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	Constitution of Kenya Review Commission

TRANSPARENCY INTERNATIONAL – KENYA REPORT OF THE CONFERENCE ON CONSTITUTIONAL REFORM TO FIGHT CORRUPTION

WINDSOR GOLF AND COUNTRY CLUB

NAIROBI, KENYA

7TH MARCH 2002

EXECUTIVE SUMMARY

Transparency International-Kenya (TI-Kenya) held a one-day conference, on 7th March 2002 on constitutional Reform to Fight Corruption. It drew together a large number and wide variety of participants from the public and private sector, faith-based and civil society organizations, the Chair and commissioners of the Constitution of Kenya Review Commission (CKRC), members of the Kenya Diplomatic and donor community, and participants from other African countries.

The key objective of the conference, which was a consultative activity, held under licence from and on behalf f the CKRC, was to gather informed views of Kenyan and other stakeholders, on how to integrate the anti-corruption fight in the new constitution. A corollary objective was to coalesce consensus on what subsequent statutory, policy, administrative or other steps were needed to actualize the fight against corruption. Whereas the CKRC cannot effect these, it can highlight and propose them for implementation in a post-constitutional dispensation.

The conference commenced with opening remarks from the Vice-Chair of the TI-Kenya, Harris Mule, and the Chair of CKRC, Prof Yash Pal Ghai. It then had regional comparatives on the fight against corruption from Uganda and Nigerian, two commonwealth states that are substantially in a similar station as Kenya. It further had three thematic research presentations from leading Kenyan researchers and public sector analysts, in the areas of pro-poor policy making, public procurement and re-visiting possible parliamentary oversight of the Public Finance portfolio of the Executive, as a means of reducing corruption. There were then three simultaneous Break-out Workshops, which generated concise, practical proposals under the heads of institutional, public procurement and anti-corruption laws.

This is the full narrative report of the conference. It gives a sequential summary of the above sessions, followed by a synthesis of the day?s proposals and recommendation: - for the (new) constitution, for statute law; and for policy, administrative or other action. Full texts of the presentations as well as a collation of the conference illustrations of corruption are added in the Report appendices. A participant generated detailed proposals and reflections under each of these heads, including creation of specific constitutional and statutory institutions to oversee the whole or part of the pro-integrity and anti-corruption movement. The caution was articulated, however, against falling into the temptation of creating a multiplicity of institutions and offices leading to an institutional glut. Where possible, existing institutions and vehicles, such as parliamentary committees, the office of the Controller and Auditor-General, etc, should be re-examined and strengthened.

LIST OF ACRONYMS USED

CKRC Constitution of Kenya Review Commission

CSOs Civil Society Organizations

GDP Gross Domestic Product

GOK Government of Kenya

MP Member of Parliament

PAC Public Accounts Committee (of Parliament)

PIC Public Investment Committee (of Parliament)

TI Transparency International

TI (K) Transparency International-Kenya

CHAPTER ONE ? THE FIRST PLENARY

A OPENING REMARKS ? HARRIS MULE

The TI-Kenya Vice-chair invited all participants to the conference and under-scored the conference objectives of harvesting concise constitutional and other proposals and recommendations for the constitution of Kenya Review Commission (CKRC) on the fight against corruption. He located the conference, and TI-Kenya?s input to the CKRC, in the CKRC statutory mandate to convene and facilitate expert consultations and hearings at every stage of the process.

He then introduced the conference presenters, especially ?the two? foreign speakers, who are members of the global TI Movement, who would give regional comparative experiences on their countries? management of anti-corruption agendas. He highlighted prevalent public opinion in Kenya, which currently ranks corruption as an issue of higher priority than even constitutional reform itself. In doing so, he revisited, in a nutshell, the various far-reaching deleterious effects of corruption: on the economy, on the moral fibre of society, on governance and electoral politics, and on national stability and security. He then called upon Prof Yash Pal Ghai to formally kick off the conference.

B CONSTITUTIONAL REVIEW AND GOVERNANCE ? PROF YASH PAL GHAI

Prof Ghai thanked and congratulated Transparency International-Kenya (TI) for its consistent campaign against corruption and underscored that the Constitution of Kenya Review Commission (CKRC) was keen to work with organizations such as TI, as this not only eases its financial and logistical burden, but also helps it identify pools of expertise.

He pointed out that although the Constitution if Kenya Review Act does not explicitly mention corruption, it is very clear that its mission and creation was influenced by it. He reiterated that the framework for the Constitution is designed in large measure to combat corruption by emphasizing good governance, accountability and public participation in public affairs. A major challenge of the review, therefore, is to translate this aim into concrete institutions and procedures so that corruption is eliminated.

He further pointed out the CKRA sets out the purpose and objects of constitutional review, which were arrived at in a series of national conferences at safari Park on the key components of the future Constitution, and which thus represent a broad national consensus. He reiterated that these values are predetermined for inclusion in the Constitution and are binding to all who engage in the review. These include: -

1. Chapter 3A of the Laws of Kenya, establishing the CKRC

* National unity and the integrity of the Republic

* Inter-ethnic amity

* Democracy

* Free and fair elections

* Human rights, particularly the right to equality and equal treatment in the law

* Meeting the basic needs of all Kenyans, and, by implication, the eradication of poverty

* Transparency and accountability of politicians and public servants

* Equitable distribution of resources

* Gender equity

* Full participation of people in the management of public affairs

* Checks and balances

* Independence of the judiciary

* Integrity of the procedures for the management of public resources and public finance

Every one of these values is negated by the objectives and practices of corruption.

Prof Ghai went on to describe and elaborate upon the specter of corruption in great detail, some aspects of which are captured in Appendix A to this report.

He thereafter highlighted some already proposed values and instrumentalities that would facilitate the fight against corruption are:

* A free and democratic system of government that enshrines good governance, constitutionalism, the rule of law, human rights and gender equality

* An electoral system that ensures free and fair elections

* Separation of powers and responsibilities among the various state organs, including the executive, the legislature and the judiciary so as to create checks and balances between them and ensure accountability of the government and its officers to the people.

* Ensuring the competence, accountability, efficiency, discipline and independence of the judiciary

* Improvements to the existing constitutional commissions, institutions and offices and establishment of additional ones to facilitate constitutional governance and respect for human rights and gender equity

* Promotion of people?s participation in the governance of the country and public affairs

* Protection of the rights of women and children

* Provision of basic needs of all Kenyans

* Ensure conditions for a free exchange of ideas

These, if effectively followed, would vastly minimize, if not eradicate corruption.

He repeated the lamentation that Kenya appears to have failed in devising viable institutions to fight corruption and further that the courts have repeatedly struck down legislation on institutions established to combat corruption and struck out corruption prosecutions. Thus the new constitution provides an opportunity to ensure constitutional foundations that will help to sustain values, institutions and procedures that counter corruption. We must, through it, examine the practices of political parties, the norms of the public service, the accountability of parliamentarians, the use of codes binding those in public authorities, the ethics and practices of the corporate sector, the accountability of the police, ways of mobilizing public opinion and support against corruption and new complaints and enforcement agencies, among other measures.

