The POINT

Bulletin of the Institute of Economic Affairs

Issue No. 37 : August 2000

CORRUPTION IN KENYA:
A CALL TO ACTION
The pervasive and distortionary nature of corruption in Kenya is an acknowledged fact. Whereas privately transacted, corrupt practices engender costs that are borne by the whole society. At a time when the moral infrastructure of society has collapsed and the demand for rapid accumulation on the rise, the art and science of corruption has acquired a sophistication that requires ingenious combat strategies. A good law is necessary but not sufficient. Early this year, the Institute of Economic Affairs (IEA) held a forum to discuss the phenomena of corruption in Kenya during which presentations were made by Justice Aaron Ringera, Director Kenya AntiCorruption Authority (KACA); Hon. Musikari Kombo, Chairman of the Parliamentary Anti-Corruption Select Committee and Mr. Job Kihumba, Chairman, Institute of Certified Public Secretaries of Kenya (ICPSK). The Point captures the highlights of the meeting and also provides a sneak preview of the Economic Crimes Bill expected to be tabled in Parliament soon.

INSIDE THIS ISSUE

Unpacking bundle KACAs dilemmas CPI and BPI Review of Economic Crimes Bill the
2 3 4 10

Introduction

This Bulletin has been published with funding from the Hanns Seidel Foundation

hat corruption remains one of the difficult areas in the process of Kenyas development is beyond dispute. It is largely considered that the recognition of this difficulty, taken together with immense political pressure, precipitated the parliamentary A director who is appointed by the response in the formation of the President for a maximum period of Kenya Anti-Corruption Authority two four-year terms heads KACA. (KACA). This institution was Th e sta tu te established under the further provides Prevention of Corruption the mere separation of the for no more Act (Cap 65), which was operations of KACA in than three passed in parliament in addition to its formation is a s s i s t a n t 1997. The Act, was a tacit admission of the directors who effected after the problem of corruption in a r e a l l amendment of an earlier the country appointees of Act, last revised in 1993. the president upon the recommendation of the Among the lauded provisions of advisory board. On its own, KACA the amendments to the statute was is a body corporate with perpetual the disarticulation of KACA from succession. the Attorney Generals office with The act provides that the director or regard to the conduct of Page 1

investigations and the prosecution of offenders. KACA was institutionalised to concentrate wholly on corruption cases. The mere separation of the operations of KACA in addition to its formation is a tacit admission of the problem of corruption in the country.

the assistant directors shall neither be a member of parliament nor salaried employees of any public body unless the person is on secondment to KACA. In conformity with its mandate, KACA has since inception investigated and proceeded to prosecute a number of public officials alleged to engage in corrupt practices as defined by the Act.

the unyielding response against it. Irrespective of the perpetrators of corruption, there are costs borne by society, which is the basis for the refusal to tolerate it. Principally, corruption harms society and the economy by diverting resources towards less deserving people. In this manner the more deserving within the economy are shortchanged. For instance due to corruption, resources may be allocated without considerations of priority and where the returns may be optimised. Examples of the effects of corruption where resources are not optimally used are numerous in Kenya and do involve claims of favouritism of some people or even regions at the expense of others. If this occurs again and again, the people or institutions that are capable of contributing to growth are stifled.

Corruption: Unpacking the bundle

otive, Opportunity and the Unethical Orientation (on the part of the offending people) constitute the three major component parts of corruption

As regards the motive, the relevant fact is that one may wish for an advantage in the conduct of business without necessarily paying for it. In such a case, the motive of the perpetrator of the corruption is where corruption is perverse, the desire to earn money w i t h o u t o b s e r v i n g t h e injustice is perpetrated because those with an unethical regulations that are in place. The motive then is primarily orientation get privileged access financial. to resources and services to

