Take Arror, Kimwarer case to London

Four civil society groups have sued State prosecutors involved in the Kimwarer and Arror dams’ case, accusing them of bungling it. It is a significant development because if it takes off, the case will have focused the searchlight on one of the darkest corners of institutions involved in the anti-corruption fight.

Sadly, we are not asking the right questions. In my view, the most important question we should be investigating is why we are servicing a massive Sh99 billion loan for a project that did not take off. Since no dams were built, where did the billions disappear to?

Indeed, the criminal case that has just ended evaded the biggest issue in the scandal because investigators chose to focus on mundane procurement issues. By far the majority of the accused persons were junior tender evaluation committee members working for the Kerio Valley Development Authority.

Yet Kimwarer and Arror was not your mere procurement scandal. The big issue to be investigated is the possibility of money laundering by top government officials through collusion with syndicated loan arrangers.

Instead of focusing on omissions and commissions by tender evaluation committees, the investigations should interrogate malfeasance by corrupt elite while contracting syndicated loans.

Follow the money. We need to see evidence and documents from the arrangers showing that the money was not syphoned off by corrupt elite. Where is the evidence and the documentation to prove that the Sh99 billion in question was indeed received and deposited in the Consolidated Fund as required by Section 206 of the Constitution?

No dams were built. Yet we can see from the external debt register that we borrowed a huge Sh99 billion loan from a motley of fringe European banks.

I keep hoping that civil society groups or even a public-spirited litigant such as Senator Okiya Omtatah, will one day marshall the wherewithal to institute cases in London, New York and Paris where we can put these syndicated loan arrangers to task to show us how the money moved and prove that they did not collude with the corrupt to syphon and channel the billions to Cayman Islands.

In 2018, prosecutors in Malaysia investigated the dealings between Goldman Sachs and corrupt elite in that country. They alleged that large amounts were misappropriated during a syndicated loan transaction and were diverted to offshore bank accounts and shell companies.

As it turned out, that famous Wall Street investment banker was forced to reach a $3.9 billion settlement with the Malaysians.

In 2021, Credit Suisse that was the lead arranger in the infamous hidden debts scandal in Mozambique agreed to pay about $475 million to regulators to resolve bribery and fraud charges. The settlement included a pledge to forgive $200 million in Mozambican debts.

Kimwarer and Arror are a much bigger scandal.

Contrary to what the government has been saying, the Italian government had minimal involvement with loans.

As a matter of fact, the name of the entity— SACE — touted as the Italian government’s export credit agency does not appear on the external debt register as one of our creditors. When they tell you that Arror and Kimwarer loans were part of a government-to- government arrangement, it is a blatant lie. The agency merely came into play as an insurance provider to indemnify the lenders.

The loans were funded by a syndicate of commercial banks in which the lead arranger was Intessa San Paolo and whose members were Uni Credit SPS, BNP Paribas Fortis Sainv and Uni Credit AG, based in Australia.

When you analyse Arror-Kimwarer carefully, the biggest motive here was opportunity for reaping economic rents from opaquely-negotiated syndicated loans.

Is it not incredible that the Treasury was prepared to release billions of shillings to that broke Italian contractor despite the fact that even something as rudimentary as acquiring the land where the dams were to be built had not been done?

To get to the bottom of Arror-Kimwarer, just follow the money. The government and the entities that arranged the loans must tell us where the Sh99 billion we borrowed from the four banks went to.

The writer is a former managing editor of The EastAfrican.