In response to questions and issues from the participants, Prof. Ghai had this to say. More attention needs to be given to the design of institutions to enforce the law and fight corruption. Near total reliance on the Judiciary needs to be tempered by better fact-finding institutions such as an Ombudsperson Human Rights Commission, (Anti) corruption institution, etc. This proves the point that there are a variety of institutions and devices to tackle corruption, which can be included in a constitution. Kenyans now have the opportunity to lay the foundation for these values and institutions, never again to fall into the traps engendered by the current Constitution.

Since public awareness is a very important facet, we need to use the Constitutional Review process to continuously conscientize Kenyans against corruption and reinforce positive values. Corruption is multi-faceted, and the fight against it should also be multi-pronged with action at several levels.

In answer to other questions, Prof, Ghai stated that although free and fair elections are important, they do not by themselves, embody democracy. Democracy requires broader conception and embodies values such as the rule of law, respect for human rights, participatory policy-making, etc. It also requires dispersal of power horizontally between institutions of government as well as vertically from the center to the provinces, districts, etc.

Prof Ghai repeatedly highlighted that the CKRC has not itself addressed the above several issues and is keenly procuring the views of the public, which it must analyze and only then codify and propose.

C THE UGANDAN EXPERIENCE IN FIGHTING CORRUPTION ? HON AUGUSTINE RUZINDANA, MP

Hon Ruzindana commenced his presentation with the painful admission that Uganda had not yet broken the cycle of corruption; he thus proposed re-titling of his session to read: ? The experience of Uganda in fighting corruption.?

He then went on to give a historical account of corruption in post-colonial Uganda. He highlighted that systems of control and accountability had broken down during the decades of dictatorship and chaotic rule. The relatively high turnover in political office as well as in the public service led to a ?short-term? mentality where one tried to grab as much as she/he could during their short stint in the office. This led to the recasting of vice as virtue with the ideology of ?man eateth where he worketh.? This extended to ?eating? even where one did not work i.e. the philosophy of ?air-supply.?

He illustrated several instances of corruption, which are recorded in Appendix A to this Report. He noted that the efforts of the National Resistance Movement (NRM) government to fight corruption earned it massive public support, which, in turn buttressed and dictated the pace of the fight against corruption. He, however, decried the gap between the official pronouncements and overtures towards combating corruption and actual proactive steps taken towards implementing those pronouncements. He rightly pointed out that he situation obtaining in Uganda is true of most African countries.

He outlined the following measures, most of which Uganda has embarked upon, to varying degrees of success: -

1. Development of an adequate body of penal law. The provision of the Prevention of Corruption Act and the current provisions of the Penal Code are not enough. New law must be devised to outlaw all forms of official misconduct and every dishonest method of diverting public resources which criminal ingenuity can devise e.g. misuse of public facilities, time and labor of public employees, false claims, etc.

2. Abuse of official position to secure unjust advantage must also be criminalized even where the perpetrator is not the immediate beneficiary. Sometimes the benefits are, in the first instance, directed to members of the family, clan, tribe, region or political party e.g. dishing out jobs.

3. Conflict of interest, though difficult to define, must be criminalized.

4. Disclosure laws imposing a duty on officials to declare personal financial and property assets must be legislated or strengthened. Periodic (e.g. annual) and disclosure of reportable events must be incorporated.

5. Both the givers and recipients must disclose financing and material support of political activities; this is a refinement of the disclosure laws.

6. Laws to prohibit and punish obstruction or intimidation of investigators and/or prosecutions of corrupt practices must also be passed. Investigations, prosecutors and judicial officials must also be insulated.

7. Confiscation and forfeiture of corruptly acquired wealth must also be provided for in law. The 1988 Vienna Narcotics Convention provides for this, with regards to narcotics; this needs to be extended, in national legislations beyond drug offences. Any economic motivated form of serious crime should be subject to the forfeiture remedy.

8. Reversal of onus of proof regarding lawful origin of alleged proceeds or other property needs to be incorporated. This is also provided for in the aforementioned Vienna narcotics convention.

9. Forfeiture should be extended beyond government officials to cover, for instance, individuals or corporate bodies, which may benefit from corrupt sale of government assets or execution of corrupt supply or works contracts.

10. An over-arching Anti-Corruption Programme and/or Policy is also necessary which enumerates and contextualizes all the mechanisms and strategies to combat corruption. In Uganda, the programme has a three-year medium term frame and a five year full-term frame.

11. Public education to create awareness and proactivity among the broad populace. This requires innovative strategies to educate the masses on corruption despite the challenges of widespread poverty and illiteracy. In this, creative use of the mass media is essential.

He then ventured some innovations and policy imperatives commenced in Uganda. One was on the independence (or attempts to secure it) of the office of the Director-General of Public Prosecutions (DPP), which is the office charged with prosecution of corruption-related offences. It has been made independent of the office of the attorney general, and initiates prosecutions independent of the latter. Secondly, the various government instrumentalities bestowed with various facets or aspects if the anti-corruption desideratum, e.g. the DPP, the Inspector-General of Government (Ombudsman), the Auditor-General, the Police, etc meet frequently to share notes and harmonize strategies.

He identified, as another crucial institution, parliament, especially through Parliamentary committees. He emphasized that Members of parliament (MPS) have an original and premier anti-corrupt mandate, having been elected by the people, and thus representing the people in ensuring accountability of government. The Ugandan Public Accounts Committee (PAC) has a Criminal Investigations Department (CID) squad permanently attached to it. Some CID officers attend PAC deliberations, and the PAC chair can instruct them to open an investigations file instantaneously. In his estimation 160 such investigations files have been opened, some having already progressed to prosecutions.

D PRACTICAL ASPECTS OF GOVERNMENTAL ACTION: FIGHTING CORRUPTION IN A TRANSITIONING COUNTRY: THE CASE OF NIGERIA ? MS OBY EZEKWESILI

Ms. Ezekwesili, in her prefatory remarks, thanked the CKRC and TI (K) for inviting her and affording her the opportunity to share her experiences with other African countries. She drew the spirit of kinship and commonality between Kenya and Nigeria, and said she hoped Kenya would benefit from some of her countries experiences in the fight against corruption.

Her presentation highlighted a number of key governmental organs and institutions in Nigeria, which have a role to play in the subject at hand. It is best to highlight them upfront.

1. The Federal Govt. of Nigeria (FGN), headed by the President, H.E. Olusegun Obasanjo.

2. The federal Parliament (National assembly), which, among other things, debates and passes the budget bill.

3. The independent corrupt practices and other offences Commission, headed by a respected retired chief Judge of the Appeal Court.

4. The Bureau of Public Enterprises charged with implementing the FGN Privatization Programme.

5. The Debt management office (DMO), that, crystallized the current effective structure and management of the country?s external debt and accelerated agreements with the Paris Club of creditors.

6. The office of the president.

7. The |Budget Monitoring and Price Intelligence Unit (BMPI), influentially located within OP, that administers the Due process Compliance (DPC) Instrument in all FGN offices and spending units.

