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Inside Moi’s cabinet, the rivalries, Goldenberg and IMF demands

By Nzau Musau | December 6th 2019 at 03:00:00 GMT +0300

Former President Moi is welcomed by the late George Saitoti. [Standard]

Former Vice President and Amani National Congress leader Musalia Mudavadi has revealed the hitherto unknown rivalries that characterised former President Daniel arap Moi’s Cabinet of the 1990s.

In the revelations contained in his new book Soaring Above the Storms of Passion, Mudavadi says long-serving Vice President George Saitoti was never at ease with him from the moment he stepped into the National Treasury docket after the 1992 General Election.

Mudavadi says Saitoti had built for himself an enviable network of loyalists in the all-important docket, and that the VP apparently understood that the Treasury was his special preserve.

But on the other hand, international financial institutions were exerting pressure on Moi to make changes in the financial management sector.

By retaining Saitoti as vice president and giving Mudavadi the planning docket, whose functions cross-cut those of Finance, Moi had unknowingly set up the two men against each other.

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Inferior office

“Saitoti refused to vacate the office. I was eventually forced to sit on the 10th floor in an office that was considered relatively inferior. I had huge challenges from the very outset. There were powerful chief officers who felt beholden to Saitoti,” Mudavadi says.

He also reveals that Saitoti refused to hand over to him, casting him into the deep end of belligerent technocrats. He says that for a while, Saitoti managed to push his ‘nose and fingers’ into the goings on at Treasury.

Before the Treasury job, Mudavadi had been the minister of Marketing and Supplies since his debut into Parliament in 1988.

Quite young, green and a stranger to big office politics, Mudavadi was no match for Saitoti.

“The Central Bank, another key arm of the finance function, proliferated with what some people derogatorily referred to as Saitoti’s errand boys. So, too, did other arms of the financial sector – from all the revenue-collecting departments to CBK,” he says.

Later, Mudavadi would come to terms with the arduous nature of the task ahead of him; the forced management of a financial sector that was resisted internally but demanded internationally.

Soon thereafter, the first International Monetary Fund (IMF) mission led by Peter Heller landed in Nairobi.

Mudavadi describes Heller as "one hell of a man most difficult to deal with". The following month, Mudavadi, alongside Treasury chiefs Wilfred Koinange, Eric Kotut and Prof Terry Ryan, had to go to Washington to convince the IMF to open the financial taps.

 

He reveals that the biggest shocker came when they met World Bank Deputy President Edward Jaycox. Apparently, he had no room for niceties and formalities, especially after seeing the composition of the Kenyan team.

“I cannot discuss with looters. I don’t want to talk to people who have ruined their own economy, now coming here thinking that we can give them more money to go and loot,” Mudavadi quotes Jaycox.

Mudavadi says that even as minister he suddenly felt small. Later, Jaycox revealed to him the rot at CBK and how heads had to roll if anything were to be done. He says when he came back home, he understood the initial antagonism against him when he realised how CBK had been looted.

With Moi’s blessings, he says, he began to clean the mess in the finance sector created by runway impunity, which also related to the Goldenberg scandal.

“Goldenberg was a scorching hot brick, so dreadfully scorching and hot in fact. And yet how to lay it bare was a nightmare,” he says, adding that “it was the work of super minds applied to a perverted cause.”

So shocking were the results of a PwC audit commissioned to probe the export compensation scheme and pre-shipment financing that when IMF Head of Mission Hiroyuki Hino saw it, he demanded a personal meeting with the President.

“It was all chaos … the schemes had been seriously abused. The country was basically bankrupt. It was on this basis the President made the decision to carry out changes at the very top of the CBK,” he writes.

The State fished Micah Cheserem from Malawi where he was working for Unilever. He says his first budget in 1993 was prepared with the assistance of the IMF because he was laying groundwork for debt rescheduling, which had failed under Saitoti’s regime.

On the other front, Mudavadi claims, he was selling the unpalatable but necessary economic structural adjustment programmes to the Cabinet. With the advise of the IMF, he enlisted the help of Catholic Church head Maurice Cardinal Otunga, to convince Moi of the need for the changes.

Meek comportment

A meeting with the Cardinal, who he describes in the book as of ‘meek comportment’, turned into a tongue-lashing of sorts. He nevertheless agreed to talk to Moi.

“And he did. That, in my view, was one move that contributed to softening President Moi’s heart towards the terms of the donor community, over and above the fact that the country was smarting under the weight of a collapsing economy,” he says.

Soon thereafter, the State moved to remove price controls, liberalise exchange rates, remove import licenses and reform key sectors like Energy. Treasury mandarins who had been making a killing through some of the inefficiencies, like import licensing, complained to Moi directly.

“Moi shocked them. He told them off, emphasising that things had to change. He telephoned me and urged me to remain very firm.”

By 1994, the aid embargo against Kenya had been lifted but after a very painful period when banks folded, some merged while others were liquidated. The money-minting schemes employed by Goldenberg had also been stopped.

In the book, Mudavadi claims he stopped a further Sh2.1 billion payment to Goldenberg demanded by a parliamentary committee led by opposition leader Michael Wamalwa.

Later, he says, it turned out that some of the opposition leaders had been paid off by Kamlesh Pattni.

Mudavadi says it was his dealings with the IMF and foul-spoken Cabinet colleagues that got him out of Treasury.

He says there were ministers like Kirugi M’mkindia “who would make a parody of you and a chorus would swing into action against you.”

Mudavadi says that one time, Moi gave him a tongue-lashing over his IMF dealings and told him that they had ‘stretched him beyond his elasticity’.

“No matter how powerful a bull is, it cannot service 50 heifers,” he quotes the former president.

Mudavadi says there was one letter from IMF where the boss passed regards to his wife, Tessie, that angered his colleagues.

"M’mkindia told the Cabinet that I no longer worked for the government." After the 1997 General Election, Mudavadi was dropped from Finance in favour of Simeon Nyachae, one of his foremost critics.

His next stop would be the Agriculture docket.


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