Kenya Central Bank Says Officials Didn't Take Eurobond Cash

  • Central bank says Nyaoga was named chairman after bond issue
  • Bank says it has provided evidence to investigating agencies

The Central Bank of Kenya has for a second time in two weeks defended its officials, including its chairman, over opposition allegations about the alleged theft of Eurobond proceeds.

Kenya raised $2.82 billion in its maiden Eurobond sale in 2014, money it said would be used to pay off a $600 million syndicated loan and to build roads and ports and to expand electricity generation. Opposition leader Raila Odinga has said $1 billion of that money is unaccounted for and named central bank Chairman Mohammed Nyaoga among 10 “persons of interest” in the matter.

“He had no access to or participation in the Eurobond matter,” the central bank said of Nyaoga in a statement published in the Business Daily newspaper. “Further, the allegations that CBK officials were involved in any misappropriation of these funds have no basis and are erroneous.”

The statement shows two withdraws of an initial $2 billion raised were made. The first $395,439,262.5 was received on July 3, 2014, the same day Kenya retired its syndicated loan. A final payment of $999,018,457.6 was received on Sept. 8, 2014. It included $245,957.27 in interest and after $225,262.67 was paid in charges. The bank says it provided evidence requested by investigating agencies.

Kenya received a further $815,436,932 from tap sales in December 2014, the central bank said.

No Wrongdoing

Odinga has demanded the resignation of National Treasury Secretary Henry Rotich and other officials over the matter and asked for an independent forensic audit to be conducted. Rotich said he wouldn’t resign because “no money was lost” when Bloomberg asked him for comment on Monday.

Nyaoga has denied any wrongdoing. “I have spent 30 years practicing law and it’s unfair for someone to mention me and call me a thief,” he said in an interview in the capital, Nairobi, on Monday. “I have filed a case against Odinga.”

The Eurobond issue took place before Nyaoga was named board chairman, according to the central bank statement. He was appointed in June 2015.

The yield on the Eurobond was little changed at 9.02 percent at 12:15 p.m. in Nairobi. It was issued at 6.87 percent in June 2014.

President Uhuru Kenyatta is coming under public and donor pressure to tackle corruption, a major obstacle to business in East Africa’s biggest economy. It’s also threatening national security because militants can bribe officials as they plan their attacks. Islamist groups have intermittently carried out deadly assaults in Kenya.

The nation is ranked 139th in Transparency International’s Corruption Index last year. Somalia and North Korea were at the bottom at 167th position.

Several cabinet ministers were replaced last year following allegations of graft, and dozens of high-ranking government officials have been charged with corruption-related offenses. Critics argue that few such cases are ever prosecuted.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE