In the past few years, millions of dollars held in secret accounts abroad have been sent back to some African countries, thanks to tighter international money laundering laws and calls for repatriation of money stolen from public coffers. In 2020, for example, the United States and the self-governing island of Jersey in the English Channel agreed to repatriate more than $300 million to Nigeria, which Nigeria’s military dictator Sani Abacha allegedly stole in the 1990s. Although Abacha, who died in 1998, was never charged with corruption, subsequent Nigerian governments successfully collaborated with various countries to get back the funds he had held secretly in various foreign jurisdictions.
However, one of the thorny issues in these repatriation schemes is what happens to the money when it is returned. There is always a risk that repatriated funds could be lost to corruption or could be misused, especially if the government or entity receiving them is corrupt or unaccountable.
Landmark agreement
Perhaps to get around this dilemma, a landmark agreement stipulates that stolen money returned to Kenya must be used exclusively for development projects and managed by an independent entity, not by the Kenyan government. The agreement is between the Kenyan government and the governments of the United Kingdom, Switzerland, and Jersey, with support from the Basel Institute’s International Centre for Asset Recovery.
Last month, Jersey returned $3.5 million to Kenya, which will be used to help the country deal with COVID-19 pandemic. Crown Agents, the nonprofit international development organisation selected to manage the funds in Kenya, says the repatriated money will be used to supply vital equipment, such as microtubes and PCR tests, to six Kenyan hospitals within two months. Crown Agents CEO Fergus Drake said that while the money was not a huge amount, he hoped this type of targeted assistance would have an exponential impact. Currently, only 15% of Kenya’s population is fully vaccinated against COVID-19.
The returned money is part of illicit proceeds allegedly obtained by Samuel Gichuru, the former managing director of the Kenya Power and Lighting Company (KPLC), and Chris Okemo, the former finance minister. Both men are wanted in Jersey to face charges of theft of public funds and money laundering. Gichuru and Okemo are accused of receiving kickbacks from foreign companies that won tenders and contracts at KPLC for various infrastructure projects, such as power dams, most of which never materialised. Last year, after a 10-year legal battle over whether Kenya’s Attorney General of the Director of Public Prosecutions should lead the case, the Supreme Court of Kenya allowed the Director of Public Prosecutions to proceed with the extradition process, which will enable the two accused to be tried in a Jersey court.
The 2018 agreement gave Jersey the authority to unfreeze and return public funds it believes were looted even before those accused of stealing them face trial. This landmark deal, known as the Framework for the Return of Assets from Corruption and Crime to Kenya (FRACCK), has been hailed as “innovative” because it encourages transparency and accountability in the use of returned assets.
The KEMSA scandals
Kenya’s state-run medical supply agency has been riddled with irregularities in recent years – which may have led to the decision to appoint an independent entity to manage the funds. This victory for the Kenyan public comes in the wake of several corruption scandals involving the Kenya Medical Supplies Authority (KEMSA). Officials were accused of embezzling $7.8 million in 2020 by flouting procurement regulations and misusing public and donor funds earmarked for the country’s COVID-19 response.
That scandal led to the suspension of several of the authority’s senior officials. But it apparently did not deter staff from attempts to steal funds and medical equipment meant for the Kenyan public. Last month, the Global Fund revealed that 1.1 million condoms, 908,000 mosquito nets, and TB drugs worth 10 million Kenya shillings (about $90,000) that it had donated to KEMSA had gone missing. It is believed these supplies were sold to private chemists. Some drugs KEMSA purchased lay in warehouses, even as the country’s health facilities experience shortages. A Global Fund audit showed that KEMSA lacked sufficient internal controls in its procurement and supply chains. In response to these challenges, Kenya’s Ministry of Health formed a KEMSA Reforms Implementation Committee, which will develop an action plan to address the gaps in the agency, alongside relevant stakeholders and donors, including the Global Fund.
Pandora’s box
These developments, including the precedent-setting FRACCK agreement, suggest that Kenya is on the right path to ensure that public funds, especially for the health sector, are not misappropriated or stolen. FRACCK has also provided a new model for other African countries to emulate, and could be a game changer in the way repatriated funds are used for the public’s benefit. Kenya’s High Commissioner to the UK, Manoah Esipisu, described the agreement as a “huge contribution” to President Uhuru Kenyatta’s campaign against corruption. He said that the agreement sent a signal that “corrupt people will not be safe simply because they hide their money abroad.”
However, Mr. Esipisu was silent on anonymous offshore assets worth millions of dollars allegedly owned by President Kenyatta’s own family. A recent investigation – dubbed the Pandora Papers –revealed that members of the president’s family, including his mother Mama Ngina, have held assets in tax havens abroad for several decades. When the investigation’s findings were leaked to the international media late last year, President Kenyatta promised to respond to the allegations contained in them “comprehensively,” but there has been no such response to date.