8. The Budget Office, a full- fledged office within the FGN Ministry of Finance.

9. The Office of the Vice president.

10. The Economic Policy Co-ordination Committee, chaired by the Vice President, which ensures integrated economic management and eliminates duplication, inefficiency, corruption and waste in government programmes and policies.

11. The Office of the Accountant general of the FGN.

12. The federal executive Council, to which the Finance Ministry must submit the draft Budget proposal for approval and transmittal to the national Assembly.

Ms. Ezekwesili commenced her presentation by also giving a historical contextualization of corruption in post independence Nigeria, highlighting the perfidy and breakdown of systems that characterized the years of misrule and military dictatorship. She itemized the several challenges that her country faces, in its ambitions transition phase. For brevity, they shall not be repeated here, since the full text of her paper is produced in the Appendices in this Report. Some of the highlights though, are: public sector resistance to change; stoking of ethnic and religious tensions and conflicts by beneficiaries of corruption; public cynicism; the difficulties of pushing through reforms- and translating institutional and process reforms success into poverty reduction and improved quality of life- in a resource- starved and capacity-lacking economy, etc.

Some successes however include the prudent accumulation of several billions in oil revenue, in contradiction to previous regimes? propensity for squandering it all away, and the establishment of the Independent Corrupt Practices and other Offences Commission, headed by a highly respected retired Chief Judge of the Court of Appeal. Another is the stoicism with which the government through the Bureau of Public Enterprises has been implementing the Privatization Programme.

The BMPI and DPC

The presentation then narrowed down to its central focus. One Process, as a key financial policy imperative was formally established through a Treasury Circular issued by the Office of the Accountant General of EGN in October 2001. The BMPI, located in the Office of the President, is the institutional mechanism for administering that Due Process and its Compliance Instrument. (DPC Instrument)

The reform process commenced with the creation of a full-fledged Budget office in the Ministry of Finance in early 2000 that was followed by the creation of the BMPI in mid 2001. The BMPI carried out a Due Process Review of the FGN budget and expenditure management process mid last year, which extracted several systemic flaws that facilitated misappropriation and corruption in government financial activities. This year?s budget bill, currently before the National Assembly for deliberation, is the first to be arrived at through holistic use of the DPC and with a central oversight rule of the BMPI. Its passage and successes through the next financial year will be the first real test of these new fiscal policies and instruments.

The DPC instrument is designed to enforce compliance with due process in budgeting and expenditure in all federal spending units, assuring that budgets and spending are not only based on authentic, reasonable and fair costing, but are also appropriately geared to the realization of set priorities and targets that were generated from medium range strategic plans.

The strength of the BPI which administers it is amplified by its ?rapid response? nature, and its utilization of the best available Nigerian and international expertise and state-of-the-art information technology. It operates with a lean staff of highly professional individuals who are able to tap into and sub-contract the best skills and multi-sector technical capacities through consultancies, drawn from the open market. It has integrated the expectation that things should and will be done according to the rules of the game in the budgeting process, the procurement process and the public expenditure payment process. This is done at three stages.

1. Budget Preparation Certification

The paper enumerates the myriad benefits to government, and the country, of due process. It then goes on to itemize and particularize the process of Budget Preparation Certification, indicating that BMPI has developed some generic questions that they apply to any spending units budget proposals. These include a query on the proximate and spin-off benefits anticipated. In the final analysis, certification of a project for budget preparation entails a decision that such a project has fully satisfied all due process requirements for start of implementation. The certification falls in three categories: -

Category I - those projects that are fully prepared technically, i.e. those that meet all the set parameters. This category includes continuing (i.e. incomplete) projects that re being ideally administered.

Category II - those which are not fully prepared, but for which preparation could be completed within the next budget cycle. In principle, the Budget could fund limited consultancies, etc, if a preparatory nature, in anticipation of category I tabling at the next budget.

Category III - those whose preparation is flawed or seriously incomplete. These will be simply returned to the promoting Agency to abandon, shelve or drastically improve.

2. Contract Award Certification

After the Budget preparation Certification, and successful appropriation by the National Assembly, the expenditure management stream of the DPC commences. There is a second set of criteria which each appropriated project must meet, and it is the task of the BMPI specialists, working closely with the relevant spending unit(s), to assure this, upon which a Certificate of Compliance with contract award process will be issued by the BMPI. Then, and only then, can the spending unit proceed to sign the contract and advise the Treasury, through the Minister of Finance, to make payment of mobilization costs.

3. Completion Work Certification

This is a certification that a project has fully satisfied all due process requirements for release of additional funds. No further releases are made on an awarded contract until the BMPI Sector Specialist, working jointly with the relevant officials of each spending unit, issues a certification that a project has met all the conditions/ criteria formulated for this phase of the certification exercise.

CONCLUSION

In conclusion, the paper reiterates that BMPI operates a lean staff component, that is augmented by use of external sector specialists to both validate and track budget and expenditure activities effectively, efficiently and effortlessly. The presenter confirms the TI principle on the importance of the personal integrity of leadership as the critical ingredient for governmental action to curb corruption. The great challenge for Nigeria as well as for Kenya therefore is just how to attract not just competent but also impeccably honest people into all levels of public leadership in order to sustain governmental anti-corruption initiative.

E GENERAL DIALOGUE

The general dialogue sessions brought out several key issues, which this section attempts to highlight with some brevity and coherence.

A: QUESTIONS AND COMMENTS TO, AND RESPONSES BY HON. RUZINDANA

Perhaps the current waning of initial political will, backed by action, to fight corruption is due to the fact that the leadership has stayed in power for too long; it gets used to power and initial idealism and principle suffers attrition over time. Time in political office should thus be limited. Elections, and the cost of campaigns, have a corrosive effect on the moral fiber of a community or nation. Even when a politician/ aspirant may not be initially ?corrupt: one is approached by volunteer ?funders? with ulterior motives, who will seek a ?pay-back? once you are in political office.

It must be appreciated also that the war against corruption is a slow process and a continuous fight. As you struggle to eradicate certain forms of corruption, others appear. Also, weak accountability processes, and monitoring systems as well as non-deterrent punishment have contributed to the survival of corruption.

He surmises that, if we are to make any headway, it is impossible not to have a weak definition of corruption. The essence of power is decision-making. Corruption transfers decision-making power from the elected or appointed official to the corruptor! This is not always easy to prove especially where the corruptor is a foreigner and the proceeds may have already been transferred into private property status.

Even in Uganda, the Judiciary, which should be one of the key pillars against corruption, does not seem to be of much help yet. It has not yet given any favorable court decisions and has not agreed to open a separate court like the Traffic or Commercial Courts. He also highlighted the importance of public-private partnerships in the fight against corruption, especially in the procurement process. The Uganda manufacturer Associations (UMA) is represented on the Central Tender Board; procurement of major public works is subjected to third party evaluation by the private sector. Also, civil society is active on the issue of corruption with IT, the Uganda Coalition against Corruption, the mass media, etc.

B: QUESTIONS AND COMMENTS TO, AND RESPONSES BY, MS EZEKWESILI

Locating the Nigerian BMPI in the presidency was deliberate, in order to pass a strong message of requisite political as well as to enable easy access of BMPI to the highest political offices in the land.

