Kenyan authorities arrested Treasury Secretary Henry Rotich following an investigation by the state prosecutor into alleged irregular payments for the construction of dams.
Rotich is the most senior to be targeted so far in an intensifying battle against state corruption in Kenya. President Uhuru Kenyatta is cracking down on graft to reduce revenue leakages and raise more funding for his plan to boost manufacturing and farm output.
The Office of the Director of Public Prosecution ordered the arrest of Rotich, Treasury Principal Secretary Kamau Thugge and 24 others as part of an investigation into possible irregularities in two planned dam projects that may have cost the government billions of shillings.
“The evidence established malpractices that impacted on our public debt,” Director of Public Prosecutions, Noordin Haji, said Monday in a televised speech.
Calls to Rotich and Thugge seeking comment went unanswered.
The yield on Kenyan bonds due in 2024 was little changed at 5.131% after the news, while those maturing in 2032 and 2048 were down 0.2% and 0.3% respectively. The shilling shed 0.2% against the dollar to 103.37.
Inflated Loan
The prosecutor’s announcement may require Kenyatta to replace Rotich, said Dismas Mokua, a political analyst at Nairobi-based Tricarta Advisory.
“Because of the sensitivity of his ministry it is important for him to resign and allow the president to appoint an acting cabinet secretary for Treasury,” Mokua said.
Two of the projects, the planned Kimwarer and Arror dams in the Rift Valley, are estimated to cost about 65 billion shillings ($629 million), Haji said March 8. To fund the projects, the Treasury negotiated a 63 billion-shilling commercial facility, which was inflated by 17 billion shillings, Haji said on Monday.
Officials awarded the contract to CMC di Ravenna of Italy while aware that the company was at the time “straining and getting into voluntary liquidation,” Haji said.
The same firm had been awarded three other mega-dam projects whose construction was incomplete or yet to commence, he said.
“This was in flagrant disregard to the laid down public procurement laws, regulations and rules, resulting in massive loss of public resources,” Haji said.
CMC didn’t immediately reply to an email seeking comment.
Rotich, 50, has been Treasury secretary since April 2013. Previously, the Harvard University trained economist served as head of macroeconomics at the Treasury from 2006.
.Bloomberg
