that confirmed that there was sexual abuse of women and children by WHO employees in the Democratic Republic of the Congo (DRC) during an outbreak of Ebola in the country’s North Kivu and Ituri provinces between 2018 and 2020. This report was the result of an independent commission’s investigations following an exclusive media report last year that found that dozens of women in the DRC had been sexually exploited by aid workers, including WHO employees.  The most disturbing revelation was that some of the perpetrators were medical doctors. Many of the abused women were offered jobs in exchange for sex; others were raped or coerced into having sex against their will. There were also stories of women being forced to have abortions after they were sexually abused. The independent commission stated that its findings showed that 21 of the 83 alleged perpetrators were WHO employees, and that “individual negligence” on the part of WHO staff may have amounted to “professional misconduct”.

This is not the first time that sexual abuse and exploitation of women and children by UN employees has been reported in the DRC. In 2004, UN Secretary-General Kofi Annan ordered an investigation into sexual abuses by UN peacekeepers in the country after it became apparent that such abuse was widespread in this mineral-rich but conflict-ridden country.  The investigation detailed various forms of abuse, including trading sex for money and food. It was in the DRC that the term “peacekeeper babies” first emerged. Women who had given birth after being raped by UN peacekeepers spoke about being abandoned by both their families and the peacekeepers who had impregnated them. However, the report had little impact on the UN’s peacekeeping mission in the DRC – none of the perpetrators were brought to book nor were the victims compensated.

Sexual abuse of vulnerable populations, especially women and children, is particularly rampant in UN peacekeeping missions.  In 2017, the Associated Press revealed in an exclusive report that at least 134 Sri Lankan UN peacekeepers had exploited nine Haitian children in a sex ring from 2004 to 2007. Many of the victims were offered food or money after they were sexually violated. (These “sex-for-food” arrangements have also been reported in other countries experiencing conflict or disaster.) Although 114 of these peacekeepers were sent home after the report came out, none of them were prosecuted or court-martialled in their countries.

One reason why UN peacekeepers evade the consequences of their actions is that under the Status of Forces Agreement negotiated between the UN and troop-producing countries, UN peacekeepers fall under the exclusive jurisdiction of the country they come from. When cases of abuse are reported, they are either ignored by the countries, or the perpetrators are sent home—no questions asked.

Unfortunately, civilian UN staff who commit crimes such as rape also evade any legal action because the UN accords the UN and its employees immunity from prosecution. This immunity can only be waived by the UN Secretary-General, but the Secretary-General hardly ever waives this immunity even when there is overwhelming evidence against a UN staff member. This means that cases brought against UN employees cannot be tried in national courts, nor can the perpetrators be detained or arrested by national law enforcement agencies.  

At a press conference held last month, WHO’s director-general, Tedros Adhanom Ghebreyesus, apologised to the victims of the abuse in the DRC at the hands of WHO employees and promised to take action to prevent such abuse from happening again. “I am sorry for what was done to you,” he said. “What happened to you should not happen to anyone.”

The head of WHO has also promised to review the organisation’s emergency response measures and internal structures and to discipline those staff members who fail to report cases of sexual exploitation and abuse. WHO member states have also called for an “immediate, thorough and detailed assessment of what went wrong”.

I have no doubt that Mr Ghebreyesus is serious about fixing a problem that has plagued the UN for decades. In fact, his response to the sexual abuse allegations is much more honest and sincere than the responses of other heads of UN agencies whose employees have been accused of allowing sexual exploitation and abuse to occur under their watch. One, he established an independent commission to look into the sexual abuse allegations, which rarely happens. (Most UN agencies either ignore the allegations or order an internal investigation, which invariably determines that the allegations “could not be substantiated”.) Two, he has publicly committed to undertake wholesale reforms in WHO’s structures and culture that allow sexual exploitation and abuse of vulnerable populations to go undetected, unreported and unpunished. Three, he has agreed to the independent commission’s recommendation that an independent monitoring group be set up within two months to ensure that the commission’s recommendations are enforced.

“What happened to you should not happen to anyone.”

Most UN agencies would not welcome such intense scrutiny of their operations by independent bodies, so WHO’s efforts in this regard are laudable.  WHO’s actions could also be attributed to the fact that, unlike other UN agencies that report to the General Assembly, WHO reports to the World Health Assembly that comprises delegates that have technical competence in health matters and represent their governments’ ministries of health. Because it is a specialised UN agency not governed by the General Assembly, WHO can establish its own rules without deferring to the General Assembly. In this sense, WHO enjoys relative autonomy from the UN system’s gargantuan and highly opaque bureaucracy.

Cover-ups and impunity 

WHO’s response is a far cry from the normal tendency of UN bosses to cover up cases of sexual abuse and exploitation taking place under the UN’s watch.  In 2014, for instance, when a senior UN official reported to the French government that French peacekeepers operating in the Central African Republic were sexually abusing boys as young as eight years old, his bosses at the Office of the UN High Commissioner for Human Rights (OHCHR) responded by asking him to resign. When he refused to do so, they suspended him for “unauthorized disclosure of confidential information”, and, in a typical case of “shooting the messenger”, they directed their internal investigations towards him rather than towards the peacekeepers who had allegedly abused the children. This case, which received wide media coverage, did not lead to significant changes in how the UN handles sexual abuse cases. On the contrary, Anders Kompass, the UN official who reported the abuse, was retaliated against, and eventually left the organisation in frustration.

Cases of UN employees sexually abusing or harassing their colleagues are also brushed under the carpet. In 2018, for example, when an Indian women’s rights activist accused the United Nations Population Fund (UNFPA)’s India representative of sexual harassment, the UN agency said that its preliminary investigations showed that her allegations could not be substantiated. The Code Blue Campaign, which tracks instances of sexual harassment and exploitation by UN employees, dismissed the findings of the investigation, calling them a “cover-up.” (Soon after the activist made her allegation, UNFPA evacuated the accused from India, which further muddied her case.)

This is not an isolated case. In 2004, when a staff member at the UN’s refugee agency accused the head of the organisation of sexual harassment, the UN Secretary-General, Kofi Annan, dismissed her claims. Recently, a woman working at UNAIDS lost her job soon after she filed a complaint of sexual harassment against UNAIDS’ deputy executive director. This was after Michel Sidibé, the then head of UNAIDS, told a staff meeting that people who complain about how the agency was handling sexual harassment “don’t have ethics.”

The UN’s highly patriarchal and misogynistic culture allows such abuse to continue unabated. In 2018, the UN conducted an internal survey that found that one-third of the UN employees surveyed had experienced sexual harassment. It revealed that the most vulnerable targets were women and transgender personnel aged between 25 and 44. Two out of three harassers were male and only one out of every three employees who were harassed took any action against the perpetrator. About one in ten women reported being touched inappropriately; a similar number said they had witnessed crude sexual gestures.

Another survey by the UN Staff Union found that sexual harassment was one among many abuses of authority that take place at the UN. Results of the survey showed that sexual harassment made up about 16 per cent of all forms of harassment. Forty-four per cent said that they had experienced abuse of authority; of these, 87 per cent said that the person who had abused his or her authority was a supervisor. Twenty per cent felt that they had experienced retaliation after reporting the misconduct.

The UN’s highly patriarchal and misogynistic culture allows such abuse to continue unabated.

Since then, the UN has established a new sexual harassment policy and a hot line for victims of sexual harassment. However, remedial actions spelled out in the policy appear to be mediation or counselling exercises rather than disciplinary ones. The emphasis is on psychosocial support and counselling (for the victims, of course) and “facilitated discussions” between the “offender” and the “affected individual”. Disciplinary measures include physical separation of the offender from the victim, reassignment, and temporary changes in reporting lines. Official internal investigations are permitted, but as I have tried to illustrate, most internal UN investigations into cases of sexual harassment and other kinds of wrongdoing inevitably conclude that the sexual harassment or wrongdoing “could not be substantiated.” This leaves victims vulnerable to retaliation.

Perhaps WHO can lead the way in showing the rest of the UN system how to tackle sexual exploitation, abuse and harassment by UN employees. WHO has already terminated the contracts of four of its employees who were accused of sexually exploiting women in the DRC. However, a true test of WHO and the UN’s commitment to end such abuses would be if they reinstated all those who were fired for reporting such cases. I for one am eagerly awaiting the independent monitoring group’s findings on whether or not WHO has taken tangible and impactful measures to protect people from being sexually abused and exploited by its employees and to safeguard the jobs of those who report such abuses.

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The Retrospective Application of Constitutional Statutes: Notes From the High Court of Kenya

Katiba Institute adds to the growing comparative discussion around constitutional statutes and therefore ought to be keenly studied by students of comparative constitutional law.

