The following report was first published in the Daily Nation.
Anti-corruption authorities, after interviewing more than 30 government officials, have concluded that no money was lost or laws broken in the Eurobond transactions.
The Ethics and Anti-Corruption Commission has advised the Director of Public Prosecutions to close the Eurobond file.
EACC was investigating claims, particularly by Opposition Leader Raila Odinga, that proceeds from the bond were kept in secret offshore accounts and used without the authority of the Controller of Budget as required by law.
After weeks of interviewing the officials accused of wrongdoing, EACC boss Halakhe Waqo said in his letter to the DPP: “Considering the nature of the allegation that the government officials had kept the proceeds of the Eurobond in offshore accounts and not in the Consolidated Fund and that the proceeds were spent without the authorisation of the Controller of Budget and in view of the above evidence, it is abundantly clear that the net amount realised after payment of the syndicated loan was Sh196 billion.
The amount was remitted from the offshore collection accounts held at JP Morgan Chase Bank and Citibank to the National Exchequer account at the Central Bank of Kenya.”
According to its report, EACC questioned officials from the National Treasury and state departments such as Energy, Transport, Water, Agriculture and ICT but also the Office of the Controller of Budget.
FUNDS FULLY ACCOUNTED FOR
In his statement, National Treasury Cabinet Secretary Henry Rotich said the Eurobond proceeds were fully accounted for and went on to fund various ministry and state department projects.
“When the money was received the government paid the syndicated loan and other transactional expenses. The balance of about Sh196.9 billion was spent to support development projects,” said Mr Rotich.
More specifically, he said about Sh25 billion was utilised in the 2013/2014 financial year while Sh171 billion was used to fund development projects in 2014/2015.
The Treasury, he told EACC, had written to ministries asking them to provide detailed information on how the money was spent.
Mr Rotich said that the amendment to the Public Finance Management Act allowed the government to pay directly from the offshore account adding that approvals were sought from the Controller of Budget to pay the syndicated loan.
He also said that an account was opened in the US since 67 per cent of the investors were from the USA, adding that the standard practice is to issue instructions to the CBK to open such accounts on behalf of the National Treasury.
DEVELOPMENT BUDGET
Treasury Principal Secretary Kamau Thugge on his part told investigators that there was no project activity that had been earmarked for the Eurobond proceeds and it was a purely development budget.
Dr Thugge, according to the EACC statements, said the lead managers were required to collect the money in their own accounts and then wire it to Government of Kenya and Central Bank accounts.
“The lead managers would wire the money less their commission in GOK/sovereign bond account and requests for withdrawal could come through the Accountant General, Treasury, or his Deputy, to the CBK,” he stated.
The PS said that the total amount of money that came to Kenya through the CBK after the deduction of commission and syndicated loan was Sh196.9 billion.
He said that in the financial year 2014/2015, most of the development projects implemented by ministries were funded using the proceeds of the sovereign bond.
“The total money that went through the exchequer and that was paid to ministries for development expenditure was Sh270 billion.
Out of this, Sh36 billion came from development partners, Sh171 billion were proceeds from the sovereign bond.
“The balance of Sh25.9 billion, proceeds of Eurobond, were used in the financial year 2013/2014 as per the ministries request to pay pending payments,” Dr Thugge told EACC.
CONSOLIDATED FUND
The Controller of Budget Agnes Odhiambo told EACC that she confirmed from bank statements from the CBK that all the money remaining after the payment of the syndicated loan and transaction costs was transferred to the Consolidated Fund.
National Treasury Accountant General Bernard Ndungu, National Treasury Senior Deputy Accountant General and Senior Assistant Director Debt Management Department at the National Treasury also said the process was above board in their statements.
Others who were quizzed included CBK’s Acting Director of Financial Markets Department John Birech, CBK Financial Markets Department in External Payment and Reserve Management Division Mwangi Muthui, CBK Manager in the Banking Services Division, National Payment and Risk Management Department Paul Lenkume.
Other CBK officials who were grilled included Ms Grace Waiganjo a manager in the financial markets department in External Payment and reserve management division, Mr Gerald Nyaoma, a director of Banking in the Bank Supervision department, Mr Leonard Kimutai, a manager in the Banking Services Division and Mr Mwenda M’Marete an assistant director of the Financial Markets Department of the CBK.