Unfortunately, engendering a homegrown and effective anti-corruption programme, even a regime of transparent, accountable and pro-poor policymaking is no guarantee that international financial institutions (donors) will support a country. Politics alone will not eradicate corruption; the war against corruption must be multi-faceted in order to be successful; it must incorporate political will, institutional facilitation, awareness and education, etc. Again, consensus is very crucial to success in transforming African economies; a tree will not make a forest, however big it is. With regard to the pursuit of electoral integrity, this is a continuous challenge and learning experience for Africa as well as other world countries; even Japan and the USA have lessons to learn in this respect.

The crucial role of public education and awareness has to be underscored; civic education for the young (within schools) and the old. It advocates for coalition of efforts between the public, private and civil society sectors in order to entrench the anti-corruption fight. Ms Ezekwesili sees FGN?s privatization programme as exemplification of the government handing over to the private sector the leadership role in wealth generation. She notes that FGN Independent Corrupt Practices and Other Offences commission has performed well, but is currently facing a constitutional challenge at the Supreme Court level. She also clarified that the BMPI is not created by the constitution, although in broad terms, it is founded on the constitutional mandate of the Executive arm of government is to establish instrumentalities for performance of its constitutional tasks; in this case, those are to manage budgetary and public expenditure expenses. In a sense, one can say that the severity of tenure of the BMPI is thus a continuing challenge.

She reiterated that under the DPC regime, unless some proposed expenditure was in the budget, it would not be paid. The BMPI certificates that precede payment clearly state whether the proposed project or expenditure is in the Appropriations framework. She highlights that ever since the BMPI was launched, it has already saved the FGN billions of Naira.

CHAPTER TWO ? THE SECOND PLENARY

A MAKING AND IMPLEMENTING PRO-POOR POLICIES IN KENYA: THE IMPORTANCE OF TRANSPARENCY AND ACCOUNTABILITY IN THE PROCESS ? DR KANG?ETHE WAMAITHA GITU

The presenter, a former career civil servant, succeeded, in a concise yet comprehensive paper, in drawing the link between corruption, bad governance and poverty. His thesis was that transparency and accountability are essential in the process of making and implementing pro-poor policies.

He observed that despite the existence of well-written policy documents with very noble and desirable objectives since Kenya?s political independence in 1963, achievement of these has been largely elusive, exemplified by the rise in poverty levels to almost 56% of the population, rises in the incidence of disease, and lack of decline of the levels of illiteracy. He noted that, to make any significant headway on the above, increased economic opportunities for the poor must be availed, together with access to basic goods and services such as education, health, nutrition, water, new technologies, markets, credit facilities and information.

He proposed that successful poverty reduction is incumbent upon making and implementing pro-poor and pro-growth policies, which engender sustained economic growth, improve the quality of life of the majority and which must establish and strengthen transparency, ensuring accountability foe effective management of economic and socio-political affairs. In this, the ultimate responsibility and authority for defining and effective policies, programmes and strategies must rest with the poor themselves. They must be empowered to demand good governance.

He reiterated that the government, the private sector, non-governmental organizations, researchers and the poor themselves share the responsibility for poverty reduction. A good government will thus forge links with such organizations and groups and attempt to involve them in policy-making and implementation. Pro-poor policies must not only aim at generating economic growth, but also at equitably distributing the fruits of growth, be inclusive of all social sectors and eschew marginalization of the under-resourced and under-privileged in society. Some elements of these are: -

1. Free and fair elections.

2. A reliable, neutral and independent Judiciary.

3. Clear, established legal frameworks that provide uniform security for the vulnerable as the more able.

4. Empowerment of the individual and civil society through education, information, control over their own resources and the opportunity to participate in the affairs of the state.

5. A committed, competent, accountable and incorruptible administration.

6. An accountable and transparent system of public management with clearly delineated and universally applied delineation of powers and responsibilities.

Repeating the new-common adage that, ?if you are not part of the solution, you are part of the problem,? he enthused participation in policy making since it is the subject of the policy who best know their aspirations, resource base, need, limitations and how best to plan to meet the policy challenges and to exploit opportunities. Participatory policy-making engenders commonality of purpose and a spirit of togetherness; it also implies domesticating and localizing pro-poor policy making and implementation. This should be through consultation through regularly scheduled programmes, which also appreciate that there are regional symmetries and specificities to which a national policy must adopt in order to succeed.

Pro poor policy must be demand-driven rather than supply driven, in order to generate continuity ad support of both implementers and beneficiaries. Again all stakeholders must have the skills, tools and sufficient time to enable them to participate. Again, the relevant information levels must be accessed to enable stakeholders to not only make sound decisions but also monitor implementation. Control and power to make decisions needs to be shared, since if these are unduly concentrated in the hands of decision makers and implementers and the poor are powerless, meaningful feedback is limited. Again, consensus, built by participation in the policy process is crucial, in order to build policy confidence; otherwise the policy is almost certainly doomed to failure. Further, mutual trust among players, and commitment to the agreed upon policy paths are essential, and these are guaranteed by full accountability and transparency.

The presenter underscored the link between policy decisions and sub-optional pro-poor policy-making and implementation. Examples of these are distortions in producer prices, over valued exchange rates, high tariffs aimed at protecting inefficient state owned enterprises, symbolic budgets disconnected from actual funds available and identified priorities, deliberate sabotage of projects by political rivals, lack of meritocracy in selecting policy implementers, etc. Others are political instability and social tensions which discourage investment, promote capital flight, encourage brain drain destroy social, economic and political infrastructure, displace people and bring on the collapse of civil society.

The presenter then focused on the effects of corruption in policy (especially pro-poor policy) making. It includes over-regulation and diversion of resources from vital, pro-poor projects. It undermines government?s ability to enforce laws and collect revenue for further investment in pro-poor and pro-government development. Finally, he highlighted the deleterious effects of policy instability and ad hoc changes in institutional leadership. He gave the example that between 1992 and 2001, in the implementation of small and micro-enterprises (SME) program, a key pro-poor and pro-government strategy, there is a flux of 6 ministers, 12 permanent secretaries and 6 directors were involved. The effect of the lack of consistency and instability on stable, pro-poor policy making and implementation is self-evident!

B INSTILLING TRANSPARENCY AND ACCOUNTABILITY IN THE PUBBLIC PROCUREMENT PROCESS ? PROF GERRISHON K. IKIARA

The presenter delivered a thoughtful and incisive paper that explored in-depth the trends and deleterious effects of corruption in public procurement. He referred to a number of international or national instruments, some as tools to measure public procurement efficacy and some as good models on which to structure ideal public procurement systems and processes. It is perhaps useful to highlight these up-front.

Some Instruments on Public Procurement

1. The United Nations Commission on international Trade (UNCITRAL) model Law or Procurement of Goods, Construction and Services (United Nations, New York, 1995)

2. The code of Good Practice on Fiscal Transparency: Declaration on Principles (International Monetary Fund 1998).

3. The Inter-American Convention against Corruption (Organization of American States (OAS), 1996.

4. The Convention on combating Bribery of Public Officials in International Business Transactions (Organization for Economic Co-operation and Development (OECDI, 1998).

