Tag Archives: corruption in kenya

The Sad Aftermath of the Nairobi Attack

APphoto_Kenya Mall Fact Check

Last month, terrorists from the group al Shabaab attacked the Westgate Mall in Nairobi, killing 67 people. In the wake of the devastating event, Kenyans rallied together in a showing of national unity often missing in this deeply divided country. Outside Kenya, the world expressed its sympathy and offered support to the country. And over the last month, under the bright spotlight of media, the government has manage to squander that good will so spectacularly that it calls into question the integrity of the most respected state institutions.

The attack occurred on a Saturday morning. The police were the first to respond, and, according to reports, managed to contain the terrorists in a corner of the Nakumatt grocery store. On Saturday evening, the KDF (Kenya Defence Forces) took over the operation from the police. A breakdown in communications between the groups led to confusion about the whereabouts of the remaining terrorists, and possibly allowing some to escape. At one point, the Kenyan military fired at the police inside the mall, killing one policeman who was responding to the attack. The siege on the mall lasted for four days, ending only after the Kenyan military fired anti-tank missiles into the store and destroyed three floors of the mall, possibly killing additional hostages.

During the siege, few details emerged about the attack and its immediate aftermath. Initial reports said that between 10 and 15 attackers stormed the mall. A month after the attack, a CCTV camera from the Nakumatt released to the press showed four men armed with AK-47s seeking refuge in the loading area of the supermarket, often putting down their weapons to pray. In addition to killing 70 innocent people, Al Shabaab could now say that four of its members held off one of the strongest militaries in Africa for four days.

A week after the attack began, shop owners were allowed to return to the mall to survey the destruction, and were surprised by what they saw. The entire mall had been looted. Everything – watches, jewelry, lingerie, electronics, and alcohol – was gone. The banks had been robbed. Six ATM machines were shot open and cash registers were emptied of their contents. Stunningly, the military claimed that it had not stolen the money, but rather “recovered and repatriated” it for the tenants at Westgate.

Within a week, 21 of the 85 businesses had filed reports with the police saying their stores were looted. Some business owners even questioned whether the military deliberately prolonged the attack to enable it more time to steal. Jeffrey Gettleman describes the aftermath:

Four days after that, the first shopkeepers were allowed back in to survey the wreckage. Millions of dollars of property had been destroyed, and businesses said that at least hundreds of thousands of dollars in cash and merchandise were missing.

On Thursday, the talk among a group of forlorn shopkeepers was of “terrorism insurance.” Nobody there had it. But Mr. Manji hoped that would not matter.

“This was not terrorism; this was looting,” he said. “It’s sad that the people who were supposed to protect us have robbed us.”

At first the Kenyan military denied the accusations. A spokesman for the KDF, Major Emmanuel Chirchir, claimed that the military was being falsely accused, citing that one store – a shoe store – had not been looted. Chirchir stated: “It would also be good to list shops that were vandalised out of the over 80 stores. So far, Bata shop has talked of its shop being intact. KDF did a fantastic job, we know our enemies who have decided to use propaganda to undermine our public good will.” That was on October 5th.

On October 3rd, A Kenyan TV station claimed to have viewed surveillance footage that showed soldiers emptying cash registers into bags and walking out of the mall with white plastic bags. Last week, television stations in Kenya aired that footage, and it was damning. Soldiers walk into the supermarket, guns raised, and later are shown walking out carrying goods with one hand and rifles with another. One soldier is shown trying to break into a jewelry case, but is unsuccessful. The military claimed that the men were only taking bottled water from the supermarket to “quench their thirst” during the assault.

The Kenyan news media, led by the Daily Nation and the Standard, are generally hard-hitting journalistic institutions, particularly by African standards. They were highly critical of the military in the aftermath of the attack, as more information came to light. And they spared no institution in their excoriation of the government and its handling of the attack.

