Sarah Elderkin was the Prime Minister’s publicist and advisor in the grand coalition government. She is also the author of Flame of Freedom, a book detailing the remarkable political journey of Raila Odinga.
On Friday 22nd in a local publication, she gave a blow-to-blow details of events that led to the suspension of William Ruto as Minister of Agriculture in February 2009:
In mid-2008, the National Cereals & Produce Board (NCPB), which bought farmers’ maize and in turn sold the grain to millers, had two million bags in store, just half the four million considered sufficient to guarantee food security. Stock-piling had failed and corrupt practices had circumvented the ban on maize exports.
A worried Cabinet decided that, in future, the ‘strategic reserve’ should be raised from four million bags to eight million. To this end, some maize would be imported immediately, and to alleviate the current situation this would be offered to millers at a subsidised price, thereby also cushioning the consumer.
The Agriculture and Special Programmes ministries were accordingly mandated to import the maize under the guidance of Prime Minister Raila Odinga’s office, and he convened a meeting on July 30.
Agriculture Permanent Secretary Romano Kiome attended on behalf of Ruto, together with Special Programmes minister Naomi Shabaan, Finance minister John Michuki and their permanent secretaries, Dr Mohammed Ali and Joseph Kinyua.
Also present were representatives of the NCPB under Managing Director Gideon Misoi, as well as Odinga’s own PS (Mohammed Isahakia) and Chief of Staff (Caroli Omondi). A ‘strategic food reserve committee’ was set up under Dr Kiome as chair to handle the procurement.
The NCPB already had a 2008-2009 maize importation programme, including some 1.5 million bags from Tanzania, and Ruto was in Tanzania at that very moment, reportedly “discussing the price”.
The minutes of the PM’s meeting noted that “the unit price (of the bags of maize) will be known when the minister for Agriculture reports back”. (Ruto was often abroad, taking a deeply personal interest in the prices of such things as imported maize and fertiliser. He was not one to leave it to his purchasing staff, as would be normal. Very diligent. Apparently.)
The PM’s meeting decided more suppliers must be swiftly identified before local maize stocks ran out, so the committee was mandated to negotiate the best deal.
On August 19, it was decided to open a letter of credit immediately for South African supplier Afgri Trading (Pty) Ltd, which had confirmed they had a loading slot for a ship at Durban. Afgri warned that if payment was delayed and this slot was missed, the grain would have to be sent overland to another ship sailing out of Maputo, Mozambique, incurring further charges.
The Tanzanian maize deal had been the result of a direct appeal from President Mwai Kibaki to Tanzania’s President Jakaya Kikwete. But Tanzanian Prime Minister Mizengo Pinda had already contacted Odinga to say Tanzania had very little maize to spare, only 4,000 bags, very far from the 1.5 million desired.
Odinga reported this to the committee but others were insistent that Tanzania would definitely bring all the maize Kenya required through the border at Loitokitok and Taveta at a cheaper price than the maize from South Africa.
Odinga was sceptical. Tanzania had also banned maize exports and the PM made clear he would not engage in black-marketeering or the economic sabotage of a neighbouring country. Ruto continued to insist, however, so it was decided Kibaki would write a letter to Kikwete and Ruto would personally deliver it.
On his arrival in Dar es Salaam, however, Ruto was referred by Kikwete to Pinda, who told Ruto exactly what he had told Odinga. Tanzania had no maize to spare.
Meanwhile, this fruitless toing and froing had delayed the opening of the letter of credit for the South African supplier, and the slot for loading the maize at Durban had been missed. This meant the cost of the importation had risen by Sh14 million, the price quoted by Afgri for moving the maize by road to Maputo to catch a ship at the Mozambican port.
Odinga refused to approve this extra charge and asked the committee to prepare a Cabinet memo. The Cabinet, like Odinga himself, was not at all impressed–especially as there was now no option, if grim consequences were to be avoided, but to approve the payment.
Back in his office after the bad-tempered meeting, Odinga told Omondi, one of the procurement committee members, of the decision. Cabinet Secretary Francis Muthaura would convey Cabinet approval in writing in due course but, because of the urgency of the matter, Odinga asked Omondi to let the others know the decision and they should then go ahead immediately with organising the payment.
Omondi went to the NCPB but Misoi was reluctant to act without written authority, so he asked Omondi to authorise in writing the additional expenditure of Sh14 million. Omondi signed, the supplier was paid, and the South African maize eventually arrived. The plan was now for it to be sold to millers at a subsidised price.