5. The 25 Principles developed by the Global Coalition for Africa at its February 1999 meeting in Washington DC USA.

6. The Ten Point Plan on Procurement (The Republic of South Africa).

Otherwise, in his prefatory remarks, he acknowledged that there is an emerging consensus worldwide that governments? fiscal policies in general, and procurement procedures in particular, are closely linked to the state of economic governance in the country. The manner and efficiency by which a country spends and collects its resources is one of the key determinants of its quality of economic governance and greatly influences success or failure in the struggle against poverty and other forms of features so prominently in the international and national instrumentalities enumerated above. In fact, principles of open, fair and transparent public procurement are encapsulated in the South African Constitution!

The above in a cognisance of the enormous amounts that pass through public procurement. In developed countries, central government purchases account for between 5% and 8% of their Gross Domestic Product (GDP). This rises to 9% to 13% in African countries. The total amount of resources handled through public procurement in Africa is estimated to be between USD 30 ? 43 billion, Nigeria and South Africa account for between USD 16 ? 23 billion, while in the rest of Africa this ranges between USD 13 and 19 billion. It constitutes the single most important and largest domestic market and accounts for between 50% and 70% of imports in most developing countries.

The presenter posits that appropriate procurement procedures enable governments to obtain good and services cost-effectively and fairly, and frees enormous resources to invest in poverty eradication. Thus a procurement mechanism should facilitate government acquisition of ?the right item at the right time and at the right place?.

In reviewing African procurement systems, he establishes that the majority is not ideal in terms of structure and composition of tender boards or in appropriate checks and balances against corruption and waste. Further, they do not conform to the prevailing internationally accepted principles, especially with the UNCITRAL Model Law on procurement of goods, construction and services (UN, New York, 1995). This has been evidenced in many countries, by the Country Procurement Assessment Reviews (CPARs), carried out under a World Bank supported programme. Some key characteristics are: -

1. Lack of well-defined, clear or comprehensive criteria or procedures for evaluation of tender bids.

2. Lack of transparency or adequate bid information in procurement procedures.

3. Lack of articulation of pre-determined criteria for awards before tender award process.

4. Even where clear tendering rules and procedures are articulated, they are not often adhered to in practice.

5. Lack of effective anti-corruption provisions, codes of ethics, etc and lack of enforcement mechanisms that would intervene when corrupt or inappropriate procurement practices are detected.

6. An overbearing influence of central government officials in procurement vehicles for central government, local authorities and even parastatals.

7. Poor, if any representation of strong public sector or civil society institution, which would demand information and transparency in public procurement and other spending activities. However, this has been changing in a number of countries in last decade, with some private sector representations or tender boards.

Some Case Studies in Public Procurement

The presenter gave several case studies, including Kenya. He noted that Kenya?s Public Procurement is three-tiered:

(i) Central government;

(ii) Local authorities and:

(iii) Parastatal enterprises.

He delineated the roles of the Central Tender Board, District Tender Committees and ministerial committees and the various calibrations of purchases that can be made without quotations, or without tender board approval or open tendering. He noted that economic liberalization and decentralization of public administration was evolving an environment in which individual ministries, public enterprises and local authorities had greater freedom to procure the goods and services they require. He lamented that, although inspired by noble motives, it tended to multiply channels of corruption. He also noted efforts to involve the private sector, especially on those tender committees that lacked technical or specialized expertise.

He applauded the Ugandan practice of local and international advertisement of tenders as a way of promoting transparency. He also supported strong parliamentary oversight roles in Uganda and Zimbabwe, especially in the latter. He noted that the South African Constitution explicitly provides for proper procurement. This has led to its ?ten point plan on procurement? whose main is to enhance the participation of small and medium enterprises in the country?s procurement activities.

Some Common Abuses in Procurement Procedures

The Paper identifies these as:

1. Procurement without competitive bidding. This sometimes causes huge losses.

2. Overvaluation of goods and services often aggravated due to the lack of industry comparatives that would have been evident from competitive bidding. Sometimes, even when there is open tendering, manipulation by bidding cartels may still result in this.

3. Variation Orders. Sometimes, in connivance with tendering authorities, suppliers bid low in order to win contracts, and thereafter apply for major variations to those contracts.

4. Payments for goods or services not supplied at all, usually with the connivance of unscrupulous public officers (?air supply?)

Some Common Flaws of Procurement Systems

1. Scattering of procurement guidelines, principles or procedures in a multiplicity of documents thereby making them unclear and difficult to follow.

2. Scarcity or outright unavailability of the documents referred to above.

3. Inadequate preparation before tenders and quotations are sought and released. This sometimes facilitates formation of bidding cartels that collude to deliberately quote exaggerated values.

4. Decision-making based on inadequate or false information. Most tender boards or committees rely heavily or briefing from government officials, who could be compromised, by inducements, intimidation or personal interest.

5. Absence of strong reward and punishment instruments for those involved in public procurement systems, as a means of promoting discipline and ethical behavior in tendering.

Some factors behind weaknesses in public procurement systems

1. Lack of political will to stick to prescribed procedures. For instance, in Kenya, despite decades of annual, detailed reports by the controller and the Auditor-General, hardly any action has been taken to punish the culprits.

2. Loopholes in some national procurement systems, which have been abused, for instance, the introduction of limited flexibility for tender boards to sometimes override strict provisions for open and competitive procedures.

3. Lack of effective codes of conduct, so that there is no framework and no measurement tool for supervision or evaluation of implementation of government contracts. This is compounded by the lack of strong disciplinary measures against professionals who fail to deliver services as required.

4. Lack of well established institutions and practices to provide checks and balances in national economic and political administrative set-ups. A prominent example is the chronic inability of several countries? Parliaments to act as effective checks against the excessive powers of their respective Executives.

Reform Proposals

The presenter noted there is a movement, globally, to reform public procurement systems, but that this is even more urgent in developing countries, especially in Africa. He outlined reform efforts at various levels and fora, such as the World Trade Organization (WTO), most prominently at its Ministerial Conference in Singapore, 1994, The Global Coalition for Africa, which is trying to develop an African Convention or instrument to fight corruption and the World Bank. He gave the example of Uganda, which has established a Task Force for Public Procurement Reform. Another was the example of Guinea, which has enacted the key elements of its procurement reforms in 1998 Public Procurement Code. A synthesis of the presenter?s proposals, as moderated by the consensus of participants, is included in Chapter 4.0 below.

C RESTORING ACCOUNTABILITY TO THE LEGISLATURE AS A MEANS TO COMBAT CORRUPTION ? NJERU KIRIRA

The presenter gave an incisive paper, which clearly outlined that Parliament could take to enhance executive accountability in order to combat corruption. He began by enumerating various forms of corruption and their deleterious effects on the economy. The bottom line was that there are weak and inappropriate institutional arrangements to facilitate proper legislative oversight of the executive. Appointments to key executive and judicial posts are the preserve of the presidency without any institutional check. Further, especially for several key executive offices, sustenance in office is also at the pleasure of the Chief Executive so that ministries and departments under them are created, also appointed, transferred, abolished and personalities within them also appointed, transferred or sacked at executive whim. This leads to wastage of public funds, inability to finish projects or achieve national objectives as well as creating a ?desperado? mentality among public officials wherein they try to make as much corrupt ?hay while the sun still shines? on them.