Instead of admitting they had indeed looted the mall, the military instead began looking for the source of the leak. They interviewed the founder of Nakumatt at a police station, and, when that did not turn up anything, trained their guns on the media. On October 24th, they announced that they would be arresting and prosecuting two journalists from the Standard for their coverage of the scandal. “You cannot provoke propaganda and incite Kenyans against the authorities. The two journalists will be apprehended,” explained the Inspector-General of the police, David Kimaiyo. So much for freedom of the press.

In perhaps the strangest twist of all, the Standard published an article on October 26th titled “Kenya Defence Forces considered among strongest, most disciplined army in the world.” The timing is certainly suggestive.

The drama continues to unfold in plain sight of the rest of the world. Coverage of the looting and the internal squabbles and blame-throwing can be found in every major newspaper in the world. Kenya’s reputation as lion of East Africa – a fast-growing economy with tremendous potential in the midst of region wracked by instability – is slowly being chipped away.

No where is this feeling more palpable than in Kenya itself. In a letter to the editor, a Nation reader shared his thoughts about the crisis:

Much has been said about Kenya Defence Forces’ conduct during the Westgate siege. I feel betrayed by our forces should the allegations against them be proved true. It is disheartening watching the last bastion of integrity falling to the beast of looting and corruption.

His opinion reflects the broader feelings of many in the country. Kenya is one of the most corrupt countries in the world. It ranks 139th out of 176 on the 2012 Corruption Perceptions Index, the standard for assessing the level of graft in a country. The average urban Kenyan pays 16 bribes every single month. By some estimates, one-third of Kenya’s GDP is lost to corruption every year.

The national security apparatus was thought to be the last bastion of integrity in a sea of corrupt state institutions. This is why the realization that the KDF exploited one of the most vulnerable collective moments for the country in recent memory for its own deeply selfish gains is so troubling. If the core of the military is rotten, the thinking goes, what else is left?

The role of a free press is to expose corruption and graft and hold the guilty accountable for their misdeeds. Yet now the institutions that were supposed to protect the country are threatening that freedom by arresting and prosecuting journalists who are doing their jobs. It is a sad turn of events for a country that, just a few months ago, seemed to be on the verge of a renaissance.

John Githongo, a former journalist and anti-corruption official in the Kenyan government and subject of the book It’s Our Turn To Eat, lamented the Westgate scandal as unfortunate, not only with respect to the looting itself, but because of its predictability. In his conclusion, he explains the current state of affairs:

In truth, we celebrate thieves instead of imprisoning them; we elect those who pilfer public funds instead of throwing the book at them; we virulently abuse each other on the basis of tribe and yet employ grand pretentions to modernity.

This modernity is skin deep. Since the middle of the Kibaki regime, deepening and spreading graft has been excused away by throwing GDP numbers at those who complain about graft.

But then our entrenched corruption is merely a symptom of a deeper malaise that has de facto legalised graft. With the discovery of oil and other minerals, even Western countries that once placed graft near the top of their agenda in their interactions with us have gone silent.

The scandal is in the process of unfolding now. Where it will go remains to be seen. But what is certain is that the Al Shabaab did more than just murder 70 innocent people and terrorize a country. It revealed that even Kenya’s most venerable institutions are mired by corruption. And it is not surprising. Corruption is a cancer. Once it metastasizes, it spreads through the organism, infecting every piece of it. And Kenya, it appears, is even more infected than once thought.

Should You Pay a Bribe?

Around the world, money talks.  In some places, it speaks in a whisper; in others, it is like your humble correspondent at a party after one too many dark and stoney’s – loud and obnoxious.  And in Kenya, many, if not all, businesses, will at some point find themselves deciding whether or makes financial sense to pay a bribe.

Corruption is not a third world vice.  There are enough Swiss bank accounts and shell companies in the Cayman Islands to provide evidence for first-world malfeasance.  This corruption, while destructive, is difficult to identify, because it is built into the infrastructure of the system.  It is a tax code that makes no sense except to people who understand how to take advantage of it.  But in some places – Kenya being one of them – corruption is in-your-face.  At every turn, you might be asked for a bribe.  Police set up roadblocks simply to collect “something small” from drivers.  Ministers exact rent from anyone seeking to do business in their districts.  From the lowest traffic cop to the highest levels of government, corruption is rife.