But instead of maizemeal becoming cheaper as expected, the price quickly rose dramatically across the country. It was a grave crisis and the PM called a meeting with representatives of the NCPB and of millers, led by Cereal Millers Association Chairman Diamond Lalji.
Under the system in operation, millers had to get letters from the ministry allocating them so many bags of maize, and they then had to exchange these letters at the NCPB for bags of grain. But a representative of Unga Limited told the PM bluntly that this was not happening. Instead, millers had to deal with middlemen who were forcing them to pay for the letters of allocation.
Someone in the ministry of Agriculture was selling the letters of grain allocation to MPs and other cronies. The names would be blank on the allocation letters, which would then be sold on to millers at a premium, and the millers would fill in their own names and use the letters to collect the bags of grain.
‘Commissions’ had to be paid at every stage and the net result was a huge corrupt windfall for people in the ministry, along with complicit MPs and other cronies, plus a sharp rise in the cost of maizemeal to the consumer nationwide.
Parliament had been widely infiltrated by the scam. It was becoming an open secret and the Cabinet was forced to order that millers be allowed to access grain without allocation letters. But the Cabinet directive was generally ignored and the letters scam continued.
Odinga then commissioned PriceWaterhouseCooper to audit the entire scheme from procurement to distribution and establish exactly what had happened. PWC completed the audit and presented the report to the Treasury, which shelved it.
Odinga continually requested for a copy of the report, but the Treasury refused to release it to him. Odinga had also called for audits by the Inspectorate of State Corporations and the Efficiency Monitoring Unit in his office. Both reports adversely named top officials in the ministry of Agriculture and recommended they be investigated.
Ruto was calmly presiding over a ministry where corrupt practice was rife. Everyone knew what was happening but he was doing nothing to stop something that was having an unbearable impact on the cost of living.
Odinga had had enough and wrote to Kibaki recommending Ruto’s suspension. Kibaki did not respond, so Odinga wrote to Ruto, copying the letter to Kibaki, telling Ruto he was suspended for three months pending the outcome of investigations.
Odinga called a press conference to inform the media. Within three hours, and without reference to Odinga, Kibaki countermanded the decision on the basis that he had not been consulted.
Odinga left the country for a state visit to Japan but at home Kibaki found himself under mounting pressure from the media, demanding to know why he was shielding people. On Odinga’s return, the two met and agreed on further investigation.
Then the Treasury suddenly decided to release to the media part of the PWC report, which it had continued to withhold from Odinga. And the section released was carefully chosen. The report had been written before the delayed appearance of Muthaura’s letter confirming Cabinet authorisation of the additional Sh14 million cost of transporting the maize from South Africa, so the report instead cited the paper Omondi had signed at Misoi’s request. In a planned smear campaign, the report was used to falsely accuse the PM’s office of corruptly trying to make Sh14 million on the maize deal.
Although Odinga knew that neither Omondi nor Isahakia, also falsely implicated, had done anything wrong, he asked both to step aside to allow for investigations. Kibaki was thus forced to suspend others who had been named, including Dr Kiome and Prof Misoi of the NCPB.
In May 2010, the Kenya Anti-Corruption Commission and the Inspectorate of State Corporations presented a report of their subsequent investigations. Concerning the release of maize from the NCPB, they criticised the PSs in the ministries of Finance, Agriculture and Special Programmes, for “lack of clear policy guidelines” and said that the three had “primary responsibility for the subsidised maize scheme but they failed to monitor the implementation of the scheme”.
They said “unscrupulous traders connived with NCPB managers to allocate strategic grain reserve subsidised maize”. The report recommended administrative disciplinary action against the PSs and several of their officers for “negligence of duty and misuse of office”.
The investigators recommended lifting suspensions from both Omondi and Isahakia, saying neither had been involved in any malpractice. The report said “the importation of maize was done above board and in the best interest of the country. However, the distribution of both the imported maize and the SGR maize was marred with irregularities and the directive of the Cabinet that the maize be sold to millers was ignored. Consequently, the subsidised maize ended up enriching a few unscrupulous businessmen.”
The letters of allocation issued by the Agriculture ministry to MPs and cronies, and the fortunes made out of corruption in the maize industry that year under Ruto’s watch as minister for Agriculture, have never been investigated.
This piece was originally published in The Standard.