Wednesday, 10 May 2017

The Eurobond saga: The scandal within the "scam"

Mpeketoni attack: Designed
 to sabotage the Eurobond
?
THE EUROBOND saga in Kenya was a well choreographed  vendetta campaign launched and  bankrolled by corrupt businessmen who lost big money contracts during the current regime, we can report. In their vendetta, they found a willing partner in the broke ODM Party and a few intellectuals, who also lost lucrative business contracts in the current regime.

All became hired mercenaries for the crooks who lost their bids for mega projects such as the green field project that was to build a second terminal at JKIA, the SGR and even the Lapsset project among other milking cows.
 The saga suggested that an estimated US$1 billion (kshs 87 billion) of the US$2 billion (Kshs 175 billion) Eurobond raised in June 2014 was stolen.  Kenya issued a US$2 billion Eurobond in June 2014, on the Irish Stock Market.

The Aftermath: A Police station burnt down
The bond, which was oversubscribed by 400% hit the market on the same day that Al- Shabaab struck at Mpeketoni in Lamu killing more than 100 people.  The news was splashed globally.

 Some analysts considered the brazen attack in Lamu an attempt to sabotage the Eurobond issue by projecting the country as an insecure investment destination.

Nonetheless, it did not dampen the investors’ appetite for the Kenyan debt paper. Investors applied for US$8.8 billion worth of the Kenyan debt paper. Kenya accepted only US$2 billion.

Analysts attribute this good response despite the bad news to confidence in Kenya’s economic fundamentals.

  A paper trail of the alleged saga did not reveal any wrong doing. It demonstrates proper transfers of the money from the lead bank to the central Bank of Kenya. According to the Prospectus for the Bond, the bond’s Managers were JP Morgan Chase Bank, Barclays Bank, standard Chartered Bank and Qatar National Bank.

 JP Morgan was the lead manager meaning all the moneys collected from the sale of the Kenyan Eurobond ended at an account in JP Morgan Chase Bank which handled all the US$2 billion pending instructions from its customer- the government of Kenya through the national Treasury.

The government authorized transfers of the Money from the receiving Bank (JP Morgan Chase) to the Central Bank of Kenya using forms Called PA forms.  The first transaction in this account was the payment of US$ US$604,560,737.50 to pay for a syndicated loan borrowed by the previous regime to buy the controversial BVR voter registration Kits.

  That left a balance of US$ 1.39 billion in the JP Morgan Chase bank. On July 3rd 2014 an order for transfer of US$ 395,439,262.50 was issued and the Money was transferred to Central bank of Kenya, which duly credited KES 34.6 billion to the government’s Kenya shilling account No 1000003987 at the Central Bank at the exchange rate of KEs 87.62 to the US dollar coming to KES 34,648,388,180.25 (Thirty four point six billion shillings).

 In effect, the Central bank of Kenya, the sole custodian of all foreign exchange reserves in Kenya, bought all the dollars transferred to the government of Kenya by JP Morgan. That left a balance of nearly US$ one billion -to be precise US$999,018,457.60- in JP Morgan’s Kenya sovereign Bond account. That is, Nine Hundred and Ninety nine million US dollars.

 This amount was transferred to the Central Bank account in the Federal Reserve Bank of New York. The Fed is the Central Bank of the United States of America, and does not open accounts for individuals. According to the paper trail, this amount was transferred to the fed on September 10, 2014, the whole lot of nearly one billion dollars.

 Before the money was transferred, the Treasury authorised the Central Bank to transfer the Money in a letter dated September 3rd, 2014. The Central Bank advised the Treasury to instead close the account since the transfer was the outstanding balance in account Number 603149985 at JP Morgan Chase. The authority to close the account was issued by the Accountant General at the Treasury the same day Vide letter REF: AG: Conf.17/01/1vol.1/8 dated the same day.

 The letter says in part “authority of the Treasury is hereby granted to enable the Central bank to transfer the balance into account no 100212764 in the CBK and to close the Sovereign Bond account.” Hence the money was transferred to the CBK’s account at the Federal Reserve and the equivalent in Kenya shillings was credited into the government account at CBK on September 9th, 2014. The intro In the Swift message reads’ “Financial institution transfer for own account.”

