Saturday, April 4, 2009

Kenyan premier says bad deals will be axed

April 01 2009

Kenya intends to stop payments on corrupt deals including a fertiliser factory that was never built, the prime minister said on Wednesday, in a move that activists say could save the country more than $100-million a year.

Prime Minister Raila Odinga said that the next budget, due before Parliament in June, would be scrubbed of dubious payments.

The administration of Kenya's second president, Daniel arap Moi, was noted for its endemic corruption, critics say.

"We are going to ensure there are no payments to Moi era-mistakes," Odinga told journalists.

It is unclear whether Odinga as prime minister has the authority to suspend payments or the capacity to bring other members of the government accused of corruption into line with his promises.

Among the payments to be cancelled are those for a 1970s fertiliser factory project for which the government incurred loans worth $53.75-million, although the factory was never built. The project was initiated under Moi's predecessor and the government recently began repaying the loans after a 20-year hiatus.

Odinga did not mention two other highly controversial projects - a military communications centre that wasn't built or a naval ship the country has yet to receive. Both were ordered in 2003, after current President Mwai Kibaki was elected.

Anti-corruption campaigner Mwalimu Mati said payments to the three projects alone accounted for more than $100 million in Kenya's current budget, which ends June 30.

It is exactly the amount Kenya has appealed for from the International Monetary Fund to help cushion its currency against the worldwide economic crisis.

The country also has launched additional appeals for aid to help feed the more than 10 million Kenyans it says are at risk of hunger. The World Food Program puts the figure at 3.2 million.

Mati welcomed Odinga's comments as a first step toward tackling Kenya's corruption problems.

"That's a positive thing if there's an admission on their part that these are illegitimate payments but what do we do about the ones we've been paying? We need an audit of the external debt register," he said.

Kenya has not audited its external debt register - where records of all loans and the terms of repayment are kept - since 2001, and even that audit is a secret document.

However, the government has completed several investigations into scams. In 2006, the government auditor concluded an investigation into 18 questionable security-related contracts known in Kenya as Anglo-Leasing, saying some of them involved shell companies and others may have been overpriced. These contracts include the naval ship and communications centre.

The full report has not been made public, and neither has an audit by accountancy firm PricewaterhouseCoopers.

Also Wednesday, Odinga expressed frustration with his partners in the coalition government several times during the press conference.

The uneasy alliance was formed following weeks of intensive negotiations and bloody riots sparked by the disputed 2007 presidential election. Many Kenyans have expressed their frustration with the government's constant public bickering and the slow pace of reform.

"We're having some problems in making the coalition government work," Odinga said. "The presidency has emasculated all other institutions."

There was no immediate response from Kibaki, whose only press conference since the elections has been to deny reports he was having an extramarital affair.

When asked if he would stay even if the government proved hopelessly corrupt like its predecessors, he answered: "In any kind of marriage there is the possibility of divorce."