Government secrecy and mysterious US bank account

Central Bank of Kenya Governor Dr Patrick Njoroge and Treasury Cabinet Secretary Henry Rotich. CORD has demanded that the two officals provide information on the Eurobond transactions. (PHOTO: FILE/ STANDARD)

On April 8 this year, opposition leader Raila Odinga formally requested a meeting with CBK Governor Patrick Njoroge, in order that they might review and discuss the receipts and accounting concerning the Eurobond billions.

Odinga listed the specific documents he wished to see and the specific information he sought. He suggested April 21 as a possible meeting date.

Njoroge took almost three weeks to reply, and when he did he refused to meet Odinga on grounds that “the information and documents held by the CBK in relation to Eurobond is privileged under the banking laws and therefore cannot be disclosed to third parties”.

In doing so, Njoroge contravened the Constitution of Kenya, Chapter 4, Bill of Rights Part II(1)(a), Rights and Fundamental Freedoms, which clearly states that “Every person has the right of access to information held by the State.”

Njoroge’s response offends even further against both the letter and the spirit of the Access to Information Bill 2015.

The Bill similarly states in Part II Section 1 that every citizen has the right of access to information held by the State.

It adds at Section 2 to say that every citizen’s right to access information from a public entity is not affected by (a) any reason the person gives for seeking access, or (b) the said public entity’s belief as to the person’s reasons for seeking access.

 Bill of rights

Among various exemptions listed, there is none that would have allowed the CBK to refuse information to Odinga.

The Access to Information Bill has been before Parliament for nearly two years. Parliamentarians have not yet passed it into law. (Can anyone wonder at that, when so many noses are in the trough, sucking this nation dry?)

The Bill of Rights, on the other hand, is part of our laws, including its unequivocal statement that “Every person has the right of access to information held by the State.”

Refusing Odinga information was quite simply illegal.
No doubt it had been three weeks of panic between the date of Odinga’s letter and the date of Njoroge’s reply, as the powers-that-be groped about in the dark for some kind of delaying tactic, and finally decided to issue Njoroge’s feeble edict.
It didn’t do them any favours.

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Previously, on January 28 this year, the Treasury had released more documents to try to cover the initial anomalies (especially the seven bogus letters) in its explanations of what had happened to the $1 billion, with the permanent secretary Mr Kamau Thugge blaming ‘technicalities’ and ‘clerical errors’ for the conflicting information.

(Remember the “typing error” worth Sh9.2 billion during Kenyatta’s stewardship of the Treasury a few years ago?)
Clerical errors? Amounting to billions of shillings?

And no one sees these ‘errors’ until they are identified by people outside the inner circle?

In commercial banking, an error of 100 bob on someone’s account is a big issue. How are people in high office getting away with monstrous ‘clerical errors’ in the billions?
It is certainly no wonder that the whole banking industry in Kenya is in crisis, when the Treasury and CBK are apparently unable to regulate themselves according to the law, leave alone regulating the commercial banks.

 Bogus letters

And then it suddenly appeared that the money wasn’t transferred as per the seven bogus letters at all.

It seems the Treasury hoped that the public had forgotten all about the seven bogus letters, and in a new angle it announced that the Eurobond proceeds were paid to the Treasury against a cheque written on its account at the CBK.

Where did this cheque, purportedly for Sh34.6 billion (in contravention of CBK regulations that amounts of more than one million shillings must be transferred electronically) suddenly spring from? It had never been mentioned previously.

But it seems it doesn’t matter if each new story contradicts the stories of the days before. As long as it fudges the issue even further, that’s what counts.
Faking numerical tables, making up stories and forging letters is not too difficult, even though in this case the bungled result was disastrously amateurish.

What cannot be faked are communications to and from foreign institutions.
That’s why the Treasury must publish all communications to and from itself, the CBK, JP Morgan Chase and the US Federal Reserve Bank that relate to the missing Eurobond $1 billion.

The Treasury needs to present clear and incontestable evidence that what it says happened, actually did happen.
There must be no more incomprehensible tables in tiny print.

The public wants authentic and irrefutable communications between the CBK, JP Morgan Chase New York, the US Federal Reserve Bank and the Treasury.
We want to see the evidence.
One person who does not seem to have seen this evidence is the Controller of Budget.
The Budget Controller is the constitutional gatekeeper for all moneys that flow into and out of the Consolidated Fund.

The Controller’s report for the financial year 2014/15 confirmed that ONLY the later supplementary loan of $815 million (the so-called ‘Tap’ sale proceeds) could be traced to the Consolidated Fund.
Nor is there any empirical evidence of the impact of an injection of $1 billion into the economy.

