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Kenya: Officials, Banks in $1bn Corruption Probe

by William Wallis and David WhiteFinancial Times
December 15th, 2003

At least $1bn of illegal gains made by former and serving politicians and civil servants in Kenya has been uncovered in a secret international investigation over the past six months, according to Kenyan anti-corruption officials.

The assets identified include shares in two London hotels and funds generated partly through foreign exchange transactions at leading international banks.

John Githongo, Kenya's permanent secretary for governance and ethics, who has co-ordinated the investigation, told the Financial Times his department was in a position to initiate procedures towards freezing some of the assets.

One series of transfers under investigation involves $13m moved to accounts at Citibank and Union Bancaire Prive in Switzerland and Equatorial Bank in London, according to investigators. Citibank and Union Bancaire Prive have been named in investigations into the laundering of public money by General Sani Abacha, the former Nigerian dictator. Neither bank could provide immediate comment on Monday night.

The transfers, dating back to October 27 1992, have been linked by forensic accountants to Goldenberg International, a Kenyan company at the centre of a public inquiry.

The commission of inquiry was appointed earlier this year by President Mwai Kibaki to probe allegations that top officials in the former government of Daniel arap Moi used the companies to generate hundreds of millions of dollars in state subsidies and financing for fictitious gold and diamond exports.

According to documents presented at the inquiry, New York branches of Citibank and the now defunct Equatorial Bank were used in a series of multi-million dollar foreign exchange transactions connected to Goldenberg.

Investigators are also seeking information from ABN Amro, Barclays, the former ANZ Grindlays, Indosuez-Sogem Aval, Middle East Bank, Standard Chartered and many Kenyan banks.

In contrast to actions by other African countries against alleged corrupt activity under past governments, Kenya's efforts to recover state funds appear to target members of the former president's entourage as much as Mr Moi himself. Mr Moi governed the country for 24 years before peacefully relinquishing power last year.

Kenyan anti-corruption officials have employed Kroll, the business investigation consultants, to help trace money obtained illegally through Goldenberg and other schemes

.

A senior Kroll source said the total of illegal funds could be between $3bn and $4bn, equivalent to about a third of Kenya's annual economic output.





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