Business Corruption

The Bertelsmann Foundation 2010 points out that there are still serious issues regarding the procurement of public enterprises in Kenya. The private media have often described these as shady deals. Many of Kenya's large corruption scandals have involved public procurements in which foreign or local companies have skimmed-off resources from over-invoiced contracts. Companies are recommended to use a specialised public procurement due diligence tool in order to mitigate corruption risks involved in public procurement.

According to the Transparency International Global Corruption Report 2008, as a result of privatisation and liberalisation, more opportunities for corruption are found in public procurement and public administration. In 2004, Kenya and its public procurement framework were shook by the Anglo-Leasing and Finance Limited scandal. According to some reports, the government issued promissory notes worth more than KES 50 billion to companies, including Anglo-Leasing, which reportedly received notes totalling KES 7 billion. The Anglo-Leasing deal was only one of 18 sham contracts entered into with different companies, most of which were non-existent entities paid for supplying fictional or overpriced services. Although the notes have supposedly been revoked, confirmation of the revocation of what were supposed to be irrevocable promissory notes has not been subject to parliamentary or public oversight.

See more on public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Political Corruption

According to a 2008 article by Bloomberg, Finance Minister Amos Kimunya was forced to resign in July 2008 as lawmakers demanded his resignation over a public procurement corruption scandal. The scandal involved the greatly underpriced sale of a five-star hotel to a local company with Libyan interests. The hotel had been reclaimed by the government from Kamlesh Pattni, who allegedly purchased the hotel with profits reaped from the 1990s corruption scandal known as the Goldenberg scandal (see the 'Environment, Natural Resources and Extractive Industry' in the Corruption Levels section). In January 2009, Kimunya was re-appointed to his previous position despite a parliamentary vote of no confidence against him, according to the Bertelsmann Foundation 2010.

According to Global Integrity 2009, the public procurement process is addressed in the Public Procurement and Disposal Act. However, regulations on conflict-of-interest are not always enforced evenly. An example of this can be seen in the Anglo-Leasing scandal where uncompetitive contracts were awarded to companies in which government officials had interests. The former Permanent Secretary for Ethics and Governance in the Kibaki government, John Githongo, estimated that public contracts were inflated by 25-100% in the Anglo-Leasing deals between 2001 and 2004.

See more on public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Frequency

World Economic Forum: The Global Competitiveness Report 2011-2012:
- Business executives give the diversion of public funds to companies, individuals, or groups due to corruption a score of 2.6 on a 7-point scale (1 being 'very common' and 7 'never occurs').

- Business executives give Kenya's government officials' favouritism towards well-connected companies and individuals when deciding upon policies and contracts a score of 2.5 (1 being 'always show favouritism' and 7 'never show favouritism').

The World Bank & IFC: Enterprise Surveys 2007:
- 71% of companies polled expect to give gifts to secure a government contract.

- Companies polled expect to pay a gift of 8% of the contract amount on average to secure a government contract.