There appears to be too much executive discretion exercised without transparency. Further, using instruments such as the Official Secrets Act, there is little or no information to the public or government operations, and disregard of public opinion at any rate.

The paper illustrates how the budget process is a mere legal formality and the treasury of individual ministries can totally disregard it with regard to raising extra revenue engaging in un-budgeting public expenditure. This is clearly provided for in the constitution especially article 99 to 101, and in subsequent statutes such as section 5 of the Exchequer and Audit Act (Chapter 412 Laws of Kenya). Further, there are funds created for specific purposes but which, for the most part, operate with very little transparency or accountability hence providing a slush fund for executive operatives. These extra budget schemes include: -

* The National Social Security Fund (NSSF)

* The National Hospital Insurance Fund (NHIF)

* The Rural Electrification Fund (FEF)

* The Sugar Development Fund (SDF)

The presenter illustrates that the provisions and procedures for public borrowing commend themselves to corruption and executive abuse since there are no instruments or mechanisms for legislative or other oversight. The executive has thus over-contracted public projects and borrowed, externally and internally, to unmanageable levels! He proposes a statutory limit to total public debt especially domestic debt. Even the ceiling or external debt, currently at a flat rate of Ksh.500 million, needs to be related to the Gross Domestic Product (GDP) or government revenue. At any rate, he argues, it is already too high to be meaningful.

The presenter proposes more effective parliamentary supervision of regulatory agencies, such as the Central Bank of Kenya. He further proposes revision of section 48 of the constitution to allow any MP to introduce a Finance Bill to Parliament. In the current scenario, only the President, through a Minister can do so, allowing the executive to solely dictate or manipulate public revenue and expenditure.

(j) Presidential prerogative to summon, prorogue or dissolve parliament should be removed and rested in parliament itself.

(k) Appointments of the chief Justice, Judges and the Director of Prosecutions should be vetted by parliament.

The paper outlines in detail the budget preparation provisions, contained in sections 99 to 103 of the constitution and highlights that, whereas the constitution and laws may not be responsible for people acting in bad faith, the constitution does not give Kenyans an instrument to stop misuse of public resources. In this case, he highlights how MPs have no formal channels to procure sufficient information to scrutinize the budget. He also illustrates how loose budgetary and public expenditure provisions allow the executive to commence ?political projects? prior to an election or by-election and abandon them immediately thereafter, so that the government has a huge stock of unfinished public projects in which it has already invested a substantial portion of national resources.

The paper also illustrates how discretion to waive taxes, duties and licences, without objective criteria or reporting procedures has been misused for political or corrupt ends. He proposes provisions for regular reporting, to parliament, or exercise of these provisions, the financial connotations, and their contribution or otherwise to the national interest. It also illustrates how the civil contingencies fund, created by section 102 of the constitution has been abused to cover up for ministerial failures to budget properly and to provide a cash for political or corrupt purposes. He shows how the controller and Auditor General?s Reports lament that the operations of this fund reflect lack of budget honesty and commitment. This can be attributed to lack of an appropriate constitutional tool with which parliament can discipline the executive.

The presenter proposes that parliament should hold ministers and permanent secretaries personally responsible and accountable to it and liable to refund the public for resources lost due to corruption, gross negligence or incompetence.

He proposes establishment of public Audit Board which will supervise the Controller and Auditor General and recommend, appoint and retirement from that office. In conclusion, the presenter intones that any organization can only be as effective as its managers, and that appointments and retention in office should reflect integrity, qualification and competence and regular performance evaluations be institutionalized.

D GENERAL DIALOGUE

In this wide-ranging dialogue and consensus session, several issues were debated. Participants were invited to appreciate the steps the current (eighth) parliament had taken to secure its institutional independence, and divorce itself from executive control, such as empowerment of parliamentary committees. Njeru Kirira, one of the presenters, also noted that we are witnessing the nett result of accumulative damage on institutions of government, starting from constitutional amendments in 1966. He further proposed that the judiciary, in addition to being independent, should be subjected to regular evaluation. Parliament should also play a more prominent role in supervising the cost of general elections and by-election. The centrality of separation of powers was under-scored; many things are done in the president?s name, some perhaps without his knowledge!

The dual role of the Permanent Secretary to the Treasury ? in both awarding tenders as well as being the forum for appeal on tenders awarded ? was castigated. G K Ikiara, another presenter, explained that this was yet another attempt by Executive to retain control and hamper total independence. It was also noted that Public Procurements Appeals Tribunal, although a positive step, was only the result of aids conditionalities. It was hoped that the CKRC would foster an enabling environment for civil society Organizations (CSOs) to be more clearly involved in and impact on governance generally, and on the institutional fight against corruption in particular.

The Hon Musikari Kombo, a member of parliament, lamented that there seemed to be no public outrage against corruption and bad governance, such as that which led Philippine or Argentine citizens to take to the streets and forced their4 governments to resign. Some participants that perhaps this was because the majority of the citizenry was struggling full time just to survive! Again this is largely due to the effects of widespread corruption on the economy and society: a classic chicken-egg situation!

Participants called for evidence-based research on the effect of corruption on marginalized, social sectors such as women and children. Further that the anti-corruption fight should be ?trickled down? to the rural communities and areas. They also distinguished between corruption and inefficiency in public office, terming both as criminal and inviting criminal sanctions. An example was given of the Permanent Secretary to the Treasury, who is required to serve on twenty or more boards. Obviously, she/he cannot fully serve on all these and monitor and receive reports from alternates serving in his/her place.

Participants categorically and vitriolically criticized the recently acquired practice of top public servants awarding themselves hug pay-rises, get totally ignoring lower-level public servants whom they work with daily or plight of the citizenry, who maintain them in public office in the first place! It was highlighted that, in the recent past, only members of parliament, judges and Permanent Secretaries awarded themselves pay-hikes, amidst the din of calls ? and strike threats- from teachers, nurses and other public servants and despite the cries of over-burdened and under-serviced taxpayers. This raises both moral and legal questions.

In conclusion, participants proposed multiple levels of institutional checks and balances, and further suggested constitutional entrenchment of these.

CHAPTER THREE ? THE REPORTS OF THE

BREAK-OUT WORKSHOPS

A THE CHALLENGES OF INSTITUTIONAL RENOVATION

MODERATOR: Dr. David Ndii, Kenya Leadership Institute

RAPPORTEUR: Duncan Okello, Institute of Economic Affairs

The group?s deliberations were reported under the following heads: (i) A summary of the Points of Caution, and of (ii) The Principles and Proposals; and thereafter (iii) a longer Narrative Report of the group?s deliberations, prefaced with some key questions and dilemmas.