Corruption is equally harmful to a society and the economy since its effect is equivalent to taxing honest work and instead rewarding mediocrity and dishonesty. As such, genuine hardwhich others are excluded working people are deWhere the motive for a corrupt motivated since merit ceases to be the basis of transaction does exist, the perpetrator will have to reward. The competitive edge in institutions and find the opportunity to indulge the desire. The people, which is essential to good service, is opportunity will emerge for the perpetrator to replaced by competition in corrupt practices and offer a bribe to a public official for the expected this distorts the nature of any market, and in gain to materialise. Hence, the intention finds turn the policies that govern such markets. A expression when the opportunity does arise. common argument heard in business circles is that survival is impossible without competition. Having had both the motive and the opportunity for the corrupt to transact a corrupt practice, the Where corruption is perverse, injustice is cycle is complete only if the perpetrator does perpetrated because those with an unethical have an unethical orientation to complete the orientation get privileged access to resources corrupt practice. The unethical orientation is the and services to which others are excluded. This disregard of the fact that the action may harm aggravates social injustice and increases poverty another, or the lack of a conscience and the mere while this social and economic exclusion concentration upon the benefits that are derived translates into class disharmony. Exclusion from the act. Corruption is often completed when maintaining the tensions increase to the extent the three factors of motive, opportunity and the that the whole society is under structural strain. unethical orientation converge. The actual Societies in which exclusion is reinforced by practice of corruption presupposes that there is a corruption do experience instability that may predisposition towards evil without an result in violence and massive destruction. accompanying feeling of guilt.

Effects of corruption

hereas corruption may often occur in private, its implications for society in general are grave and this must form the basis for

Finally, at the purely commercial level, corruption does discourage investments because it raises substantially the transaction costs in the conduct of business. Due to the additional cost, Page 2

the goods and services procured through the corruption process are uncompetitive. Implications for the economy: a gradual depression in the investments as the costs contingent to corruption cut down on the expected returns. Businesses then withdraw to places or countries where there is an atmosphere more conducive to investment. The prime consequence to the economy is that corruption does cause the loss of investment, both local and foreign.

corruption = monopoly of power + discretion- accountability

The above formula is apt for the description and understanding of the character of corruption in Kenya. The explanation being that due to the present monopoly of power by the executive, together with wide discretion and lack of accountability the Kenyan environment is structurally conducive to corruption.

In these circumstances parliament must be more assertive not just through its various committees such as the PIC and the PAC but also through a The extent to which Kenya has lost foreign progressive and proactive legislative agenda. investment on account of corruption cannot be Parliamentary institutions are to support the told with certainty but the potential investors are work of the Controller and Auditor General by aware of the magnitude of the problem in Kenya identifying the culpable officials and their allies and are known to avoid countries with endemic in the private sector. However, parliament must corruption. Since no rational investor will to the extent possible, knowingly establish a business expedite debate on the legislative intervention in this in a corrupt country, the need Auditor Generals to deal decisively with this scrutiny is not to emasculate the reports since delays often problem is imperative, as executive but rather to reduce the private sector investment has incidence of arbitrary actions that aid allow for the guilty to get away with their crimes been demonstrated to be the corruption due to the difficulty of most influential factor in getting evidence after the lapse of many years. determining economic growth. It is clear therefore that corruption has contributed substantially to Kenyas underdevelopment. Public resources need to be vigilantly protected and the scope of public understanding of what constitutes such resources must necessarily encompass all loans that the government may procure through international agreements. Since these agreements do naturally bind succeeding governments and translate over time into public debt. Parliament needs to have a role beyond that of mere rubberstamp. Consequently, the External Loans and Credit Act may need to be amended to clearly provide for parliamentary consent to international loan agreements The general public's concern here is about the manner in which government has used the funds procured internationally, and the wish of some legislators is therefore to ensure that the deployment of such funds is as stated in the agreements and memoranda. Such legislative scrutiny would serve to substantially reduce the monopoly of power and add to the accountability of government to the people. Legislative intervention in this scrutiny is not to emasculate the executive but rather to reduce the incidence of arbitrary actions that aid corruption. The monitoring of corruption by civil society is a Page 3

Parliament and corruption

enyan legislators seem to respond to the public concern about corruption especially where public officials are directly implicated. Whereas the Parliament Audit CommitteesPIC and PAC-have historically done a splendid postmortem job on corruption. Parliament deemed it fit to create a special committee on corruption. It, in 1998, established the Parliamentary AntiCorruption Select Committee (PACSC) with three mandates: To study the nature and extent of corruption in Kenya. To identify the key perpetrators of corruption in Kenya. To develop a more comprehensive Bill to widen the scope of the definition of corruption beyond Cap 65. In its work, the Committee has taken due regard for a paradigm developed by a scholar, Robert, Kiitgaard and others that reduced corruption to a formulaic expression. Simply put, corruption is the result of a monopoly of power added to discretion in the absence of accountability.

major contribution towards the overall enhancement of the accountability sought by the public and donors. Parliament must aid the process by the enactment of laws that reduce the monopoly of power held by government officials and individual discretion or arbitrary administrative action. The role of KACA is appreciated as a requisite step in further tightening the space and controlling corrupt practices.

sanctions alone, however harsh, do not suffice in reducing corruption considering the levels of the vice in Kenya today. Which means that KACA must go beyond the enforcement of the law whenever cases have been investigated and the evidence made available. In order to improve on the enforcement of the law, KACA has established telephone hotlines for the members of the public to report in confidence on any corrupt practices that they may have witnessed or of which they may be aware. There is need for the public, civil society and the private sector to work together in cleaning the political and economic environment of all corruption. Media support for the purpose of educating the public about the sanctions attached to corruption is invaluable in addition to objective investigative journalism.

KACAs strategy

ACA acknowledges that first , Kenya faces a serious corruption problem in both the private and public sectors. Second, conventional law enforcement has so far been ineffective in dealing with the problem. In the pursuit of the goals for which it was established, the institution has prepared a fouryear strategic plan which starts with the development of a national plan against corruption. Wisely enough, the strategy recognises the need for KACA to work in partnership with other interested parties in the creation of awareness of the causes and effects of corruption. This is a laudable approach especially since the continued growth of corruption in Kenya is partly attributable to the widespread ignorance of its harmful effects. The plan also emphasises that all the cases under KACAs jurisdiction are to be investigated and prosecuted properly. The public undertaking from the director is that prosecution will be instituted against all corrupt people without regard to position.

Legislative support
egislative support for the Kenya AntiCorruption Authoritys efforts would come in two ways. The first way is through the careful scrutiny of the Public Accounts Committee and the Public Investments Committees reports and their recommendations to KACA to follow-up on any cases that fall under its jurisdiction. Second, provision within an appropriate framework to guarantee KACAs autonomy may be developed. It is contended that the AG still has substantial control regarding the institution of proceedings against persons even where the evidence is available. This need for preliminary consent from the A.G. erodes KACAs independence of action especially where the persons under investigation are members of the executive or are connected to them in any manner. This is one of the reasons that may account for the continued protection of the big fish and the sacred cows so consistently cited in the reports of Auditor General, PIC and PAC. Under the head of prevention, KACA is empowered by the statute to take all legal measures for the prevention of corruption in the public, parastatal and private sectors. It is as well charged with the responsibility of advising the government on ways and means of preventing corruption. In the public domain, the first move may involve the simplification of procedures and reduction in bureaucracy. For instance, clearance of goods at the port of Mombasa requires about fourteen Page 4

KACAs commitment to the achievement of the objectives under the defined strategy fall into three points. 6 The consistent enforcement of the law against corruption. 6 The prevention of corruption by removing the opportunities that facilitate the crime. 6 The education of the public and enlistment of their support in the fight against corruption. The three factors are necessarily complementary of one another. In addition, they reflect the understanding that the fight against corruption must proceed cautiously and progressively. Penal

different bureaucratic steps while in the main port in Tanzania, no more than four bureaucratic steps are involved. The unduly long clearance process in the Kenyan port provides the opportunities for solicitation and extortion of bribes. Solutions to the numerous problems such as these must begin with the reduction in the number of bureaucratic processes in these transactions.

It is imperative for the citizens of Kenya particularly to comprehend the fact that corruption has an adverse effect upon the economy and this is reflected in lost revenue, poor policies and increased cost of goods and services procured through corruption. The role of the public in sustaining corruption can also emerge when the overall economic effects of corruption are common knowledge.