For companies, dealing with corruption is a very real part of doing business.  The system – particularly within the government – moves slowly, and sometimes not at all.  A work visa could take two weeks or two years to process, depending on who you know and, more importantly, who you pay.  If you are a vendor trying to buy a storefront, obtaining a construction permit means putting 2,000 Kenyan shillings in an envelope to “expedite the process.” To be sure, greasing the gears of the system leads them to move more quickly.

But doing so exacerbates the problem, providing positive reinforcement to those collecting bribes.  And once a company is identified as one that pays bribes, there is no end to the gravy train.  Once they have paid a bribe somewhere, companies operating in multiple cities or provinces will have to pay the same tax everywhere.  The question then becomes, is it worth paying a bribe to make doing business easier?

Transparency International's Corruption Perceptions Index.

There are some, including Develop Economies, who have made that claim in the past.  Why not?  After all, civil servants are underpaid.  Their superiors extract money from them, and on up the chain.  Not to mention, placing restrictions on American companies through the Foreign Corrupt Practices Act (FCPA) only puts the U.S. at a disadvantage when competing against companies from nations with no such regulations.

But that, unfortunately, is not the truth.  Corruption is a parasite, feeding on society, preventing it from making forward progress.  Businesses that are bled dry from corrupt entities will cease to make investments in growth and expansion, as they are increasingly less rewarded for risks.  Roads and bridges that allow commerce are rarely built.  When they are eventually constructed, they work is so shoddy that it falls apart during the next heavy rainfall.  This, of course, is good for the contractor, who also happens to be the minister who commissioned the road to be built in the first place.

For multinational businesses, paying bribes is part of the expansion process.  And with the BRIC countries – three of which (India, China, and Russia) happen to be among the most corrupt in the world – accounting for much of the growth in this post-Western global economy, gaining access to the billions of people in these fledgling economies means paying bribes.  Among the guilty are some of the world’s largest corporations.

Wal-Mart, for example, just came under scrutiny for paying over $24 million in bribes to obtain construction permits in Mexico.  The stock market responded to the company’s unscrupulous business practices, driving the stock price down 7.5% and causing $17 billion to evaporate into thin air.  But Rana Faroohar of Time magazine explains the conundrum:

The scandal tells you that doing business in the world’s fastest-growing markets can be fraught with peril. Emerging markets now account for the bulk of the world’s economic growth, as well as about 30% to 60% of the revenues at many U.S. multinational firms. Indeed, one of the reasons that the stock market has done relatively well throughout the downturn is that it was buoyed by U.S. multinationals earning more and more of their money in these still relatively fast-growing economies. This is particularly true of packaged-goods and retail firms like Walmart.

Many of these markets are rife with corruption–but graft is not necessarily perceived as a serious crime in some places. It’s more a way of doing business. In Mexico, “the bulk of retailers pay bribes,” says one veteran Mexican fund manager for a large U.S. financial institution. Indeed, Mexican firms are the third most likely to have to pay bribes, right after Russian and Chinese ones, according to Transparency International, an anticorruption NGO.

If that is the case, then how can these multi-national firms enter these markets without playing (or not playing, depending on whose side you are on) by the rules? Dealing with governments where corruption is endemic pose a fundamental challenge to doing business in developing countries.  But the truth is that buying into that system – stock price aside – will only make it worse.  Once a company has established itself as one that is willing to play the game, there is no end.  It is difficult, but abstaining and refusing to pay will be better for the business in the long-run.

There are ways around the system.  The courts, as corrupt as they may be, can be an avenue for justice.  But unfortunately, when time is money, patience can be a financial burden on the business. Still, paying a bribe will be only cause more problems for a business in the future.