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The Retrospective Application of Constitutional Statutes: Notes From the High Court of Kenya
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Previously, I have discussed the concept of constitutional statutes. Recall that a constitutional statute is a law that is “enacted in pursuance of the State’s positive obligation to fulfil a constitutional right.” While certain constitutional rights are self-enforcing (such as, for example, the right to free speech ipso facto prohibits the State from engaging in arbitrary censorship), others – by their very nature – require a statutory framework to be made effective. For example, the right to vote cannot be made effective without an infrastructure in place to conduct free and fair elections, including the existence of an independent, non-partisan Election Commission. Insofar as such a legislative framework is not in existence, the state is arguably in breach of its positive obligations to fulfil the right in question. Thus, to refine the definition further, a constitutional statute is a statute that “provides a statutory framework towards implementing a fundamental right, thereby fulfilling the state’s positive obligation to do so.”

What follows from the finding that a particular law is a constitutional statute? On this blog, we have discussed constitutional statutes in the context of amendments to the Right to Information Act, which have sought to undermine the independence of the Information Commissioners. We have argued that, insofar as constitutional statutes stand between the individual and the State, mediating the effective enforcement of rights, legislative amendments that prevent them from fulfilling this function, are thereby unconstitutional. Furthermore, once a constitutional statute has been enacted, the principle of non-retrogression applies – that is, the legislature cannot simply repeal the law and go back to a position where the right in question was unprotected. Another example discussed on this blog is the recent judgment of the Kenyan Court of Appeal in David Ndii, where it was held that the implementation of the Popular Initiative to amend the Kenyan Constitution required a legislative scheme, as also its discussion of the previous judgment in Katiba Institute, where an attempt to reduce the quorum for resolutions of the Independent Electoral and Boundaries Commission was held to be unconstitutional.

The judgment of the High Court of Kenya of 14 October 2021 – also titled Katiba Institute – provides an additional, fascinating implication that flows from the finding that a law is a constitutional statute. Katiba Institute arose out of the efforts of the Government of Kenya to implement a national biometric identification system called NIIMS, and the judgment of the High Court with respect to a challenge to the constitutionality of NIIMS (Nubian Rights Forum), which we discussed on this blog back in 2019. Recall that in Nubian Rights Forum, after a detailed analysis, the High Court struck down a part of NIIMS, and allowed the government to go ahead with the rest of the programme subject to the implementation of an effective data protection law. Therefore, as I had noted in that post:

The High Court’s decision – at least in part – is a conditional one, where the (legal) future of the NIIMS is expressly made dependant on what action the government will take. Thus, there remain a significant number of issues that remain open for (inevitable) litigation, even after the High Court’s judgment.

Notably, Kenya had enacted a data protection law in between the hearings and the judgment, but the High Court – in its verdict – was insistent that until the point of effective implementation, the continued rollout of NIIMS could not go on. And this was at the heart of the challenge in Katiba Institute: the applicant argued that NIIMS had been rolled out, in particular, without complying with Section 31 of the Kenyan Data Protection Act, which required a Data Impact Assessment as a pre-requisite to any data collection enterprise. In response, the state argued that the data collection in question had already been completed before the passage of the Data Protection Act, and that therefore – in accordance with the general principle that statutes are not meant to apply retrospectively – Section 31 was inapplicable to this case.

Engaging in impeccable constitutional statute analysis, Justice Jairus Ngaah noted that the Data Protection Act was “enacted against the backdrop of Article 31 of the Constitution.” Article 31 of the Constitution of Kenya 2010 guarantees the right to privacy. As the learned Justice noted, in its very preamble, the DPA stated that its purpose was to “give effect to Articles 31(c) and (d) of the Constitution.” Justice Ngaah then rightly observed, “The need to protect the constitutional right to privacy did not arise with the enactment of the Data Protection Act; the right accrued from the moment the Constitution was promulgated.”

The judgment of the High Court of Kenya provides an additional, fascinating implication that flows from the finding that a law is a constitutional statute.

It therefore followed that, on the balance, an interpretation that gave the DPA retrospective effect was to be preferred over one that did not. A contrary interpretation would mean that the state was entitled to collect data and infringe the right to privacy even in the absence of a legislative scheme. Or, in other words, having failed to implement its positive obligation to enact a constitutional statute to give effect to the right to privacy, the state could then take advantage of its own failure by nonetheless engaging in data collection enterprises anyway. This, naturally, could not be countenanced. And in any event, given that Article 31 had always existed, it followed that:

. . . there was always the duty on the part of the State to ensure that the Bill of Rights . . . is respected and protected. Section 31 of the Act does not impose any more obligation or duty on the state than that which the state, or the respondents . . . have hitherto had to bear.