I. THE POINTS OF CAUTION

a. At the core of constitutional engineering, is institutional design and reform. The implementation of the Constitution has to do with the kind of institutional reform agenda that we embrace.

b. Kenya?s institutions have been victims of subversion and creative criminality. Institutions exist but they are not working. Informal institutions are more functional than formal ones. This is what allows private interest and conflicts of interest to prevail. The fundamental challenge we face is how can we design institutions that cannot be subverted. How do we narrow the gaps that allow mischief and criminal innovation to thrive? We need to focus on institutional principle as opposed to detail. Laws and institutions that are dense with detail are more susceptible to subversion. More is not necessarily better.

c. In our eagerness to stem corruption, we must watch against institutional inflation/glut. Far too many institutions may lead to incoherence and conflicts. There is even the danger of these institutions adopting a conspiratorial behavior against the people.

d. In designing institutions, we must re-conceptualize the State from its pre-globalization context and give it an institutional character that accurately reflects the reality of globalization. We have been off loading responsibilities from the state, but not resources, which in itself has created an avenue for corruption.

e. Clear inter-institutional relations are crucial in design maters so as to avoid contagious decay. We need a systemic conception of State institutions and see them as parts of a whole.

II. THE PRINCIPLES AND PROPOSALS

a. Limit and decentralize discretion:

There is too much discretion, sometimes to the wrong people, that need to be checked and or eliminated. We must define who holds what discretion and what are its limits or latitudes. Discretion is also a bit too concentrated at the centre and only in a few offices. In instances where there is discretionary power, this power needs to be dispersed so that its enjoyment is not curtailed by a distanced and far removed bureaucratic arrangement. One of the challenges facing us is how to balance the objective need/benefits of discretionary power and subjective abuse of those powers.

b. Establish Complaints Mechanisms:

Kenyan citizens sometimes have complaints but the mechanisms for redressing or processing these are lacking. These need to be established and in particular:

(i). The Office of the Ombudsman

(ii). Independent Police Complaints Commission to process complaints against the police

(iii). An array of Appeals Boards or Tribunals. Even these must have performance monitoring mechanism so that they do not in themselves become captives of a select professional, business or government elites. We must learn from the non-functioning nature of the complaints commissions established by a number of the professional bodies whose organs seem not to work as robustly as initially intended for purposes of protecting the public. If poorly designed, complaints institutions may themselves become objects of complaint against which there is no recourse for the public.

c. Ensure Institutional Stability:

Our institutional culture has been one of uncertainty and unpredictability. Offices get established and abolished at will. Those that are not easily ?abolishable? are undermined from within. Thus, in designing new institutions, we must aspire to reclaim and restore institutional stability by insulating key offices from whimsical executive actions either by appointments, dismissals or ?capacitation?. Senior public appointments need to be subjected to confirmatory hearings either by Parliament or a specially constituted constitutional body.

d. Disclosure of Information:

The right and freedom of information should strongly underpin our constitutional principles and institutional formation. The right and access to information should constitute a core component of the Bill of Rights. We need to enact a Freedom of Information Act; strengthen the independence of the media; establish Information Appeals Tribunals.

e. Shift Sovereignty from the State to the Citizens:

The present residency of sovereignty is in the state not the people. This needs to be reversed. Thus, in our institutional designs, we should provide for citizen civil litigation on matters related to financial mismanagement and fraud, or, abuse of office. This will ensure that if supreme audit institutional reports are not acted on then, the citizens can, on their own, initiate or institute proceedings. This principle could be expanded to incorporate taxpayer litigation in respect of the quality of services offered or not offered by the government.

f. Regulate Conflict of Interest:

Public servants or officials ? be they ministers, Permanent Secretaries, Commissioners, Members of Parliament ? adjudicate on matters, such as tenders, salaries, benefits, in which they have direct interests. This is wrong and a key principle of institutional design should ensure that this does not happen. There probably should be an overall Public Institutions Salaries, Remuneration and Benefits Commission charged with the task of setting these limits and reviewing them periodically. This will also allow for a coordinated approach to remuneration in the country.

g. Public Vetting of Seekers of Public Office:

Seekers of public office should be vetted before thy take up their appointments.

h. Local Accountability and Domestication of Information:

The principle of local accountability should be emphasized. We tend to focus primarily on accountability at the national level and ignore accountability at the local level. Mechanisms should be established to enable local people to control their local governance institutions. The local authorities, as they are constituted today, are effectively beyond the control of the locals beyond the elections of councillors. Similarly, information, especially of the financial kind, such as budgetary allocations to the local areas should be domesticated. Reports about resource movements, allocations and expenditures, should be published and made accessible to the public in a friendlier, ?consumer-able? fashion.

i. Higher Reporting and Enforcement Mechanisms/ Requirements:

The present government-reporting requirements are very low. Institutions do not release or publish periodic reports. Information on government appropriations is erratic and technically inaccessible. The basis of distinction of what information should be disclosed and which one shouldn?t is unclear. We must proceed from the premise that all information is public until certified otherwise by a court of law. Even then, Parliament should be able to access this information even if under oath.

j. Preface the Constitution with ethos, principles, aspirations, and national objectives:

Our Constitution begins rather too abruptly. We need to preface the constitution with certain key principles, ethos or aspirations that Kenya stands for. We need also to constitute ourselves and define the residency of sovereignty and the contracting parties to the Constitution. One of these principles could be the use of public finance efficiently and equitably.

k. Enhance Parliamentary autonomy, powers and capacity:

Parliament should possess the powers to conduct confirmatory hearings for senior appointments. It should also have the capacity to enforce its own decisions. We should enhance the research capacity of the House; we need to establish a Parliamentary Budget Office; involve the House in the preparatory stage of the Budget; formalize and strengthen the Parliamentary Committees? powers of summon. Further, Parliament should have its own autonomy especially in deciding its own calendar.

l. Sanctions Philosophy to Expand from Malpractices to Non Performance:

We need to punish incompetence as well. Thus a performance monitoring and evaluation scheme needs to be drawn up that shall be used to assess performance and against which judgement can be made.

m. Overarching Philosophy of National Interests that Each Institution Seeks to Achieve:

We need to produce an over-aching National Institutions Services Charter, which declares in general but useful terms the aspirations, and public good or interests that all the institutions we create are meant to serve. This will secure institution from the mischief that too much detail may permit. As of today, national or public interest is un- defined. This Charter would cure this problem. These principles may be made justiciable.

n. Checks and Balances:

There should be inter and intra- institutional system of checks and balances in order to avoid excesses. This is a theme that should run through all the institutions that are designed.

SOME KEY QUESTIONS/DILEMMAS

1. Should confirmatory hearings be tasked to Parliament - before which some professionals may not want to appear - or should they be made the responsibility of a specially constituted national panel.

2. What is the optimal number of institutions that is desirable?

3. How do we expand the Bill of Rights to protect citizens not just from the state but also from the rising power of corporations and selected professions?

4. Are there some key institutions that we would like to completely shield from any form of executive action or interference?

III. THE NARRATIVE (HANSARD) REPORT OF GROUP PROCEEDINGS

The moderator in his opening remarks restated the brief that the Group was expected to execute. He briefly presented an overview of the key components of the task before the Group. In his discussion, he focused primarily on two issues ? the institutional questions and the issues of financial accountability and corruption.