Procurement procedures must also be reData driven approaches are favoured by KACA examined as a lot of as indispensable in the corruption takes place presentation of the facts by educating the public, it is possible related to corruption. As a around this. KACA is for Kenyans to understand more committed to the result of this, KACA did acutely the subtle manifestations of identification of best conduct a survey in which it corruption and its extent within the practices and creation of a broadly assessed the extent database on the practices. society in general and microcosms of it to which Kenyans were The application of aware of the effects of and technology for tracking procurement processes extent of corruption within the country. This would serve both to simplify the whole process survey forms a platform that allows for a more and also to inject transparency and efficiency. informed approach to the fight against Here the goals of KACA converge with those of corruption. In addition, the results of the survey the Private Sector Corporate Governance Trust in enable the institution to assess the publics trying to make businesses adhere to minimum perception of the manifestation of corruption and ethical standards. The latters commitment to their own attitudes towards it. The development these standards is evident in the unilateral of education material is then based on such publication and circulation of a sample code information. detailing best practices for corporate governance and ethics. The KACA dilemmas: Of laws and An express endorsement and subscription to the code would translate into a substantial reduction in the overall incidence of corruption. The optimism in the efficacy of the code is that the commitment to it necessarily negates the motive and opportunity and vicariously enhances the respect for honesty and adherence to rules. By educating the public, it is possible for Kenyans to understand more acutely the subtle manifestations of corruption and its extent within the society in general and microcosms of it. If KACA were to succeed in passing this information to the public, then the public may respond more confidently in whistle blowing and enhance resistance to corruption. Hopefully, an understanding may then emerge of the connection between the endemic corruption and the poor state of the economy. This education may then involve religious leaders for the purposes of ethical reinforcement, civil society for research and lobbying, and consistent media coverage.

confidence

hile every Kenyan readily appreciates KACAs huge role in the prevention of corruption, common consent has it that the organisation tends to be cautious in the pursuit of the perceived perpetrators of grand corruption. The organisations credibility thus suffers from the allegations that it only pursues the soft targets and that whenever it does move against the big fish, it is often because such persons no longer enjoy executive protection. This is the primary challenge that the directors of KACA must confront if the public is to be expected to increasingly have faith in it. In short, KACA must widen the dragnet to fry the big fish and slay the sacred cows of Kenyas corruption. On the other hand, it must be accepted that KACA operates under a statute that necessarily delimits the scope of its action. Part of the limitation comes from the narrow definition that the Prevention of Corruption Act gives to corruption and the affiliated powers of the directors to gather evidence and present the Page 5

same before courts. Naturally, therefore, the organisation cannot go beyond its powers and expect to sustain its cases in court. It, therefore, behoves the legislators to considerably expand the powers of the organisation to deal more decisively with corruption. Being the institution in place, its ability to act independently will largely determine any progress that Kenyans expect in the short term. Strengthening KACA must, therefore, involve among other details the following: v An appropriate legislative framework. v A more comprehensive definition of corruption. v Protection of informers and whistle blowers. v The extension of police powers to KACA officers. v Judicial decisiveness in expeditious determination of cases prosecuted by KACA.

The 1999 Corruption Perception Index (see Table 1) ranked Kenya 90th hence the tenth most corrupt country in a list comprising 99 countries. More particularly, Kenyas CPI score after 4 surveys was 2 points with Cameroon emerging as the most corrupt in that list with a corresponding score of 1.5 points. Such revelations may not surprise many but have served to make the country re-examine the perception of the country by investors more critically. The CPI is a system of ranking that TI developed as a numerical method derived from the perception of corrupt practices within given countries. It acts as a means of assessing the corruption levels in different countries as perceived by business people, the public and political analysts. As an index of corruption it is fairly accurate and reliable in identifying the countries that are perceived by business people to have problems with corruption.

International responses to corruption

orruption is a phenomenon that attracts much discussion in the globalised world and is certainly not unique to Kenya. This, however. is not consoling because Kenyas relatively high levels of corruption are known well beyond the national borders. In response to the problem of corruption worldwide, Transparency International (TI) was formed out of the ideas of a German academic Dr. Johann G. Lambsdorff of Gottingen University in the mid 1990s. The TI has developed an index of corruption and whose publication yearly since 1995 has proved unflattering to Kenya. This innovative index is known as the Corruption Perception Index (CPI) and ranks given countries of the world for the purposes of comparison.

Corruption Perception Index (CPI)

he CPI was first published by TI in 1995 and became shortly thereafter the subject of discussion on the soundness of the methodology. Sceptics also raised queries regarding its reliability in the diagnosis and monitoring of corruption. As the number of countries included in the CPI increased, it has come to be considered a credible index of corruption in the perception of businesspeople. A minimum of 3 surveys per country was required for the CPI score to be calculated. In the 1999 CPI, the number of surveys per country varied from 3 to 12. The main bone of contention is whether the CPI suffices as data because it is derived from the perception of corruption and does not measure corruption specifically. Given the secrecy that necessarily goes with corruption, the representative value of the CPI as a measure of corruption is discussed with caution. Its significance, despite the controversy is that the CPI Its significance, despite the controversy is that the CPI is frequently used in the recommendation of countries that should receive bilateral aid.

