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Survey: Kenya ranked third most corrupt country in the world

By Dominic Omondi | Published Sat, February 27th 2016 at 00:00, Updated February 27th 2016 at 11:07 GMT +3

NAIROBI: Kenya is the third most corrupt country in the world. This is according to a survey on prevalence of economic crimes released in Nairobi yesterday by audit firm PriceWaterhouseCoopers (PwC).

According to the survey, Kenya only fared better than South Africa and France. The findings come a day after President Uhuru Kenyatta said Kenyans were experts in stealing, whining and perpetuating tribalism. The President said this while addressing Kenyans who live in Israel.

Similar views were expressed by Chief Justice Willy Mutunga during a newspaper interview weeks before. The Chief Justice told Dutch newspaper NRC Handelsblad that Kenya had become a bandit economy where corruption pervaded all levels of society.

The audit firm found that Kenya beat the rest of the world in economic crimes  such as embezzlement, bribery and procurement fraud.

More worrying from the survey is the declining confidence in the ability of law enforcers to deal with these crimes.

"A worrying trend in the survey is the low levels of confidence in local law enforcement's ability to investigate and prosecute economic crimes," said PwC's Forensics Leader in Eastern Africa Muniu Thoithi.

The report comes amid growing public anger over the wanton theft of public resources following revelations over the loss of Sh791 million at the National Youth Service (NYS).

Before the NYS saga that has sucked in top government officials, the jury is still out on how the government spent the Sh250 billion it raised from the Eurobond.

Investigations have also been revived on the alleged role of Kenyan electoral officials in bribery by officials of a UK security printing firm to win printing contracts for 2013 General Election materials.

The crimes stray into other spheres. In the private sector, a clique of top managers of Imperial Bank are in court for allegedly stealing more than Sh34 billion from bank deposits.

In most cases of economic crimes, the perpetrators were mainly insiders, a fact that has now been confirmed by PwC's findings.

"Most economic crimes continue to be committed by internal fraudsters who were responsible for 70 per cent of the cases reported by Kenyan organisations," Mr Thoithi reported.

And last month, the CJ laid bare his frustrations in the fight against corruption in the Judiciary, saying the country was being run by criminal cartels working  with politicians.

"As long as I fight the cartels and they are protected, you cannot achieve anything. You are taking these people into a corrupt investigating system, through a corrupt anti-corruption system, and a corrupt Judiciary," Dr Mutunga said.

On Tuesday, President Uhuru Kenyatta  appointed a tribunal to investigate bribery claims against Supreme Court Judge Philip Tunoi. The judge is alleged to have received Sh200 million to influence the outcome of an election petition.

Embezzlement was the most predominant economic crime in Kenya, the survey noted.

Three out of four of the respondents in the PwC survey had encountered a case of embezzlement — an indication of the level of theft by employees or State officials. Weak systems predispose Kenya's public resources to pilferage by government officials, as reported in the latest report of the Auditor General.

A rather shocking finding was that only one per cent of Kenya's national budget for the previous financial year had been properly accounted for.

This corruption cascades to all spheres of society. And while millions of ordinary citizens are starving, their elected representatives take every opportunity to raid the national kitty through dubious allowances, padded procurement and bloated mileage claims.

Anti-graft czar John Githongo last year decried the level of fraud in the country.

"This is the most rapacious administration that we have ever had. Corruption in Kenya has deepened and widened," said Mr Githongo.

His sentiments came months before the revelations of inflated procurement costs and outright theft in government came to the fore.

Half of Kenyan respondents in the PwC survey reported to have witnessed or given a bribe, in prevalence rates that are double the global average.

These high levels of corruption have been noted by  luminaries. During his trip to Nairobi in July last year, US President Barack Obama described Kenya's corruption levels as historical.

"It's clear we've reached a scale of looting that surpasses anything we've had in Kenyan history," Mr Obama said. 

This theme was revisited by Pope Francis during his visit to Kenya in November last year. The Pope said corruption was a "cancer" and "a way of death" that was eating up the Kenyan society.

The PwC survey says rates of economic crimes in Kenya had dramatically risen to 17 per cent in just one year, catapulting the country to position three globally, seven percentage points behind South Africa.

Sixty-one per cent of the respondents from 99 organisations spanning different economic sectors said they had suffered some form of economic crimes in the last 24 months — a nine per cent increase from 2014s 52 per cent.

South Africa (69 per cent) and France (68 per cent) were the countries standing between Kenya and the dubious prize of the country with the highest score of economic crimes.

Zambia tied with Kenya at 61 per cent in a survey that saw all the four African countries surveyed feature among the top-ten countries. Nigeria was the fourth African country in the survey.

And in a foreboding statistic, Kenya  topped the list of countries where respondents had little faith in their law enforcement agencies. Seventy-two per cent of respondents said that their law enforcement agencies were not well equipped to combat what is fast turning into a national crisis. This was against the global average of 44 per cent.

Most organisations would rather discipline the culprit internally with the eventual sanction losing their jobs, it was noted.

The most prevalent form economic crime in the country is asset misappropriation which involves the theft or embezzlement of company assets by directors, trustees or employees. This remains unchanged for the last eight years.

And 72 per cent of respondents reported having experienced this form of economic crime in the last 24 months. Even more disquieting, 68 per cent of the respondents expressed fear that they would experience asset misappropriation in the next 24 months.

The evidence of such crimes is overwhelming. Retail store Uchumi Supermarkets and the dissolved Imperial Bank and Dubai Bank  are some of the Kenyan firms which have been rocked by this vice with former directors or managers being accused of embezzlement.

The second most prevalent form of economic crime in the country is bribery and corruption, with 47 per cent reporting having experience the vice in the last 24 years.

According to the survey 61 per cent of respondents believe that corruption and bribery were likely to occur in their organisations in the next 24 months. Only 46 per cent believe that the top level management perceives bribery as an illegitimate practice. "This indicates that the mindset of individuals within the organisations needs to be changed," says the survey.

Procurement fraud, especially at the initial bidding stage, was the third most prevalent economic crime in the country with 37 per cent of respondents saying they experienced it in the last 24 months. The report noted that corruption and bribery and procurement fraud in Kenya are "usually in tandem".

Accounting fraud, in which books of accounts are cooked, and cybercrimes were the fourth and fifth most prevalent forms of economic crimes respectively.

The profile of the typical culprit is that of a 21 to 30 year old well-educated male employee.  

"Investing in systems to combat economic crimes needs to go hand in hand with investing in the people that are entrusted with the assets and systems in these organisations," said Thoithi.


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