Looting of Kenya Treasury Finally Puts Pressure on Corruption : Africa: Theft of up to $850 million has scandalized foreign aid donors, who for the first time are making contributions conditional on reforms.

NAIROBI, Kenya —  Somebody has been looting the national treasury of Kenya. From 1990 to 1993, $600 million to $850 million “went missing.” That is about the same amount this struggling country received in foreign aid from the United States, Britain, Germany and other developed nations.

On the scale of African corruption, the theft may be shocking but hardly warrants top ranking in the record books.

As for the history books--well, they may tell a different story.

Finally, on the world’s poorest continent, the ugly hand of corruption is being slapped back. Manifold revelations about Kenya’s mysterious--or maybe not so mysterious--treasury looting have energized domestic and international fury. In this region where trouble is contagious, big trouble appears to be brewing for the old guard of Africa, known for its plundering ways.

Or so many hope. Because the alternatives are so discouraging.

Impoverished Africa, as any number of experts will testify, is being left behind in the global scramble for a new economic order. Few things weigh it down more than the inefficient, dispiriting millstone of corruption.

The 50 assorted republics that make up sub-Saharan Africa have long borne this cross and for a multitude of reasons. Not the least of which is that the strong prey on the weak, and Africans began their independence 30 years ago with the misfortune of having a powerful few at the top, a powerless many down below--and not much buffer in between.

Quickly it came to pass that men with the title “Honorable” before their names, independence fighters who were once known as the Thomas Jeffersons of the continent, began expecting a little something besides honor for their talents. And the generals sought a little something, too, as did government ministers and district representatives. After a while, the “little somethings” added up.

Olusegun Obsanjo, Nigeria’s former president, estimates that just a few African strongmen now sit atop cash deposits of more than $20 billion in Swiss banks. It was all pillaged from societies that live hand-to-mouth in disease and squalor, most of them heavily dependent on the largess of the world’s richer nations.

“Whole communities and in some cases whole nations are impoverished by this process,” he said.

Obsanjo now resides in prison, the result of his opposition to the military junta in Nigeria, an important U.S. oil supplier and, analysts say, a country with one of the most corrupt governments on the continent. More than $12 billion of Nigeria’s public funds went missing in recent years and is still unaccounted for.

When practiced at such a grand scale and for so long, corruption yields its own corrupt, degenerative cycle. At each turn, more people are swept along. Today, in any number of African countries, the price of justice is a little something for the judge. Staying out of trouble requires something for the police officer. Passing grades for the children depend on something for the principal. To activate a rubber stamp, something for the clerk.

Some say the payoffs are necessary: A Kenyan civil servant with the title “assistant director” of a national government agency explains that he is provided an allowance of $3.63 a day to cover hotels and meals when traveling on official business. Compare that to the $145 a night charged at Nairobi’s major hotels and the $7 for a decent hamburger. “Are civil servants supposed to sleep at bus parks and eat from dustbins?” he asks.

Dieter Frisch, former director general of development for the European Commission, says Africa is approaching the tragic closed circle where “corruption is both cause and consequence of underdevelopment.”

According to a national poll conducted last November by Kenya’s Center for Law and Research International, 92% of citizens recognize that corruption is “rife” in their government and country. More than 60% said they could not hope to get a job without paying bribes.

“A large portion of the Kenyan population is unlikely to strive much to enhance their skills, qualifications and work performance because such attributes are not expected to be used as criteria for selection, advancement or promotion,” the watchdog group concluded.

Soon thereafter, the organization was outlawed for meddling in politics.

A decade ago, a few cracks like this from the government bullwhip might have quieted the meddlers. But not today.

Kenya--a proud anchor of stability in East Africa, long a friend of the West, a continental leader in commerce and education, a favorite of tourists and Africa’s ambassador to much of the outside world--is finding its old ways on trial from within and without.

It should be emphasized that Kenya is by no means the most corrupt of African nations. Some would argue that the dishonor goes to such countries as repressive Nigeria or diamond-rich and dirt-poor Zaire, where President Mobutu Sese Seko’s personal wealth is believed by Western analysts to be greater than his country’s huge debt.

No, it is Kenya’s own progress bearing down on the established order.

In the past, the ruling elite might have explained how the nation’s wealth went missing by promising not to let it happen again. There would have been showcase arrests of a few crooked underlings.