Indices of corruption
hat an international organisation would emerge with the purpose of keeping tabs on worldwide trends in corruption shows the recognition that the vice is quite perverse. Perhaps there is also the recognition of the fact that corruption has cross-border effects. The need to reduce the amount of corruption in international transactions makes sense only if the efforts are consolidated. Partnerships must be developed between the developing and developed countries for a common front to be presented against corruption.

Continued on Page 8

Page 6

Table 1: The 1999 Transparency International corruption perceptions index (CPI)

Country rank Country 1999 CPI score Standard deviation Country rank Country 1999 CPI score Standard deviation

1 2 3

Denmark Finland New Zealand Sweden

10.0 9.8 9.4 9.4 9.2 9.2 9.1 9.0 8.9 8.9 8.8 8.7 8.6 8.0 7.7 7.7 7.6 7.5 6.9 6.8 6.7 6.6 6.6 6.1 6.0 6.0 5.7 5.6 5.3 5.3 5.2 5.1 5.1 5.0 5.0 4.9 4.9 4.7

0.8 0.5 0.8 0.6 0.5 1.2 0.9 0.5 0.8 0.6 0.9 0.7 0.5 0.5 1.6 1.9 0.8 0.8 1.0 1.3 1.0 1.0 0.7 1.7 1.6 1.3 1.2 0.9 1.3 0.9 1.1 1.5 0.5 0.8 1.9 1.7 0.7 0.6

39 40 41 41 43

Czech Republic Peru Jordan Uruguay Mongolia Poland Brazil Malawi

4.6 4.5 4.4 4.4 4.3 4.2 4.1 4.1 4.1 4.1 3.9 3.8 3.8 3.8 3.7 3.6 3.6 3.5 3.5 3.4 3.4 3.4 3.4 3.4 3.3 3.3 3.3 3.3 3.3 3.2 3.2 3.1 3.0 2.9 2.9 2.7 2.6 2.6

0.8 0.8 0.8 0.9 1.0 0.8 0.8 0.5 1.7 1.4 1.9 0.4 0.5 0.9 1.5 1.4 1.0 2.2 1.5 1.4 0.7 1.3 0.5 0.8 1.4 0.6 1.0 1.2 1.0 2.5 0.7 2.5 0.8 0.5 0.6 0.9 1.0 0.8

Canada Iceland

7 8 9

Singapore Netherlands Norway Switzerland

45 45

Morocco Zimbabwe El Salvador Jamaica

11 12 13 14 15

Luxembourg Australia United Kingdom Germany Hong Kong Ireland

50 50 53 54

Lithuania South Korea Slovak Republic Philippines Turkey

17 18 19 20 21 22

Austria USA Chile Israel Portugal France Spain

56

Mozambique Zambia Belarus China Latvia

24 25

Botswana Japan Slovenia

58 58 63

Mexico Senegal Bulgaria Egypt Ghana Macedonia Romania

27 28 29

Estonia Taiwan Belgium Namibia

68 70 71 72 74 75

Guatemala Thailand Nicaragua Argentina Colombia India Croatia Ivory Coast Moldova

31 32

Hungary Costa Rica Malaysia

34

South Africa Tunisia

36

Greece Mauritius

38

Italy

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Country rank

Country

1999 CPI score

Standard deviation

75

Ukraine Venezuela Vietnam

2.6 2.6 2.6 2.5 2.5 2.4 2.4 2.3 2.3 2.3 2.2 2.2 2.2 2.0 2.0 2.0 1.9 1.8 1.8 1.7 1.7 1.6 1.5

1.4 0.8 0.5 0.4 1.1 1.3 1.0 0.3 0.7 1.3 0.4 0.7 0.7 0.5 0.8 1.1 1.1 0.5 0.4 0.6 0.9 0.8 0.5

