Kenya Reiterates That It Accounted for Proceeds of Eurobond

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Kenya’s Treasury reiterated that all proceeds from the country’s inaugural Eurobond have been accounted for, rejecting accusations by the country’s main opposition party that funds had been misappropriated.

Kenya’s public prosecutor on Wednesday ordered police and anti-graft investigators to submit a report within 10 days on allegations that part money the government received went missing. The Coalition for Reforms and Democracy, or CORD, said earlier this week the government can’t account for more than 140 billion shillings ($1.4 billion) it received after selling $2.75 billion of debt last year.

“CORD’s is an issue of misreading the tables,” Treasury Principal Secretary Kamau Thugge said by phone Thursday from the capital, Nairobi. “They read what we spent last year, which is 110 billion shillings, and so 140 billion shillings is missing. But that 140 billion shillings was allocated for this financial year.”

Kenya ranks among the world’s most-corrupt countries, placing 145th out of 175 on the Berlin-based Transparency International’s 2014 Corruption Perceptions Index. President Uhuru Kenyatta last month described the crime as a national security threat that enables Islamist militants to plot attacks in the country.

Previous cases in the country include a scandal known as Anglo-Leasing, which involved the payments for security contracts to non-existent companies in the 1990s and early 2000s and cost the government 56.2 billion shillings. In the 1990s, the state lost almost $1 billion through the fraudulent export of gold and diamond jewelry in a scam known as Goldenberg.

Infrastructure Spending

Kenya sold the Eurobonds to raise funding for spending on projects including a new railway from the port of Mombasa to Nairobi, the capital. The government is investing in infrastructure to help accelerate growth to at least 10 percent, compared with an estimated 6.5 percent this year.

The opposition CORD party said there is a “lack of evidence” of where and if the government spent more than $1 billion. CORD leader and former Prime Minister Raila Odinga turned down a Treasury invitation to scrutinize documents on the Eurobond and instead asked officials to make the paperwork public.

The Treasury has handed over all documentation relevant to the Eurobond to the parliamentary accounts committee and the attorney-general, Thugge said. The country’s Budget Controller has also been informed how the proceeds were spent, he said.

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