But a generation of educational progress has produced a more sophisticated society. Press freedoms, although restricted, have injected new ideas and accountability into once-cloistered civic affairs. Political liberalization has brought forth the first party in Kenya’s history with a credible anti-corruption platform. A shrinking world has brought prosperity and the ideals of meritocracy to within view of millions. It is difficult to console such people when 10% of one year’s gross domestic product vanishes and sends the whole economy into a nose-dive.

Even the young know the brutal odds against them. “The entire society is corrupt,” complains 16-year-old high school student Salome Zighe. “There is no money to build schools. Our health sector is also collapsing because the people who are vested with the task of managing the public funds are the same people who are now tearing the country apart.”

Meanwhile, the world has grown wily, too. Either that or exhausted with Africa.

Kenya has been a recipient of foreign aid since independence in 1963. Over the years, millions upon millions of dollars have been documented as stolen, skimmed, diverted or missing. Among the picturesque thorn trees and ancient canyons of this country, the landscape is littered with the bleached bones of white elephant development projects. And Kenyans still earn less than $400 a year per capita.

With each failure and frustration, aid donors devised new strategies to counter the culture of corruption. They bypassed the central government, gave up on big construction projects that are easy prey for skimming, added endlessly to paperwork requirements and scolded all the way.

The results, however, were disappointing. Many relief agencies remain proud of their individual efforts. But for Kenyan society as a whole, the years 1985 to 1995 go down as the “decade of corruption,” as one newspaper called it--10 years in which scandal became a national industry.

Which brings the story back to the looting of the Central Bank of Kenya.

Even those who thought they had seen everything were stunned at the revelations as they began to emerge last year and continue today. “Impossible!” one news headline said.

If published accounts prove accurate, the bank, controlled by the government of 17-year President Daniel Arap Moi, was systematically looted of the equivalent of a month’s salary for every person in Kenya.

In September, the International Monetary Fund said it had enough. It announced a suspension in aid until the misdeeds were explained and justice administered. Other donors may follow suit when they meet in Paris sometime in the next 90 days to review Kenya’s applications for fresh millions in assistance.

Never before have foreign donors made their aid conditional on cleaning up internal corruption.

With top officials suspected of culpability in the thefts, Moi’s administration now squirms in the spotlight. Can the scandal be resolved and the complainers appeased without exposing more of a republic’s rotting foundation than the ruling class here can risk?

The question consumes not just this country but corrupt regimes across the continent. Kenya may be the target, but there are plenty of others in the impact zone.

“The chickens have finally come home to roost,” one Kenya journalist said.

The facts of the bank scandal remain cloudy. Is this one complicated scam? Or multiple misdeeds? And whose pockets went bulging through the back door of the bank? So far, one high-flying businessman and the former governor of the central bank have been accused of complicity in the misappropriation of $245 million.

But hardly anyone believes that the scandal ends there. Even in the painfully restricted language of Kenyan journalism, the Economic Review blamed “what was apparently a highly organized syndicate which could have involved politically well-connected players.”

For aficionados of graft, the bank scandal is a dilly. Perhaps the greatest outrage is that the mechanisms established to try to revitalize Kenya were themselves manipulated for personal greed with painful consequences for the entire economy and for millions of workaday Kenyans.

At the start of the decade Kenya embarked on a campaign to expand exports by offering cash incentives to business people. It now appears that a single company known as “Goldenberg” sucked more than $100 million from the treasury for allegedly fictitious export of gold and diamonds, neither of which is a notable Kenyan commodity.

So vast was this pillage that Kenya’s government scrambled to prevent the flight of foreign capital. By so doing, it offered astounding 60% interest to those willing to invest in government treasury bills and adjusted money exchange rates to attract hard currency.

The looters are suspected of double-dipping, investing some of their spoils in the legitimate transactions and perhaps draining the treasury of an additional $100 million while driving up inflation for some of the poorest people on the planet.

U.S. Ambassador to Kenya Aurelia Brazeal is among those warning that Africa’s plunder has gone too far.

“Nothing is more damaging to the public’s image of foreign aid in donor countries than the perception, however exaggerated, that we are pouring money into corrupt systems,” she said. “This gives rise to the very negative view that, by providing foreign aid to these countries, we are taking from the poor of the rich countries to give to the rich of the poor countries.”