Integrity crisis affects whole economy

Just two years ago, Dr Davy Koech, Kenya Medical Research Institute chief exe-cutive, was named ‘CEO of the Year’ in the Company of the Year Awards (Coya), a yearly event organised by the Kenya Institute of Management. And, for the third year in a row, Kemri was named the country’s ‘Best Parastatal’.

Today, Koech and other senior officials stand accused of diverting more than Sh600 million in pension and donor funds to personal use. This is more than half the annual allocation to Kemri by Government. The brazenness of the looting, carried out over several years and detailed by the Inspectorate of State Corporations, is breathtaking: False payrolls, irregular bank withdrawals, allowance fraud and even an unprocedural pay increase for Koech.

This happened in a climate of governance similar to that in the rot-ridden National Social Security Fund: Disregard for ministry and Civil Service circulars on the use of money, no high-level audit function, unreconciled bank accounts with non-executive board members as signatories, a disregard for procurement laws and a rubber-stamp board of directors that didn’t look at Kemri’s budget before Koech submitted it to the Health Ministry. How this rotten institution could be the country’s best parastatal is unfathomable.

Koech joins Dr Charles Kandie, the former head of the Kenya Medical Supplies Agencies (Kemri’s sister corporation under the health ministries), on a growing list of shame of parastatal heads accused of economic crimes.

Shining stars

A year before Koech was feted by Coya, Mr George Okungu, Kenya Pipeline Managing Director, was picking up an award from President Kibaki for running the "second best performing State corporation".

Today, he is in court on charges of illegal disposal of KPC assets, as Kenya Anti-Corruption Commission investigates the irregular release of Sh7.6 billion worth of oil products from the company’s depot to Triton.

Former Kenya Tourist Board MD Ongong’a Achieng’ is yet another shining star whose name has been tarnished following accusations of financial impropriety.

Earlier, we had Kenya Re MD Mr Johnson Githaka arraigned in court over suspect transactions in the disposal of assets ahead of the firm’s privatisation. And before him, Dr Mohammed Isahakia, Dr Margaret Gachara, Mr Nathaniel Tum... the list goes on.

While outrage is generally reserved for those who abuse their positions in the public sector to ‘eat’, there is ample evidence the private sector is rife with similar rent-seeking behaviour.

Absence of scrutiny

Only the fact that managers that control advertising budgets exert greater pressure on media houses than the shareholders being bilked explains why a blind eye is turned on private sector corruption.

Despite this absence of scrutiny (or perhaps because of the excesses it provokes), people who were in positions of trust and often held in high esteem by their peers — Terry Davidson, Chris Kirubi, Isaac Awuondo, Patrick Gacivih and others — now defend themselves in court on various charges for activities not dissimilar to those of public sector managers. While it has become fashionable to lament the lack of integrity in the capital markets, has any thought gone into the misdeeds in other parts of the economy that go unreported?

Uphill battle

There is a rottenness in the private sector that has long gone unremarked, despite its knock-on effect on public governance. Take competition in the beverage industry, for example: It consists largely of unethical practices like destroying competitors’ bottles and advertising material. Is anyone surprised firms in the industry are mentioned in scandals on political influence-peddling?

Kenya Revenue Authority Director-General Michael Waweru last year revealed that disciplinary cases for new hires, most of them fresh from universities, are sometimes noted as early as the second year. The pressure from a corrupt private sector is so great, efforts to make KRA ‘clean’ are a constant uphill battle.

While the media, understandably, is dependent on the private sector for advertising, it must not exclude it from the kind of scrutiny it gives parastatals.