No big new projects exist and domestic borrowing had increased. The inescapable conclusion is that the $1 billion remains missing.
In addition, it is interesting to note that we have not had the Auditor-General’s report for financial year 2014/15.

Why not?
Constitutionally, the report must be released within six months of the end of the financial year.

The 2014/15 financial year ended on June 30, 2015. We are now in May 2016. The report has taken 10 months and is now nearly five months late.
Could this possibly be due to difficulties encountered in producing a convincing narrative that combines the official accounts on Eurobond, the Budget Controller’s contrary explanations (contradicting her own official reports) and the glaringly inconsistent facts on the ground?
$1 billion is an awful lot of money to hide in accounting.

The Treasury has meanwhile also appeared before the Public Accounts Committee of parliament with questionable statements. This is outrageous.

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Besides the seven bogus letters that attempted to close loopholes, there was also the very interesting bank advisory note posted on the Treasury’s website, purporting to show that the $1 billion dollars (to be precise, $999, 018, 457.60) was transferred from JP Morgan Chase Bank to the US Federal Reserve Bank of New York on September 8, 2014.

But there was nothing to show where this note came from, and the lower half had been covered up (redacted) to conceal the number of the account at the Federal Reserve Bank receiving the money, as well as the name of that account’s owner.

A public statement by the CBK on January 26 claimed it holds a US dollar account no.021084571KENYA with the Federal Reserve Bank.
But there is no evidence or basis for assuming that this was the account the $1 billion from JP Morgan Chase was paid into.
In fact, the Treasury’s concealments suggest that it was a completely different account that was credited with the $1 billion proceeds.
If there is nothing to hide, why is the statement redacted?

It can only be assumed that the intention is to keep secret vital details, most particularly the destination account number and the name of the beneficiary.
And it is significant that the paper trail stops at this point.

Changing tales

There is no further evidence as to where the $1 billion went after it left the JP Morgan Chase Bank.
We have heard endlessly changing tales of how this money came to Kenya, first with myriad attempts to prove the $1 billion was transferred here, and then the Treasury coming out to contradict itself by informing us the dollars were never repatriated but were sold abroad.

We have seven letters hurriedly written (and consequently bungled), attempting to show that the money was transferred to the Consolidated Fund in inexplicably random and consecutive small sums.

We have a later contradictory story that the money was transferred against a Treasury cheque.
We have the Budget Controller’s 2014/15 report, which shows no receipt of any of this $1 billion in the Consolidated Fund.

We have an advice note of the transfer of the $1 billion apparently from JP Morgan Chase to the Federal Reserve Bank of New York, with the beneficiary’s name and account number concealed – a concealment that indicates something is seriously wrong.

We have ever-changing stories about what the purported $1 billion was used for. First it was used – according to Rotich’s written statement to the Public Accounts Committee – on infrastructure projects, “some [of which] have been completed while others are ongoing”.

Rotich failed to provide a list of these projects, passing the buck to ministries, departments and agencies of government (MDAs), whom he now held responsible for accounting for the Eurobond money given to them.

Unsurprisingly, the MDAs kicked the ball right back to him, saying they had no way of knowing where their budget allocations originally came from.
No one believes that $1 billion was ploughed into public projects in less than a year, yet not a single member of the public can see any of these projects.

What is more, Rotich stunningly announced that there was no audit trail for this supposed money or these supposed projects, so nothing could be traced or proved.

More than half the people in this country live in dire poverty. For any government official to be so bold as to act as though he has no obligation to make clear where $1 billion of public money has gone is beyond arrogance. It is criminal.

Rotich had to scramble for new explanations, and he recently came up with a completely different notion – the $1 billion was used to pay Coalition Government debts!

Well, desperate times call for desperate measures – and these are definitely desperate times for the Treasury.
For let’s face it – if this money had been properly transferred and properly used, we would not be in this merry-go-round.

To settle the matter, we now need documentary evidence regarding the four salient issues regarding the $1 billion – that is, all the supporting documents between the Treasury, the CBK, the JP Morgan Chase Bank and the US Federal Bank of New York – together with the account number to which $1 billion was transferred at the Federal Reserve Bank and the name of the holder of that account.

In January this year, instead of answering the obvious questions raised when stories were published about Eurobond, Rotich responded with “Elderkin is a serial liar. That is the right term. What she has written is nothing more than nonsense.”
OK, Mr Rotich. Prove it.

Sarah Elderkin was a Managing Editor of the defunct Weekly Review Magazine. She also served as an aide to Raila Odinga