Economy Ouko says Eurobond billions still a mystery

Auditor-General Edward Ouko. Photo | Francis Nderitu | NMG

Auditor-General Edward Ouko has renewed the controversy surrounding the Sh215.5 billion that Kenya borrowed by way of a Eurobond, saying its receipt and spending are still to be ascertained.

In a fresh audit report on the National Exchequer Account, Mr Ouko says investigations into the receipt, issue, accounting and utilisation of the funds relating to the sovereign bond issue were still ongoing as at end of June last year.

“Under the circumstances, the accuracy of the Exchequer balance of Sh203,491,418.97 brought forward from 2014/2015 may be affected by the outcome of the ongoing special audit on Eurobond,” Mr Ouko says in the latest audit report for the year ended June 30, 2016.

The report, dated November 16, 2017, was tabled in the National Assembly by Leader of Majority Aden Duale on December 6, 2017.

“However, as indicated in the Auditor’s Report for 2014/15, the receipt of net proceeds from commercial financing (Sovereign/Eurobond) of Sh215,469,626,035.75 accounted for in the 2014/15 financial year could not be ascertained as investigations into the receipts, issues, accounting and utilisation of the funds related to the sovereign/Eurobond was still ongoing as at June 30, 2016,” he says.

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Kenya in June 2014 floated a $2 billion Eurobond in two tranches of $1.5 billion over 10 years and a five-year $500 million bond whose proceeds it deposited in JPMorgan Chase, New York.

Mr Ouko in his 2013/14 fiscal year report said that Sh54 billion of the total proceeds was drawn to settle a syndicated loan that the government took in 2012.

The rest was earmarked for infrastructure development and budgetary support. At the time Mr Ouko said that Sh215 billion of the Sh280 billion debt could not be clearly accounted for.

Allegations of embezzlement

The Eurobond saga touched off a heated political debate that saw the then main opposition coalition Cord and its leader, Raila Odinga, allege that the proceeds had been embezzled, a claim the government denied.

President Uhuru Kenyatta in October 2016 rubbished plans by Mr Ouko to investigate activities of the Federal Reserve Bank of New York regarding alleged misuse of the $2 billion Eurobond cash.

Mr Ouko had in May told MPs that his office would conduct a forensic audit of the funds outside Kenya after securing appointments with top US and UK financial institutions involved in the Eurobond transactions.

“When you say that the Eurobond money was stolen and stashed in the Federal Reserve Bank of New York, are you telling me that the Kenyan government and United States have colluded?” Mr Kenyatta posed at an anti-corruption summit at State House, attended by Mr Ouko.

“Who’s is stupid here? And he (Mr Ouko) says he wants to investigate the Federal Reserve Bank of New York!”

The Auditor-General told the National Assembly’s Public Accounts Committee (PAC) that a team of forensic auditors would, among others, visit JP Morgan, Federal Reserve Bank, City Transaction Services New York, JP Securities, Barclays Bank, ICB Standard Bank and Qatar National Bank to scrutinise transaction data.