Eurobond: Treasury CS Henry Rotich dodges one billion dollar question

Treasury Secretary Henry Rotich Sunday responded to some of the questions on the Eurobond funds, but could not provide proof on what happened to the cash stashed in the Federal Reserve Bank in the United States.

Journalist Sarah Elderkin, who helped the country comprehend the mega Goldenberg scam, last week gave a chronology of events based on documents on Treasury’s website, to show the possibility that some of the Eurobond money was never brought to Kenya and cannot be accounted for.

The first tranche of the Eurobond loan was received into an offshore account at JP Morgan, the biggest US bank by assets, which has been hit by various scandals in the recent past and was fined Sh200 billion for money laundering. The Government says it paid off a Sh53.2 billion debt from a syndicated loan that was due, wired some back home and paid commissions and other costs incurred in raising the money.

It was left with Sh88 billion, an amount that was sent to the Federal Reserve Bank, one of the most powerful financial institutions in the world given that it controls the US financial system by playing the equivalent role of the Central Bank of Kenya (CBK).

Elderkin raised questions on the real signatory to this account held at the Federal Reserve Bank of New York and from where the Sh88 billion of the Eurobond money is said to have been wired to Kenya. When these questions were put to the CS, Mr Rotich dismissed the author as merely playing politics.

"Elderkin is a serial liar. That is the right term. What she has written is nothing more than nonsense. What is in New York is a public account not a private account belonging to Rotich. This is just politics. What they have done is just to pull our documents and use them to build their case. If we were hiding anything, we would not have placed those documents on the website," said Rotich.

"The Federal Reserve Bank does not deal with private accounts. It's only commercial banks that can own accounts there. This is a Central Bank account and the CBK has all the documents to show the various transactions," he said.

This comes at a time when the Director of Public Prosecutions said he will continue with the probe into the Eurobond cash to get more information, two weeks after EACC cleared government officials of culpability for the alleged loss of funds.

Treasury has not provided details of these transactions at the Federal Reserve Bank, only saying that it received the equivalent of the $999 million in Kenya shillings, which translates to the Sh88 billion. The other question has been why Treasury at the last minute dragged the Qatar National Bank into the mix of transaction advisors.

Another critical question that Rotich didn't answer is whether or not the money raised from the loan went to South Africa, which is a Rand economy and not a Dollar economy, before it came to Kenya. Rotich could also not explain why the Government cannot pin point the specific projects the money funded to bring the matter to rest.

When the scandal first broke, Treasury said it would name the projects. In a second meeting, it said it had given ministries three weeks in December to furnish it with the report on the projects. But this has also changed after Rotich explained that ministries cannot differentiate whether the money they received from the Exchequer was from VAT, income taxes, customs duties, excise taxes, domestic borrowing or the Eurobond. This means that Kenyans may never know the exact projects the billions went to even as they start repaying the loan.

Rotich has explained that the Government had to bring Qatar National Bank into the transaction to cater for the Middle East market to ensure no market was left out.

"It is true we had three banks in the beginning but we did a special procurement to bring on board Qatar Bank so that we cater for the Middle East market," Rotich said.

"We had JP Morgan to take care of the US market, Barclays was to handle the European market while Standard Charted Bank has a strong presence in Africa. We really wanted to succeed and Qatar was to take care of the Middle East so that everyone who wanted to participate would."

The opposition has been demanding to see the paper trail of the various transactions, including the movement of the money from JP Morgan Chase to the Federal Reserve of New York, two institutions that handled the money before it was allegedly wired to the Central Bank of Kenya.

"If this nearly one billion dollars was transferred to Kenya, we need to see very clearly when and how. We need to see all the documents and whatever else is available that can constitute accurate, authentic and irrefutable proof that our money is safe," Elderkin wrote.

Elderkin is a former managing editor of the defunct Weekly Review magazine. She is also remembered for her investigative series that exposed the Goldenberg scandal.

She has also worked as an aide to former Prime Minister Raila Odinga, who has put up a spirited campaign to unravel the mystery surrounding the billions raised abroad.

"Without these documents, we can only say that this money is not 'missing' or 'lost', or 'unaccounted for', as it is often politely described, but stolen. And finally, I am sure the US Department of Justice might be quite keen to see all these documents too," she said.

In his response Rotich said that the CBK has all the documents including the account numbers.

"The governor of the Central Bank has all these documents that are being asked for. They have the account number. The money that was transited from the CBK accounts was not just created. It must have come from somewhere," he said.

Controller of Budget Agnes Odhiambo, who has also come under pressure for 'flip-flopping' on whether she approved the payment of a Sh53.2 billion syndicated loan, did not respond to the latest revelations by Elderkin.

"I'm not in a position to comment at the moment. I am in hospital," said Ms Odhiambo. The controversy Sunday continued to provide fodder for politicians to trade blows.

Leader of Majority Aden Duale also termed the latest claims by Elderkin as 'propaganda.'

"The writer is not an authority. We don't even know which school she went to. At one time, she is a speech writer for Odinga, at another time, she is a side kick and a propagandist. She cannot be trusted to write anything of substance," Mr Duale told The Standard.

"If they say that this was an individual account, let them tell us who is the signatory instead of making empty allegations. My position is that the Government has proved that no money was lost," he said.