80 82 84

Armenia Bolivia Ecuador Russia Albania Georgia Kazakhstan

Among the lessons to be learnt from the CPI, which now appears regularly, is the fact that Kenyans in particular have come to appreciate the levels of corruption and in response embark on a debate on the need to deal more decisively with it. Whenever the CPI is published, newspapers in turn publish articles and commentaries on Kenyas ranking and suggestions on initiatives that may help to inspire investor confidence. That the CPI is often quoted when making recommendations for bilateral aid cannot escape the notice of countries that require such assistance. Whereas the CPI serves the purpose of showing the perceived levels of corruption in a comparative context, it does not present the nature and character of corruption within a nation. The national chapters of the organisation would be best placed to do this. However, it still suffices as an indictment of the public service especially by showing it what the private sector, political analysts and the public think of it. An examination of the CPI reveals for instance that the countries with the highest scores have fairly high standards of living. But more importantly, while virtually all the Scandinavian countries rank within the top ten, consistently the top African nation in the 1999 CPI is Botswana at 24th. TI labours to correct the impression that the CPI is meant to show which categories of nations are the most corrupt. Instead, the CPI is a manifestation of the assessment of the respondents to the corruption in specific countries. With this in mind, the scores are more significant than the rankings since the countries featured are merely a sample of the globe. Still the index is fairly authoritative for comparing corruption within countries and as a measure of the perceived degree of its pervasiveness. Social scientists and economists particularly give credence to the CPI because it correlates rationally with other economic data. Analyses of the CPI across countries have revealed the connection between the degree of corruption as reflected by the CPI and the level of economic development. Many of the worlds poorest nations are perceived as being among the worlds most corrupt and the CPI has been instrumental in drawing attention to this link1 . It is possible then to understand that corruption is both a consequence and cause of underdevelopment. Page 8

87

Kyrgyz Republic Pakistan Uganda

90

Kenya Paraguay Yugoslavia

93 94 96 98 99

Tanzania Honduras Uzbekistan Azerbaijan Indonesia Nigeria Cameroon

Continued form Page 6

As an illustration of this growth, 52 countries were featured in 1997, 85 in 1998 and 99 in the 1999 CPI. The CPI ranks countries from all the continents in the world in a descending order with the least corrupt in the first position down to the one perceived as the most corrupt. These surveys have proved important as objective assessments of the perception of corruption by the people who are most likely to encounter and perhaps engage in it. Due to the increased acceptance of the CPI, it has become a powerful indictment of all governments with regard to the probity of its public officers. TIs role in the commissioning of the surveys and the computation of the CPI is also a reflection of the international concern for the improvement of governance and accountability.

The implication is that the existence of corruption aggravates poverty and thereby creates an atmosphere conducive for more corruption. Thus corruption and underdevelopment are mutually reinforcing. It is imperative then that the declarations of government about the need for poverty reduction also recognise the interrelationship between poverty and corruption. For all its value, the CPI only represents the perceptions about corruption levels of public officials. As it stands alone, it presents a clear but incomplete picture of corruption. It fails to show who is on the other side of the corruption

process. In response to this, TI promptly developed a Bribe Payers Index (BPI). This decision was informed by the fact that the reduction of corruption must involve the identification of both the payers as well as the receivers.

Bribe payers index (BPI)

Table 2: Bribe Payers Index (BPI)

1999 Transparency International bribe payers index (BPI) : Ranking 19 Leading Exporters

ecause corruption is often perceived as a problem exclusive to developing nations, the BPI serves to provide a more comprehensive view. Most of the major bribe payers are from the developed nations and are often the representatives of multinational corporations. In taking together the CPI and BPI it is recognised that corruption is as much a public as it is a private sector problem. It is therefore important to expose both the payers and receivers of bribes. TI acknowledges that graft often involves people from different countries each with a different motive but nevertheless with an unethical orientation. Bribery is a two-way street. We can blame those who take bribes but we must not forget that there are also those, equally involved, who pay bribes. Tools which shed light on all facets of corruption will go a long way in helping devise solutions to it2. The BPI ensures that it is recognised that the vilification of receivers alone gives the erroneous impression that it is more acceptable to be the payer. Implicit in this is the finding that the public officials of developing countries have willing allies in the officials of some multinational corporations. The first BPI published in 1999 sought to rank countries, which are the home of the payers of international bribes. While the list does not match the comprehensive nature of the CPI of the same year, it provided deep insights into the nature of bribery as an aspect of corruption. Published in the same manner as the CPI, it ranked Sweden first with a score of 8.3 points while China (including Hong Kong) ranked last with a score of 3.1 points out of a total 19 countries. These countries are Page 9

Rank
1 2

Country
Sweden Australia Canada

Score
8.3 8.1 8.1 7.8 7.7 7.4 7.2 6.8 6.2 6.2 5.7 5.3 5.2 5.1 3.9 3.7 3.5 3.4 3.1