 A statement from the Central Bank shows that this amount was credited into Government of Kenya’s account on September 8th, 2014 at the ruling rate of KES 88.55 to the green buck. This came to a total of Eighty eight billion four hundred million shillings (Kshs 88,400,000,000). The statement also shows how the money was transferred locally until the account balance read zero.

From the foregoing four things are clear: Only the Central Bank is authorized to open and operate foreign accounts in behalf of the Government of Kenya. It is also the CBK that closes the accounts. This is what it did with the account number 603149985 at the JP Morgan Chases Bank.
 
Second, the Central bank is the Custodian of all foreign exchange in the country and third, the government of Kenya does not hold its money in foreign currency but in Shillings.
 Fourth, it is clear that the account at the Federal Reserve was not opened for the Eurobond, rather it was the Eurobond proceeds that found their way into a legal account of the Central Bank of Kenya at the Fed.
Fifth, there was no further external communication over the sovereign Bond since it was already in the country and being used.

The money trail shows no signs of a crime committed by anyone nor any missing dollar of the sovereign bond. That was the finding of all investigating agencies and the DPP who closed the file “for lack of evidence.”

 So  how was the Eurobond saga born? Analysts feel that, the failure of the  Mpeketoni attack to dampen demand for the debt paper gave birth to the second plot.  The analysts see a connection however weak. They point out that the failed Okoa Kenya campaign was launched at just about the same time.

The campaign was led by ODM, which also  "exposed" the Eurobond scandal"  claiming upto US$1 billion was stolen. But how did ODM get its figures?  As stated earlier, the party got this information from the businessmen. A search in the internet brought some very interesting findings. Among these is: ODM has surrounded itself with a Cabal of businessmen and intellectuals who lost mega deals during the current regime.

They are now bankrolling ODM in a bid to hoist it to power in 2017. Among the number is Jimmy Wanjigi and the late Jacob Juma.  Jimmy Wanjigi’s Followers on his tweet page read like who-is-who in CORD including Raila Odinga, Senator Muthama, Kalonzo Musyoka, Kethi Kilonzo, and Jacob Juma.

  Wanjigi, the King pin deal maker is said to be unhappy with the Kenya regime which has denied him lucrative deals even though he supported – and Financed romours have it- jubilee during the last election.  He fell out with the regime almost soon after their election. Consequently he is bitter man working to change the Jubilee administration.

According to their loose Cannon, the late Jacob Juma, CORD will take over Presidency this year. Juma in a tweet in March last year tells us why Wanjigi, who is bankrolling CORD, is furious with the Uhuru administration. He lost the lucrative US$650 million (Ksh 65 billion) Greenfield terminal at JKIA whose construction was cancelled last year. Juma in his tweet told Jimmy to “forget the warehouses at JKIA. When CORD takes power, we shall built a US$2 billion (kshs200 billion) new and Modern Airport.”

Juma himself lost a mining license that the Court found he had acquired illegally. The Mining license to an outfit called Cortec from Canada, was for mining rare earth which according to the parent company of the local outfit was worth Kshs 297 billion. He thus became a bitter critic of the government, always featuring prominently in “scandals” touching of the Deputy President, William Ruto.

 Juma was also a key player in the Eurobond saga, even “giving evidence” before the Investigating agencies. His testimony was part of the other testimonies that the DPP rejected as inconsequential in terms of evidence.
 Sources, credit Juma with being “brave but indiscrete.”  They say that he did not see the legal consequences of the scandal. That is why he dared where other, who knew their evidence was inconsequential, avoided. They Kept away from the investigating agencies for fear of the legal consequences.

 Among those who avoided the investigating agencies were Raila Odinga the ODM leader. He refused to face off with these agencies on flimsy grounds. He at one time almost mobilized his fanatical adorers to cause unrest when it appeared like he shall be arrested by the EACC. He also avoided meeting the CID and the PAC.

He knew that such a move could have landed him in Jail if it was found that he willfully lied to government officials.

 He left that to his Lieutenants including Sarah Elderkin who is said to have been former Raila aide, and David Ndii who became embittered when he lost his contract as a consultant for Amnesty International.

 Raila revived the alleged “scandal” in a recent interview with a local TV channel after he was anointed the NASA Presidential flag bearer, saying that the Controller and Auditor General could not find the Money in Federal Reserve when he visited the US. Incidentally, the CAG is yet to produce a report on his mission at the Fed last year.











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