Goldenberg scandal
The Goldenberg scandal was a
Background
Similar to most countries, Kenya encourages international trade by granting tax-free status to commercial enterprises involved in the export of goods and sometimes subsidises these exports. The Goldenberg scandal was based on the fact that exporters who deposited US$ earnings with the Kenya central bank received in exchange the equivalent in Kenyan shillings plus 20 percent.
However, gold mining represented a tiny portion of Kenya's GDP, with only one operational gold mine (at Kakamega). Goldenberg International therefore developed a scheme of smuggling gold into Kenya from Congo, so that they could legally export it at the higher export price offered by the Kenyan government.
Details
The chief architect behind the scheme was a relative of the Kenyan businessman
The scheme began in 1991, almost immediately after the Kenya government, following directions from the IMF, introduced measures to reform the economy and increase international trade and investment, and seems to have stopped in 1993 when it was exposed by a
Bosire report
On 3 February 2006, following an investigation under the Kibaki government, a report by Justice Bosire[6] recommended that the Education Minister at that time, George Saitoti, should face criminal charges for his actions and that former President Daniel arap Moi should be further investigated. Saitoti was both vice-president and finance minister under Moi in the early 1990s. On 13 February, Saitoti's resignation was announced by President Kibaki in a television address.[7]
The Bosire report found that KSh.158.3 billion/= of Goldenberg money was transacted with 487 companies and individuals. A list of exhibits compiled by the commission placed Goldenberg International Ltd at the top of the primary recipients of the money, at KSh.35.3 billion/=. The directors of Goldenberg were named as Pattni and James Kanyotu. Although Kanyotu was the director of the Special Branch (intelligence unit of the Kenya Police, now known as National Intelligence Services, NIS) and a director of First American Bank, he described himself as a farmer in Goldenberg documents. President Moi was named by Pattni as having been a shareholder of GIL by nominee. However, President Moi himself was never called to present evidence despite this alleged link.
Cost
In response to a query by
Travel restrictions
Shortly after, Saitoti along with 20 several others suspected to be involved in the scandal were prohibited from leaving the country and ordered to surrender any weapons they possessed. Among those named were
- Gideon Moi, retired President Moi's son, also the Baringo Central MP
- Mr Philip Moi, retired President Moi's son
- Mr Moi's lawyer, Mr Mutula Kilonzo
- Mr Moi's former personal assistant, Mr Joshua Kulei
- Former Central Bank of Kenya governor Eric Kotut
- former Central Bank of Kenya deputy governor Eliphas Riungu
- former Central Bank of Kenya employee Job Kilach.
- former Central Bank of Kenya employee Tom Werunga
- former Central Bank of Kenya employee Michael Wanjihia
- Philip Murgor, the former director of public prosecutions
- Mr Murgor's law firm represented the Central Bank of Kenya during the two-year public inquiry headed by Mr Justice Bosire.
- Former Treasury permanent secretary Charles Mbindyo
- former Treasury permanent secretary Wilfred Karuga Koinange
- former Treasury permanent secretary Joseph Magari
- Prof George Saitoti, who resigned as Education minister.
- Goldenberg architect Kamlesh Pattni
- Pattni's business partner and former Special Branch chief James Kanyotu
- former commissioner of Mines and Geology Collins Owayo
- Mr Arthur Ndegwa, senior mining engineer in the Commissioner of Mines Nairobi office
- former commissioner of Customs and Excise Francis Cheruiyot.
- former Kenya Commercial Bank general manager Elijah arap Bii
Former president Moi himself was not listed.
The Law Society of Kenya chairman Tom Ojienda criticised Police Commissioner Hussein Ali's move to seize travel documents. He described the decisions as "a total violation of the law and the Constitution". Ojienda regretted that individuals had been charged, tried and convicted by the court of public opinion and the media or through political statements. He commended three Cabinet ministers who resigned to pave way for investigations into the Anglo Leasing and Goldenberg scandals. "The resignation of three members of Cabinet signifies the maturity of our democracy, where leaders whose reputations are besmirched would opt to resign pending investigations to clear their names rather than hold the Government hostage. Such resignations are no pointers to guilt."[9]
Prosecution
Two transactions stand out – one for KSh.5.8 billion/= from the Central Bank to Goldenberg International in 1993, personally authorised by then-president
Wako is recommending that the country's chief justice consider overturning a previous court order exempting Mr Saitoti from prosecution. All except Werunga are to be charged.[10] The prosecution hopes that Werunga will be their witness.[11]
In August 2006, it was reported that a
See also
- Corruption in Kenya
- Anglo Leasing Scandal
- 2009 Triton Oil Scandal
- 2009 Kenyan Maize Scandal
- Kenya Police
- Politics of Kenya
- Crime in Kenya
- International Anti-Corruption Academy
- Group of States Against Corruption
- International Anti-Corruption Day
- ISO 37001 Anti-bribery management systems
- United Nations Convention against Corruption
- OECD Anti-Bribery Convention
- Transparency International
References
- ^ BBC News: Moi 'ordered' Goldenberg payment
- ^ East African Standard Faces behind the Goldenberg scam Archived 16 February 2006 at the Wayback Machine
- ^ Corruption conventions lack clout Archived 28 October 2004 at the Wayback Machine
- ^ "Death of a Whistle blower". Mambo Africa. 27 September 2010. Retrieved 17 September 2012.
- ^ Judicial Commission of Inquiry Report into the Goldenberg Affair
- ^ "Moi 'knew about' Kenya gold scam". BBC News. 3 February 2006. Retrieved 17 September 2012.
- ^ BBC News: Kenyan 'graft' ministers resign
- ^ Kenya National Assembly Official Record (Hansard). 16 December 2008. p. 4107. Retrieved 8 January 2013.
- ^ East African Standard: LSK criticises minister on graft assets Archived 10 October 2007 at the Wayback Machine
- ^ BBC: Kenyans facing Goldenberg charges
- ^ The Standard: AG orders prosecution of Goldenberg suspects Archived 27 September 2007 at the Wayback Machine
- ^ "Kenyan Judiciary struggles to pass the integrity test". Timesnews.co.ke. Archived from the original on 18 September 2012. Retrieved 17 September 2012.
- ^ Goldenberg: Constitutional Court Ruling a Blow to Kenya’s Anti-Corruption Rhetoric?
- ^ "Misc Civ Appli 102 of 2006 – Kenya Law".
External links
- BBC
- A short story on Goldenberg
- USA government study of Kenya's mineral industry(pdf)
- Document attempt by government to place blame on a Canadian
- Forensic accountants traces goldenburg transaction
- This article may explain Goldenburg in a different style
- CNN report on deportation of Canadian
- Involvement of judges in Goldenburg scandal
- Graft evidence stuns Kenyan MPs