4 5 6 7 8 9

Austria Switzerland Netherlands United Kingdom Belgium Germany United States

11 12 13 14 15 16 17 18 19

Singapore Spain France Japan Malaysia Italy Taiwan South Korea China (including Kong) Hong

among the worlds leading exporters. Sweden, Australia and Canada ranked as the top three nations in the matter of probity while Taiwan, South Korea and China ranked as the homes of the payers of bribes. While the 1999 BPI (see Table 2) is not comprehensive, it is significant that Asian countries registered the lowest scores while the countries with the highest scores in the same index are those whose governments exercise vigilance in the way its nationals conduct business. The BPI shows also that these countries are able to attain high standards of life even while reinforcing high ethical standards. There are countries also that do not tolerate bribery within their borders but do allow for corporations based in their countries to receive rebates of up to 50% of the amounts paid in bribes abroad. TI is opposed to it because it amounts to taxpayers helping corporations to pay bribes. The BPI is distinguishable from the CPI in terms of methodology because the former is a single poll whose respondents included executives of corporations, chartered accountants, commercial banks and even law firms. Unlike the CPI, it is an integrated survey while the CPI which is a poll of polls. Governments of countries with low CPI scores need to do far more to publicly acknowledge the problems, to confront the issues, to subject the corrupt companies and the corrupt officials to prosecution, and to earn public confidence by their anti-bribery policies3. The foregoing statement by Peter Eigen, the Chairman of the TI Board of Directors gives advice that government and all legislators will be wiser to heed. Now that mechanisms have been developed that provide an objective quantification of the facts of corruption, Kenyans must show the desire to reduce corruption by supporting anti-corruption initiatives KACA and demanding probity in government officials.
References: 1 Transparency International: the coalition a g a i n s t corruption Annual Report, 1999, Page 2 Ibid 3 www.transparency.org Table 1 & 2 are references from the TI website (www.transparency.org)

The Anti-Corruption and Economic Crimes Bill : A Review

or a long time, the informed contention has been that the Penal Code on its own does not provide for sufficient deterrence and retribution against corruption in Kenya. Such arguments are made because both the investigation and prosecution of offenders has not registered appreciable success. Through the Parliamentary Anti-Corruption Select Committee, a bill has been drafted for presentation to parliament as a response to the endemic corruption in Kenya. Notice that at the time of this publication, the Bill has yet to be gazetted. The rationale for this bill is that quite apart from the poor record of prosecution against corruption, the Penal Code is constructed such that corruption under it is only construed as bribery. Without faulting the drafters, it can be argued that corruption has since become more sophisticated in both the public service and the private sector that such a law cannot be effective against the corruption industry existing in Kenya today. The draft law is comprised of 12 parts with the preamble qualifying that the act is intended to provide for the prevention and punishment of corruption and economic crimes. It attempts right from the beginning to widen the scope of the bill to cover crimes that would otherwise not find coverage under the Penal Code.

KACA and Economic Crimes Board

art 2 of the act details the establishment of a new body referred to as the Kenya AntiCorruption and Economic Crimes Board to work in conjunction with the Kenya Anti-Corruption Authority (KACA). The Board is constituted widely and comprises nominees from the Law Society of Kenya, the Institute of Certified Public Accountants, forum of religious organisations, Kenya Bankers Association, Federation of Kenya Employers, a member nominated by the International Federation of Women Lawyers (FIDA) and a Director General who shall be an ex-officio member and the Secretary to the Board. The composition of the Board is indubitably intended to ensure wide representation from professional and religious organisations. Page 10

