Thursday, 5 May 2016

(Assignment 1) Kenya: Corruption during Moi’s Regime - Rushabh Menon

With a GDP per capita of only 1000$ a year, and one of the highest mortality rates in the world, the 40 million strong nation of Kenya is a victim of its corrupt past. Its rank of 135 on the Transparency International index is further confirmation of that. The regime of Daniel arap Moi (who served as Kenya’s President between 1978 and 2002) serves as a good example of ‘Official Mogul’ described by Michael Johnston in his book ‘Syndromes of Corruption’. Kenya was characterized by ‘weak institutions including a corrupt judiciary, expanding economic opportunities and undemocratic politics’ With Moi’s regime maintaining an iron grip of the political situation in Kenya and not allowing for dissent- political or otherwise, it became open market for everyone in his inner circle to loot the country blind. Since Kenya doesn’t have resources like oil, diamonds or gold like some of its neighbours, clever schemes involving multiple companies and complicated currency deals is usually the norm. This is well represented in the three examples below:

a)     Goldberg Scandal: A political scandal involving the subsidised exports of smuggled gold from Congo, and by paying its exporters in 35% over their foreign currency earnings, in Kenyan Shillings. This has now been estimated to have cost the exchequer 10% of the country’s annual GDP. Incidentally this scam was made to coincide with opening of the markets in 1991, and ran for a full two years. The Goldberg International Company itself was established by the architect of the scheme, Kamlesh Pattni (ironically honoured by in 2012 with the Lifetime Africa Achievement Prize for Humanitarianism and Equity) with the sole purpose of running this racket. Prominent bureaucrats and ministers in the Moi regime along with dozens of senior Kenyan judges have been implicated in this scam till date, illustrating the vast networks which enabled it.

b)      A Sh360 million helicopter servicing contract in South Africa, which many officials argued could have been done locally. The overtly extravagant contract points fingers towards officials within the Air Force and the bureaucrats involved, though such sort of deals are not very uncommon. India, with the Bofors Scam during the Rajiv Gandhi era went through a similar situation.

c)     Supply of Mahindra Jeep vehicles to the Police Department for SH 1 million each, six times the showroom price by Chamanlal Kamani, a businessman known to be close to Moi is another startling case of corruption. The processing of such a sale, which was anyhow free of import duties in this case, couldn’t have been done without the knowledge of government officials and bureaucrats.

In all the three examples, we see that private individuals who were close with the ruling bodies in Kenya were able to amass huge amounts of wealth by indulging in blatantly visible scams. However, since there were negligible legal checks, and due to absence of any dissenting voice or accountability, these became the norm. A system of patronage with Moi’s inner circle getting gifts of public and private land along with official favours was also common. Moi acted favourable to some native tribes over others causing further division with Kenya.  Weak institutions coupled with an ineffective democracy can be cited as the reason for Moi’s success and Kenya’s failure.

References:
1.     Michael Johnston, Syndromes of Corruption, 2005

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