20101023
Nation

Nairobi — One of the most eagerly-awaited debates in Parliament will be on Tuesday afternoon as MPs discuss the damning report of a departmental committee which found taxpayers lost hundreds of millions of shillings in dodgy deals abroad.

The revelations contained in the report by the Defence and Foreign Relations Committee, if adopted by the House, will represent the biggest known scandal since the grand coalition came into office.

In a series of deals which committee chairman Adan Keynan described as epic fraud, it was found that Foreign Affairs ministry officials ignored recommendations from civil servants and independent valuers to saddle the public with huge bills that could have been avoided.

Some of the deals were inexplicably rushed, attempts were made to sanitise those that had gone sour, sale agreements were signed by people without authority and large amounts of money were channelled to accounts not in the Central Bank of Kenya.

The scandal, which was first highlighted by the Sunday Nation, threatens to end the public careers of Foreign Affairs minister Moses Wetang'ula and permanent secretary Thuita Mwangi.

In this special report, we outline the irregularities pointed out by the committee, whose findings were tabled before the House last Thursday.

Nigeria

Kenya acquired three pieces of prime land in Lagos, Nigeria, in 1972, ostensibly to build the embassy, chancery and the ambassador's residence. In 1991, the Nigerian government decided to move its political capital from Lagos to Abuja.

The city's planners allocated all friendly countries prime property in the new city to build their embassies and envoys' residences. Kenya then decided to sell the beach plots and use the proceeds to build in the new capital.

The Lagos plots were described as among the choicest pieces of land in Nigeria as they neighboured the home of former president Ibrahim Babangida, the British High Commission, the French Mission and British Airways, with the office of the governor of Lagos right opposite.

But, before the sale, a team headed by Albert Musasia, now the director of Immigration Services, was sent there to see whether disposal would be prudent. Mr Musasia's team was of the opinion that, while Kenya should build a new embassy in Abuja, it was better to keep the Lagos property.

He was later transferred to the Immigration ministry, the team's opinion disregarded and the three plots sold off. According to Mr Keynan, the lawyer who oversaw the transaction was not paid, and Nigeria's Foreign ministry has sent a demand note for Sh94 million to settle his bill.

The twist in the Nigerian tale is that the money was never used to build the new embassy as the ministry saw it better to use it to pay for the cost of putting up the embassy in Tokyo, Japan. The ministry said this money had been transferred to the Central Bank of Kenya but it has emerged that it ended up in the ministry's account in London.

It was later transferred to Nairobi and subsequently to Tokyo, and the upshot of all this was that, by the time the proceeds from the sale of the beach plots got to Tokyo, an estimated Sh9.8 million was lost. In Nigeria, the ministry's staff were left without an office, and are "squatters" in a building owned by Kenya Airways.

Mr Keynan told Parliament that Kenya's Immigration officer in Lagos carries the tools of his job - visa forms and the rubber stamp - in a bag as he has no permanent office.

Japan

According to the report of the Keynan team, the deal to buy land in Tokyo marked the epitome of all that had gone wrong in the purchase of land by the Foreign ministry. President Kibaki had requested for land from the Japanese government through Senator Tetsuro Yano, who is the president of the Upper House, when he visited Kenya in 2008.

The request was granted and the ministry was offered land in Minato Ku, described as a diplomatic enclave that is three minutes' walk from Japan's Foreign Affairs ministry, and five minutes from both the Emperor's residence as well as the Japanese National Assembly.

But the ministry decided to buy land far from the enclave, where it would have had 80 other foreign missions for company in addition to the convenience of being centrally located. Interestingly, Mr Wetang'ula told the committee that the shape of the plot was not suitable for the construction of the embassy and chancery and it was located in an archaeological zone, meaning the Japanese government could excavate it for fossils and artefacts at any time.

But the entire Tokyo area is an archaeological area and the shape of the plot did not matter as it would have been possible to build a tall building that could even be rented out. As Mr Keynan put it, "It is like being offered a plot right here next to Parliament, but then to say that Ruai is spacious, let's go and build in Ruai."

The committee says in its report that the ministry went ahead to buy the land in Tokyo despite advice from the lawyer handling the case, a Mr Kijima, a Kenyan architect based in Japan, Dick Olango, and a real estate agent called in to advise on the matter.

Among the most interesting aspects, however, is the manner in which some Sh1.4 billion, the equivalent of 80 per cent of the cost of the land, was handed over. A cheque was issued but with instructions that payments be made in cash.

Another notable aspect of the deal is that there were two sale agreements; one signed by permanent secretary Thuita Mwangi and another by Allan Mburu, who was the Charge d'Affairs at the embassy. But Mr Mwangi was in Nairobi at the time of the meeting, and Mr Mburu was not authorised to transact on behalf of the government.

The notable thing is that Kenya has a title deed for the piece of land. Mr Keynan said the committee suggested to Nobuo Kuriyama, who sold the land, that he could take it back and return the money and he offered about Sh450 million, yet he had been paid Sh1.7 billion.

The minister wrote to the Kenya Anti-Corruption Commission on October 1, 2010 asking its director PLO Lumumba to initiate an investigation into the Tokyo deal. This is unusual, given that the corruption watchdog began investigating the matter in May this year after the Sunday Nation reported the unusual goings-on in Japan. Was he, as Mr Keynan said, trying to extricate himself from a deal that had suddenly acquired the taste of unripe fruit?

Egypt

Kenya acquired a plot in Cairo in the late 1980s. Although there was no official policy on the acquisition of such property, the move was considered reasonable but no development was undertaken on that plot. The land was sold after a policy on acquisition of property to house embassies abroad was developed and adopted by the ministry.

It fetched $677,246 (Sh54.2 million) and the proceeds were to be used to build the ambassador's residence. But when the money was sent to the ministry's account, 10 per cent was missing, which the Central Bank of Kenya noticed, according to evidence by the bank's governor Prof Njuguna Ndung'u.

Mr Keynan said the committee disputed the price at which the plot was sold but since the deal was closed, it was only fair for the ministry to track down the missing amount. "As an administrative measure, or as a prudent financial mechanism, the ministry must be prepared to find out what happened to the remaining 10 per cent," he said.

Pakistan

The government bought a plot in Islamabad, at about the same time the one in Cairo was acquired. The ministry has since designed a plan to construct an ambassador's residence and the chancery there.

But Mr Keynan said when the team visited the city, they found that the construction is only 40 per cent complete, the contractor was not on site and the cost has shot up by Sh157 million from the original Sh366 million.

The MP said the contractor had tried to create the impression that work was going on when he realised that the Parliamentary committee was in town.

Belgium

The acquisition in 2008 of the property in Brussels marked an attempt by the ministry to adhere to procurement procedures. A committee was formed to participate in the acquisition of the land, a valuation was carried out and the price was set at 3 million Euros (Sh381 million).

The ministry got an independent valuer who varied the figure to 3.1 million Euros, but the seller was asked to include the cost of second-hand furniture - despite the fact second-hand furniture is useless in Europe - making the price Sh85 million higher.

According to Mr Keynan, the ministry also acquired a 90-year-old building, whose alteration would require the approval of the Belgian cabinet and the mayor of Brussels. "The only good thing about it is that it is located in a central area in Brussels. But everything else went wrong," said Mr Keynan.

He said staff at the Kenyan mission subsequently wrote a letter to complain over the matter, and copied it to the president of the European Union as well as the Foreign minister.