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Return of our money stashed abroad long overdue

By Joseph Nyagah | August 9th 2020 at 12:00:00 GMT +0300

A recent World Bank report states that Kenya and Uganda are leading countries in East Africa in terms of “stealing” and “hiding” aid funds.

In recent years, we read detailed leaks from Panama, Luxembourg, Mauritius, and several others that have even listed the owners of these funds and investments sitting abroad.
How can we allow our countries to suffer when our stolen wealth remains hidden in foreign countries, including tax havens?  The funds are managed by our political elite, their associates, and companies, mainly multinationals trying to evade paying taxes. Illicit funds from drugs and other criminal activities are in this category too. Estimates by the US Think Tank, National Bureau of Economic Research, from studies undertaken last year, showed that approximately Sh6 trillion of Kenya’s money is illegally hidden abroad. This figure represents about 65 per cent of our GDP. Our total borrowings today, from both local and foreign sources, amounts to about Sh6.7 trillion, which is almost equivalent to the funds that are illegally held abroad.

The outflows from Africa are much higher than the foreign aid and loans that we receive. This means that we would not need aid and loans if we came up with a mechanism to keep this money here. These amounts continue to grow as both the devolved system and our vast external borrowings have opened up more opportunities for siphoning out more funds.

Our country’s problem is severe. The amnesties that Kenya gives through the Budget Speech days are not legally attractive to some of those who may wish to repatriate the funds. The Kibaki Administration hired Kroll Associates, a risk consulting firm, to locate this money. His administration would have benefited from the return of these funds.

During my parliamentary backbench days at the time, I prepared a draft motion to try and get approval for the preparation of a Bill to address this issue. Powerful forces blocked me from bringing it to the floor of the House. Given my experience working for a major international bank in Chicago and London, and after studying what other countries had done, my proposal sought to introduce a carrot and stick policy that would have encouraged the return of those funds the Kroll Report had identified.

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There are many things we can do locally to reduce the siphoning of our money. Our people must change their attitudes towards corruption. Our anti-corruption institutions must be strengthened. They need to recruit and train young Kenyans to the highest levels, including the latest forensic technologies and methods. Finally, the country should sign the appropriate agreements with as many countries and tax havens as possible, to facilitate the repatriation of the funds. I know that we have signed such agreements with Switzerland, the United Kingdom, and her territories and Mauritius, but given the enormous amounts that are still held in these countries, what may have been recovered so far, or is in the process of recovery, is negligible.

Obviously, the countries holding our money will continue to pay lip service to our requests if we do not become more aggressive. Nigeria got back $1 billion when the current administration got serious in following up on former President Sani Abacha’s money from Switzerland.

These countries will not make it easy for us. They will use every delay tactic in the book as the money continues to earn compounded interest for them. After all, that is the money, our money, that they use for their own development, or loaned back to us. They will keep us busy with lengthy technical processes within OECD, World Bank’s Stolen Asset Recovery Initiative, and their countries’ complicated procedures. 

International cooperation in this field is definitely beginning to take shape, albeit slowly. The bilateral arrangements are far too slow, so we should finalise the easier and faster procedures that are proposed at the United Nations (UN) level. Through its institutions, the UN has prepared a Draft Resolution on these matters to be discussed at a Special Session of The General Assembly early next year.

If passed, developing countries like Kenya and Uganda would have access to the money faster. Kenya should, therefore, use her new position at the Security Council to ensure this passes.

The return of this money will make us a very rich country. This can be a win-win situation for the owner of these funds and the benefiting country.

- The writer is a former Cabinet Minister


World Bank Foreign bank accounts
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