However, it may be questioned to what extent only FIDA qualifies to represent women on the Board as there are other institutions that would also be interested in such representation. In addition, the specification of FIDA does not conform to the rule where all other nominating organisations tend to be a joint forum. All the nominating bodies must forward the names of such nominees to the Attorney General who shall subsequently submit the names to the Ethics and Integrity Committee of Parliament for approval. Among the principal functions of the Board are to advise KACA on the exercise of its powers under the proposed act and also to approve the acceptance of grants and donations to KACA. The members of the Board other than the exofficio members hold office for a single term of 5 years. In the course of service to the Board, the tenure of members may be terminated for incompetence, physical or mental infirmity, conviction for an offence and unauthorised disclosure of the Boards business. Section 16 of the bill provides for the existence of KACA and prescribes largely the nature of its work in conjunction with the Board. The Authority is to take necessary measures for the prevention of corruption in the public, parastatals and private sectors. The Authority may assume the responsibility for investigating any matter commenced by the police for any offences that fall under the bill. This provision will invariably widen the ability of the Authority to act independently in the performance of its duties and allow it to hire investigators as it may require. Section 21 of the bill requires parliament to form the Ethics and Integrity Committee in accordance with part XIX of parliamentary standing orders. This committee will generally approve the appointment of persons to the Board, examine the annual report by the Authority and also to review laws and policies related to corruption and economic crimes. The committee is as well required to educate legislators on the ethical standards applicable to them and to inquire into queries raised in parliament as the regular House committees do.

Economic Crimes Court

part from the Board and the Authority, the other significant public institution created by the bill is the Economic Crimes Court. Whereas the court shall remain subordinate to the High Court, it shall have and exercise unlimited jurisdiction in respect of crimes under the bill itself. This provision is calculated to alone ensure that the case backlog affecting the courts in general will not necessarily affect this court. However, appeals to the High Court will still be available to any person aggrieved by the Economic Crimes Courts findings. The bill vests power in the Authoritys officers to conduct investigations, obtain information necessary for presentation before the court, effect arrest for offences under the bill, and the interception of private information upon an ex parte application to the court. Sticklers for due process may raise queries regarding some of the search, arrest and seizure powers. The Authoritys officers under the Act wield wide ranging powers under Section 17 of the Bill. Quite apart from the general powers the officers will have all the powers of police officers equivalent to an inspector of police. Disciplinary matters for KACAs officers will be directed by a disciplinary code issued by the Director General. An average officer of the authority bears far more powers than the police officer. Specific duties of the Director General of the Authority shall require the submission of the Board and an annual report containing the Authoritys financial statements and the activities of the authority. Additionally, a report on activities by the same officer shall be submitted to the Attorney General for presentation to parliament within 30 days. Public scrutiny of the activities of the authority is therefore possible while the financial scrutiny is the task of the Auditor General Corporations.

Within the bill are also the definitions of economic crimes and the manner of establishing culpability of persons involved in the crimes themselves. Interestingly, the bill responds to the problem of abuse of Harambee by making it an offence for public officers to use their offices for soliciting funds. In the punishment and Page 11

deterrence of corruption, the bill also recognises the importance of protection for informers against intimidation by suspects. This elaborate bill reflects both the genuine quest to tackle corruption decisively as well as an admission of the failure of the existing mechanisms to meaningfully reduce corruption. It rightly acknowledges that corruption is sophisticated and hence must have a wide definition beyond mere bribery and that the establishment of the court may make some headway especially where crime has occurred and punishment must follow. It also commits Kenyan citizens irrespective of the place of residence to adherence to the provisions of the bill. No doubt the debate and passing of the bill will be an important index of the commitment of the legislature towards Kenyas redemption from bad CPI ranking. In conclusion, this Bill intends to establish an active authority to respond to the corruption industry on Kenya. However, the wide powers that this Bill seeks to grant to the authoritys officers may be used by the over-enthusiastic officers to intimidate Kenyans all in the Name of exercising the statutory powers. These officers must understand the limits of the powers from
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the outset as KACA may instead turn into a body for harassment of citizens hence lead to violation of constitutional rights. Still the excesses may be moderated without altogether stifling the authority because it is obvious that the authority needs sufficient powers to begin to impact upon corruption in Kenya. No doubt this bill will have the support of many, subject to the moderation of some of the excessive powers. On the other hand, parliament will show its seriousness about both the prevention and punishment of corruption in the way it reacts to this bill. It is hoped that the deliberations on this bill will transcend partisan interests.

Reference Draft of Anti-Corruption Economic Crimes Bill, 2000 and

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DIRECTORS: DR. JAMES KARUGA, PROF. ANYANG NYONGO, MR, ROBERT SHAW, MR. WACHIRA MAINA, MR. IRAKI KIBIRITI, MR. ARTHUR NAMU EDITORIAL: BETTY MAINA, DUNCAN OKELLO, KWAME OWINO, ANGELA NYAGAH, FREDERICK MUTHENGI, IRENE OMARI WRITTEN BY: KWAME OWINO : DESIGN & LAYOUT: IRENE OMARI

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