Develop Economies’ Music Recommendation

The Many Forms of Corruption

cor·rup·tion (n.): Dishonest or fraudulent conduct by those in power, typically involving bribery

In Nairobi the other day, the police pulled over my taxi at a checkpoint.  There were four people in the backseat, so the officer beckoned me, seated in the front seat, out of the car and said “You’re breaking the law – what do you want to do about it?” Fortunately, a friend sitting in the back felt strongly about not perpetuating the system of bribery and demanded to see their badge, since he was an employee of the embassy and wanted to report them.  The police officer held up his gun and said “this is my badge,” while my friend explained to the “security officer” for the embassy on the phone that he was being harassed by police officers (I later went to dinner with another friend, who, it turns out, was the “security officer” on the other end of the line).

In Tamale in Northern Ghana, we took an illegal U-turn on our motorbikes and were stopped by a plain clothes police officer.   He took away my friend’s keys and said we were going to the police station unless we gave him something to “make it better.” My friend, who works at the office of the regional coordinating council for the Northern Region, pulled out his phone and showed the officer the phone number of the regional minister, and explained that, because he did not understand what “make it better” mean, he was going to call the minister and ask for some clarity.  We quickly got our keys back and were on our way.

In the Philippines, the 2010 election took place during my stay.  Politicians send emissaries out to the different barangays (communities within a town) to distribute money directly to the people in exchange for votes.  If a politician can’t buy a community, he rents a bus, loads it with booze and fried pork, and brings the members of the community to the beach for a party on Election Day.

The point I am trying to make is that, in many developing countries, corruption is a problem.  It exists out in the open, in forms that are easy to see and easy to track.  Some estimates place leakage in the Kenyan government due to corruption at 40% of GDP.  As I discussed in a post the other day, the government is embroiled in a scandal over 4bn Kenyan shillings designated for free public education.  Yes, corruption is a problem, and can be a major impediment to economic and social progress.

The western approach to Africa emphasizes good governance, democracy, and transparency in exchange for aid and development (tied or untied).  Ghana is referred to as a “donor darling,” as its history of successful democratic elections has made the government a reliable (if not strategic) partner for donors in terms of economic development.  In contrast, the Chinese approach in Africa has been to provide direct infrastructure investment in exchange for natural resource concessions, irrespective of governance.  To the Chinese government, it is none of their business how another sovereign nation chooses to govern itself, particularly when it is in their interest to maintain the status quo.

Regardless of efforts to stem the tide of corruption, it exists and will likely continue to exist until certain fundamental underlying issues are addressed.  I used to note that Filipinos are some of the most cynical people I’ve ever met about politics.  Corruption is so pervasive in the system that (at least in local elections) people vote for the politician who is most adept at playing the game than the one who vows to change the rules.  And when they talked about this, I used to say that corruption comes in many forms, and the United States is hardly immune.  In fact, I would argue that corruption in the United States is arguably worse than in certain developing countries, if only because it operates under a veil of legitimacy.

K Street is a physical street in Washington D.C.  It is also a euphemism for the lobbying industry, which, for the most part, calls K-street home.  Wikipedia describes how lobbying works in the United States:

Lobbying (also Lobby) is the act of attempting to influence decisions made by officials in the government by individuals, other legislators or government actors, constituents, or advocacy groups. A lobbyist is a person who tries to influence legislation on behalf of a special interest or a member of a lobby. Governments often define and regulate organized group lobbying that has become influential.

Lobbyists use their time both with legislators, to explain the issues of the organizations which they represent, and with their clients to explain the obstacles elected officials face when dealing with these issues. Many of these lobbyists are employed by lobbying firms or by law firms, which retain clients outside lobbying, other lobbyists are employed directly by advocacy groupstrade associations, companies, and state and local governments. In 2007 there were over 17,000 federal lobbyists based in Washington, DC.[1]

Lobbying activities are also performed at the state level, and lobbyists try to influence legislation in the state legislatures in each of the 50 states. At the local municipal level, some lobbying activities occur with city council members and county commissioners, especially in the larger cities and more populous counties.