On this basis, Justice Ngaah therefore held that NIIMS had been rolled out in breach of Section 31, and therefore, first, quashed the rollout itself, and secondly, issued a mandamus restraining the State from rolling it out again without first complying with Section 31.*

The judgment in Katiba Institute does not, of course, answer the number of questions that still remained to be resolved after the Nubian Rights Forum judgment, including some problematic aspects of the DPA itself. Those questions were not, however, before the court in this instance; on the other hand, the court’s finding that constitutional statutes apply retrospectively – and the reasons for that finding – make it a landmark judgment. Katiba Institute adds to the growing comparative discussion around constitutional statutes, Fourth Branch bodies, and “Guarantor Institutions”, and therefore ought to be keenly studied by students of comparative constitutional law.

* One cannot, of course, help comparing this with the judgment of the Indian Supreme Court in the Aadhaar case, where despite the fact that Aadhaar data was collected for more than five years without any law whatsoever, it was retrospectively validated by the Supreme Court.

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The Pandora Papers Reveal the Dark Underbelly of the United Kingdom

Through its network of tax havens, the UK is the fulcrum of a system that benefits the rich and powerful.

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There’s the role, for instance, played by the British Virgin Islands, an overseas territory of the UK that functions as a tax haven. Czechia’s multimillionaire prime minister used the territory to hide his ownership of a chateau in France. Others, including the family of Kenyan president Uhuru Kenyatta and Vladimir Putin’s PR man, have made similar use of the islands to conceal wealth – while Tony and Cherie Blair reportedly saved £312,000 in stamp duty when they bought a London property from a company registered in the British Virgin Islands in 2017.

Then there’s London itself. The leaked documents show how the King of Jordan squirreled personal cash away in the capital’s property market, as did key allies of Imran Khan, Pakistan’s president.

More details will emerge in the coming days. But one thing is already clear. This isn’t a story about countries on the periphery of the world economy. It is a story about how the British state drives a global system in which the richest extract wealth from the rest.

British through and through

The British Virgin Islands were captured by England from the Dutch in 1672. By then, the indigenous population had already gone – either slaughtered in an unrecorded genocide or fled for fear of one. The islands have been a haven for pirates of various sorts ever since.

But this is just one part of Britain’s offshore network. There are around 18 legislatures across the globe that Westminster is ultimately responsible for. These include some of the worst offenders in the world of money laundering, tax dodging and financial secrecy. The Cayman Islands are British. So is Gibraltar. So are Anguilla and Bermuda.

These places aren’t just British in an abstract sense. Under the 2002 British Overseas Territories Act, their citizens are British citizens. They operate under the protection of the British diplomatic service. And, when need be, they can rely on Her Majesty’s Armed Forces: in the last 40 years, Britain has twice gone to war to defend Overseas Territories. Once was when Argentina tried to claim back the Falklands/Malvinas. The other time was the invasion of Iraq, when the British government claimed that Saddam Hussein’s weapons programme threatened its military bases at Akrotiri and Dhekelia on the island of Cyprus.

This complexity is no accident

In total, experts estimate, Britain and its overseas territories are responsible for facilitating around a third of the total tax dodged around the world. And that’s before we consider money stolen by corrupt rulers, or the proceeds of crime. Not to mention the way that billionaires’ hidden wealth allows them to influence our political systems in secret.

This complexity is no accident. The UK, unlike almost any other country on earth, lacks a written constitution. The rules about how the rules are made are set through ‘convention’, an endless fudge that ultimately amounts to them being made up by our rulers as they go along.

We see this most clearly in how the domestic territories of the British state are governed: Scotland, Wales, Northern Ireland, Greater London and the City of London each has its own arrangements, each absurd in its own way. Each of these messes leaves a different tangled thicket in which the crooks of the world can hide their cash.

Seen from the perspective of international capital, though, it is the Overseas Territories, as well as the Crown Dependencies of Jersey, Guernsey and Mann, which form the most significant part of this complex. They use the malleability of the British constitution to form a network of safes in which the rich can hide their cash.

A new era

Although no one knows for sure how much money is hidden in tax havens, of which the British territories make up a significant chunk, the figures involved are so vast that academics at the Transnational Institute in the Netherlands have described them as “the backbone of global capitalism”.

Seen this way, the constitutional flexibility of the British state isn’t just some post-medieval hangover. It’s a hyper-modern tool in an era of global surveillance capitalism, where the rich can flit around offshore while the rest are forever trapped by borders.

Through its empire, the British state played a key role in inventing modern capitalism. Now, the UK is helping reinvent capitalism once more, by extending the protection of a constitution designed by the powerful, for the powerful, to the billionaires, oligarchs and criminals of the world.

Adam Ramsay is openDemocracy’s main site editor. You can follow him at @adamramsay. Adam is a member of the Scottish Green Party, sits on the board of Voices for Scotland and advisory committees for the Economic Change Unit and the journal Soundings.

This article was  first published by Progressive International

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