E-Clips:- Business Pictorial - Spectre Of Corruption Hounds PS Magari

When he was appointed to the position of Treasury permanent secretary in January 2003, Joseph Magari was hailed as an astute economist who would competently spearhead the sweeping economic reforms promised by the Narc administration. Although he was a little past his prime — like most of his peers at the top of government over 70 years old — many people believed that his past record as a civil servant would bear him out.

But 15 months down the line, the reclusive economist is now being accused by opposition backbenchers and some Narc MPs of being the patron of what is alleged to be an elaborate new network of fly-by-night millionaires out to rip off the Treasury.

“There is no doubt that there are deep problems at the Treasury and the man responsible is the permanent secretary,” says shadow Finance minister Billow Kerrow.

“The policy of zero tolerance to corruption will be meaningless if there is no will to deal with elements who are clearly corrupt,” he says.

Mr Magari, who enjoys a long professional association with his boss, Finance Minister David Mwiraria, has proven surprisingly resilient despite being repeatedly mentioned adversely in relation to a series of scams.

Backbenchers

All that may be about to change in the coming weeks, though, as backbenchers aim to tighten the screw on what they see as a re-invention of graft by the Narc administration.

The Sunday Standard has learnt that the parliamentary anti-graft watchdog, the Public Accounts Committee, has demanded that the Treasury furnishes it with documents to facilitate a special audit of the government computerisation project which, it is claimed, has been hit by massive irregularities and could yet constitute the next major big Narc scandal.

Additionally, a number of backbenchers have lined up a series of questions in Parliament demanding the censure of the PS for irregularly influencing the award of tenders to favoured firms.

PAC chairman James Magara told the Sunday Standard last week that the levels of corruption in the current administration could well spiral out of control unless decisive action is taken to stem the tide. “The fuse of corruption blew with the installation of the new government and the assurance by President Kibaki that the days of high-level graft were behind us. That fuse was, however, reconnected around March last year, and the demon of graft is now healthy and thriving,” he said.

Observers point to the system of procurement as the minefield that corrupt elements within the Narc administration have tapped to make a quick buck.

The procurement system accounts for nearly Sh100 billion a year, almost half of the government budget.

Procurement rules

Early last year, the Treasury introduced new stringent procurement rules that annulled the previous system that had been put in place under World Bank supervision in 2001 empowering individual ministries to supervise procurement.

Under the new system, the entire system was centralised to the Treasury, with the Finance PS having the last word on which companies would get which contracts.

The new system has been faulted for being winded, slow and inefficient. Last year, Trade and Industry minister Dr Mukhisa Kituyi warned that the procurement system was compromising efficiency in service delivery.

“We have very substantial resources which will not be utilised in the coming year or the next,” he said, adding that Kenya risked losing out on lucrative contracts to rebuild peacetime Sudan due to bureaucratic cobwebs. More seriously, the Treasury has been accused of taking advantage of the new system to perpetrate grand corruption.

Following the summary dismissal of procurement officers last year, the government announced in May the freezing of procurement in all ministries.

The freeze notwithstanding, opposition politicians tabled evidence that Magari had written to the National Social Security Fund over a Sh100 million tender advertised in February 2003 for insurance cover to the Fund, ordering the management to award the tender to favoured insurance firms regardless of a decision by the Appeals Board.

The Treasury was on the spot a short while later for unilaterally granting pre-inspection rights to two firms at a cost of Sh4 billion despite the absence of supplies officers.

This was a short while before the payment of pending bills, to the tune of Sh2.4 billion (this figure was later disputed) to select road contractors, which kicked off a huge row. When in the Opposition, Narc MPs had vigorously objected to Kanu payment of the bills terming it as corruption. In fact then shadow Finance minister Mwiraria publicly admonished his predecessor, Mr Chris Obure, over the issue during the ministry handing over in January 2003.

In September, it emerged that IBM/Symphony, a firm which had been blacklisted by Parliament had been awarded a lucrative government computerisation tender despite the United States Agency for International Development (USAid) offering to undertake the project as a grant to the government.

And in the latest mega-scam to rock the Treasury, Magari has found himself at the centre of investigations into the quadrupling of the value of a secure passports project in which his nephew, Jimmy Wanjigi, has been fingered as the main intermediary. Now, it is turning out to the great embarrassment of the Government that the company that had already been paid Sh90 million for the tender does not exist.

MPs now claim that government officials have identified the procurement system as the easiest and most lucrative avenue for perpetrating graft on a grand scale. “The extravagance that has beset government is astounding,” says Magara.

“We are spending beyond our means, not because we need the items we are purchasing, but simply because the officers involved are only interested in what is in it for them,” he says.

That statement cannot be exaggerated. Last week, the Government tabled its supplementary budget in which it is seeking an extra Sh50 billion to plug a hole in its budget before the end of the financial year in July.

Special audit

Embakasi MP David Mwenje, the chairman of the parliamentary committee on national security is demanding that House committees be given powers to conduct a special audit on every government contract issued.

“We need to know all the details of all these purchases. What we are currently seeing is purchases being shrouded in secrecy, which is a conducive environment to perpetrate graft,” he says.

Although government insists that purchases touching on national security should not be subject to standard procurement procedure due to their sensitivity, Opposition MPs have dismissed these concerns as a ruse for engaging in graft. Kerrow claims that most equipment purchased by militaries globally is eventually reported in international defence news magazines, which makes nonsense of the need for secrecy. “If the tender for a Sh2 million borehole in Mandera is advertised in all three newspapers, I do not see why that for a tender running into billions of shillings should not,” he says.

Despite all the accusations, Magari appears to have a formidably thick skin. He has not replied to most of the accusations levelled against him and rarely speaks to the press. He takes umbrage in his long professional association with Mwiraria, having — like his minister — studied applied statistics at Makerere University alongside President Mwai Kibaki.

In later years, Magari served as director of fiscal and monetary policy at the treasury at the time when Mwiraria was permanent secretary, and a short while before with Kibaki as Vice President, before he was transferred to the ministry of Health in 1988.

Despite these ties, the noose appears to be tightening around Magaris neck. Delivering the supplementary budget 10 days ago, Mwiraria confessed on the floor of the House that “the government retained a few people who it thought were good only to realise they were not”, in what was seen as a thinly veiled reference to corrupt officials at the Treasury.

It remains to be seen, though, whether the latest warning delivered by the PS for Ethics and Governance, Mr John Githongo, that government will not hesitate to pay the political price of the war on graft will be just another idle threat.