By Mutahi Mureithi
East African StandardDecember 11, 2001
The Kenya Government has accused the World Bank of double standards in the recent suspension of funding for Kenya's roads.
It says that the Bank flouted most of its own rules on procurement, and is trying to lay the blame on the Government.
The Government has gone further and accused some World Bank staff of misappropriation of trust funds entrusted to the International Development Association (IDA) by Nordic countries.
However, although the Bank admits that some of its staff were involved in dubious deals, it adds that the level of corruption was very high, necessitating the suspension of the project. The Bank suspended funding for the Kenya Urban Transport Infrastructure Project, blaming it on graft.
Joshua Terer, the then Permanent Secretary in the Ministry of Local Government claims in a letter he wrote to the then Finance Minister, Chris Okemo following the suspension of the Kutip credit that, following his own investigations, he had uncovered what he believed to be impropriety on the part of the World Bank.
In a confidential letter to Okemo, dated October 5, 2001, Terer said when he initiated his own investigations into the reasons why the Bank had suspended the credit, with a view "to coming up with a reasonable explanation for the bank's unusual conduct" he uncovered clear anomalies that places the Bank under the spotlight.
Chris Okemo has since been moved to the Ministry of Energy. In the letter, which was copied to J.J Kamotho, then the Ministry for Local Government, and the Head of the Civil Service, Dr Sally Kosgey, Terer says that several World Bank staff, including the one supervising the Kenya Urban Transport Infrastructure Project (Kutip) were interdicted in mid 2000 for misappropriating funds entrusted to the IDA by Nordic countries, which they were to manage on behalf of these countries.
It has since been confirmed that at least one of the World Bank staffers is under investigation by the Federal Bureau of Investigations.
A statement from the World Bank yesterday said it is true the bank conducted an investigation into allegations of corruption pertaining to the KUTIP Project.
"This investigation led to the dismissal in August 2000 of the World Bank task manager responsible for the project. The Bank also referred this case to the United States Department of Justice for a criminal investigation" said the statement.
It said that a US criminal investigation was necessary given that the task manager was physically based in Washington, DC, where the Bank's head office is located.
"In addition, the Bank's investigation led to the debarment on March 31, 2001 of a number of consulting firms and consultants involved in the corruption scheme. Debarment means that these firms and consultants will, henceforth, be barred from bidding on any World Bank-funded projects anywhere. In this particular case, the debarment of these firms and individuals is permanent," said the bank.
According to the statement, the bank's investigation subsequently uncovered additional evidence of corruption in the project implementation unit. This is what led to the suspension of all disbursements on the project. Evidence uncovered by the investigation was provided to senior Kenyan officials, including the Kenyan Attorney- General according to the World Bank.
"The Bank also turned over the relevant evidence to the Kenyan Anti-Corruption Authority."
Terer quotes extensively from the Bank's audit report, which says that no evidence was found on any misdeeds by the Government. In fact, the auditors had praise for the Government, and had little to say about the Bank.
"On the Bank's side, in some cases the Task Team Leader of the projects under review provided on Bank's behalf "No objections" and other clearances for which I cannot find any evidence that he followed the proper clearance procedures within the bank," said the auditor.
The auditor added that the bank's paper and electronic files "on procurement in these projects were less than satisfactory."
The same auditor praised the Kenya Government, and in the report said: "I could not find any instance that the bank could term mis-procurement. I also found, within the limits of my work, that contract dliveries are being made. (They) maintain adequate procurement records in accordance with appropriate management practices, and the management and staff are highly professionaland capable employees."
The credit was suspended in a fax to Okemo by Callisto Madavo, the World Bank's Washington-based regional Vice President in charge of Africa dated August 25. It said that the bank had decided to withdraw support because it had uncovered cases of graft following intensive investigations.
"The World Bank Group's department of Institutional Intergrity has continued its inquiry into allegations of fraud and corruption in connection with this project. The inquiry has uncovered evidence of substantive allegations of fraud and corruption in this project," said Madavo's letter.
Terer said that the bank contravened rules on procurement, and cites a case where, when advertising for Expressions of Interest for the contract, the World Bank failed to place adverts in the Development Business publications as required.
"Contrary to the requirements, the advert was displayed on-line only, thereby restricting the number of firms who could have seen and responded to it. The GoK project manager's efforts to query this irregularity were brushed off by the bank," said Terer.
He added that even while this was going on, the World Bank was "secretly" communicating with a "favoured" American bidder.
"The World Bank, through their Task Team Leader, Mr Lance Morrell, went as far as agreeing with the American firm on how the terms of reference for the contract would be worded, structured and priced, to ensure that the American firm got the contract.
One e-mail communication which is quoted by Terer and which he says was between Morrell and the American firm says: "Let's try to do what you are suggesting. Please send me some language which will be sufficiently vague but still get the point across." When the Government project manager, Engineer L.M. Ngare learnt of the efforts to give the American firm an edge over rivals, the Bank suspended the credit.
The statement from the World Bank yesterday said that the institution "has a duty to ensure that the funds it lends to its member governments, including Kenya, are used for their intended purposes."
FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.