There are 17,000 people whose sole qualifications are their connections to lawmakers, and whose job it is to influence legislation in exchange for money.  A rose by any other name would smell as sweet, and lobbying smells like corruption to me.  In fact, I am not sure exactly how lobbying can be construed as anything but a legal form of corruption that operates with complete immunity from prosecution.  Legally, politicians are not allowed to accept gifts from lobbyists.  But, they can accept campaign donations to from political action committees (think Swift Boat Veterans for Truth) during a campaign year, increasing their likelihood that they’ll keep their job and their magnanimous donor will encounter what Michael Porter would describe as a “friendly regulatory environment.”

Yesterday, an article in Politico describes what Andrew Sullivan calls “Talk Radio’s Ideological Industrial Complex,” in which prominent talk radio hosts accept money from influential political think tanks in exchange for endorsements:

In search of donations and influence, the three prominent conservative groups are paying hefty sponsorship fees to the popular talk show hosts. Those fees buy them a variety of promotional tie-ins, as well as regular on-air plugs – praising or sometimes defending the groups, while urging listeners to donate – often woven seamlessly into programming in ways that do not seem like paid advertising.

“The point that people don’t realize,” said Michael Harrison, founder and publisher of the talk media trade publication TALKERS Magazine, “is that (big time political talk show hosts) are radio personalities – they are in the same business that people like Casey Kasem are in – and what they do is no different than people who broadcast from used car lots or restaurants or who endorse the local roofer or gardener.”

The Heritage Foundation pays about $2 million to sponsor Limbaugh’s show and about $1.3 million to do the same with Hannity’s – and considers it money well spent.

This is called the “politico-media complex,” and, to my mind, it is another form of corruption.   The military-industrial complex – Harry Truman’s phrase for the unholy relationship between the defense industry and the government that Dylan sang about – is another form of corruption.  So is the prison-industrial complex, which describes the connection between the drastic increase in the number of incarcerated Americans – by far the largest of any industrialized nation as a percentage of population – to the political influence of the private-sector prison lobby.   Remember the Arizona immigration law?  The one that legalizes racial profiling and is designed to stop “the Trojan horse destroying our country,” as described by Arizona state senator Russell Pearce?  Well, that bill was influenced by, if not drafted by, the private-sector prison lobby, led by the Corrections Corporation of America.  The business model of for-profit prisons is simple: revenue is directly correlated to the number of inmates being housed in the correctional facility.  Illegal immigration – an issue that appeals to people’s basest tendencies, drawing on latent xenophobia and racism – is, frankly, a big market. This, from NPR:

NPR spent the past several months analyzing hundreds of pages of campaign finance reports, lobbying documents and corporate records. What they show is a quiet, behind-the-scenes effort to help draft and pass Arizona Senate Bill 1070 by an industry that stands to benefit from it: the private prison industry.

The law could send hundreds of thousands of illegal immigrants to prison in a way never done before. And it could mean hundreds of millions of dollars in profits to private prison companies responsible for housing them.

Yes, that is corruption too.  Food is another one.  The agribusiness sector in the United States spent $1.3 billion on lobbying between 1998 and 2010, representing ~4% of the total, and the return on that investment has arguably had a greater impact on world hunger than do the corrupt politicians that preside over the hungry populations.  The U.S. senate recently voted to repeal a $6 billion tax credit to ethanol producers, which probably existed in part due to the fact that presidential candidate Newt Gingrich received $300K in campaign contributions from biofuel lobbyists.  Meanwhile, the world is in the midst of a serious food crisis.  Fortunately, Mr. Gingrich and his constituents will not feel the sting, as they do not spend half of their income on food, unlike the 100 million people who were pushed into extreme poverty during the last food crisis back in 2008.

These are all forms of corruption.  I am a realist, as readers of this blog know.  Geopolitics is driven by oil and money, and that is not going to change.  Bribery – financial or otherwise – greases the wheels of capitalism and is part of the game, for better or for worse.  But I do think it is only fair to acknowledge the hypocrisy in demanding good governance from other countries.  Because corruption comes in many forms, and with more complexes than I can count on two hands, the United States would do well to take a hard look at its reflection in the glass house before it decides to throw stones.