Institutional Choices

He argued that the core function of the review process is that of institutional design. At the bottom line of constitutional engineering is institutional reform. Implementation of the Constitution ultimately has to do with institutional reform.

Broadly but not strictly, the choice is between presidential and parliamentary systems. The presidential system has a strong separation of powers component though this separation does not apply to the civil service, which is very political as evidenced by the US White House culture where the entire staff is replaced whenever there is change of government. The parliamentary system, on the other hand, is weak in terms of separation of powers. The three arms or branches of government confluence and fuse variously. However, it has a more independent civil service. However, there are gradations in between the presidential and parliamentary systems and Kenyans need not necessarily be stampeded into making choices from these two. Our institutional designs need to be creative and experiential rather than imitative.

Financial Accountability and Corruption.

Under our present Constitution, the office of the Controller and Auditor General (CAG) has two functions: the control function and the audit function. Presently, this office seems to focus primarily on the latter - the exposure function. It has been dormant in exercising its control function, which requires of it to authorize all withdrawals from the Consolidated Fund. It needs to begin to discharge its control function.

Similarly, the audit philosophy that underpins the practice of this office is pure financial audit. The CAG does not undertake performance or value for money audits. This means that the CAG may find that proper expenditure procedures were followed but as to whether those expenditures matched the quality of services or goods bought the CAG remains spectatorial. To protect public interest, the CAG should be mandated to undertake value for money audits in addition to financial audits.

Prosecution ? need for an independent prosecution office. The Attorney General?s office needs to be rationalized so that it stops straddling all three arms of government creating conflicts of interest and impeding institutional independence.

Integrity of public servants is crucial to the proper management of public finance. One way of ensuring that we get public servants of impeccable ability and character is to vet all senior appointments. What needs to be done is to protect public officers from arbitrary removals.

Discretion

Participants felt that there is too much discretion, sometimes to the wrong people. The review should focus on who has what discretion and what is the acceptable latitude of exercising it. Discretion has been the route for corruption. It is what makes corruption thrive as it provides an opportunity to corrupt decision-making process. Even in situations where discretion is necessary and useful, our centralized orientation or culture towards government has made us to centralize discretion to. The result is that, rather than facilitating decision making, it has instead fostered delay. Members of the public are held at ransom by officials with discretionary powers in a bid to extort bribes from them. Thus we need to decentralize and have multiple accountability.

One of our biggest problems is also conflict of interest. Ministers adjudicate tenders in their own ministries in which they have interests. What are the criteria when conflict of interests arises?

In most cases when you talk to members of the public, they complain that they have problems but do not know where to take their complaints. We recognize that the public suffers injuries but we are yet to provide effective institutions of relief. We need to establish effective and functional complaints mechanisms and channels for the public. These may include more Appeals Boards on Procurement and on Information, for example. But the public must have faith and confidence in these institutions for them to make sense.

Our institutions also lack external or peer evaluation to ascertain whether they are performing. We need regular checks and audits by eternal experts or peers. Professionals must check on each other. In the past in the universities for example there used to be Visitation Committees, which occasionally verified the curriculum content and training methodology.

Participants also noted that there are institutions and rules in Kenya that are very detailed and fairly well intentioned. For example, the Exchequer and Audit Act, the Government Financial Regulations and Procedures etc regulate the government financial management in substantial detail. Thus, the issue in Kenya is not whether institutions exist but, rather, whether institutions work. And the reason they are not working is because of our lack of an arms length culture. We have a culture of short cuts. Informal institutions therefore preponderate over formal institutions. This is what allows for conflicts of interest to prevail; it is what permits private interests to prevail.

Our history therefore shows that we design institutions and quickly subvert them. We have a very strong inclination towards institutional subversion and informal dealings. The challenge is how to design institutions that cannot be subverted. This subversion has sometimes been aided by too much detail. Our institutions are long in detail but short on principles. We need to embed institutional principles in the Constitution; details can be possible to escape. We may need an over-arching National Institutions Service Charter.

We have also treated our laws a bit too casually. Thus we create and abolish offices without reflecting these changes in law. For example, the Paymaster General exists in law, but not in reality. The Financial Secretary exists in reality but not in law.

Public interest is not defined anywhere in our laws. Article 1 of the Constitution, which could have done this by capturing our aspirations, principles, ethos, values or defining some directive principles of state policy, begins rather too abruptly. It immediately declares Kenya a Republic without identifying the contracting parties and the basis of their coming together.

On the basis of the discussions above, are there institutions that we may want to secure so that they cannot be whatsoever modified by executive action?

A participant contributed that the reason why our institutions are subverted is that there is high degree of criminal innovation. The CAG?s constitutional independence, for example, has been subverted by undermining its officers who are employees of the Public Service Commission and therefore do not enjoy security of tenure. Constitutional independence of institutions or offices needs to be complete.

We need to create institutional oversight mechanisms. Institutions also need to be accountable to themselves. Institutions must have capacity and independence to check themselves.

Parliament should have the power to withhold ministerial allocations for purposes of keeping ministries in check.

Participants agreed that parliament needs essential support. Its capacity needs to be enhanced e.g. in legislative drafting and research. We cannot demand so much from Parliament if we do not give it the powers and resources to discharge its mandate.

We have inverted the state ? it competes with its own people rather than facilitating them.

One of the big issues we have to confront is that we are dealing with the State in pre-globalization terms. We have continued to fritter responsibilities away from the State yet we have not reduced resources to it to reflect this shift. Most of the responsibilities initially undertaken by the State have been transferred to the individual and civil society. The State has resources without responsibilities. This has enhanced corruption.

We also nee to ask ourselves some fundamental questions such as: ?Why these institutions?? ?Why are we Kenyans?? ?What do we want to achieve; what tasks are necessary to do it; and how do we coordinate these tasks?? ?What is it that we want to collectively achieve??

The Moderator intervened and asked, given the tenor and thrust of the discussions so far, it is probably germane to ask at this point: What kind of institutions do we need to design given that we are the same people with strong inclination to subvert the same institutions we create Who is the custodian of public property or interests?

A participant ventured that, so far, we have focussed on sanctions against malpractices but not against non-performance. It was agreed that the Police force requires an oversight body; establish an independent complaints commission for the police force to process complaints against the police. The present system of complaining to the same institution that has committed offences against the public is untenable.

We must also confront the problem of cumulative institutional decay. The contagion of non-performance that one institution passes to the others needs to be checked

We need to recognize the importance of information as a political and economic resource. Our access to information regime is woefully weak. Its orientation is geared towards protecting the State rather than facilitating citizen information and knowledge. We need to re-examine the Officials Secrets Act, enact a Freedom of Information Act and include access to information as an integral part of the Bill of Rights. Disclosure of information on corruption should be exempted from any secrecy law or regulation. Public officials who disclose corruption related information (whistle blowers) need to be protected from mischievous and punitive measures by the executive. Key institutions such as the police, prisons, etc should be compelled by law to publish annual or periodic status reports. These should be made available to the public. Getting information from these state funded institutions is presently a nightmare.

A participant, C. J. Mills of the Karen-Lang?ata District Association proposed that: -

* Establish an Office of Public Service and Ethics with a Commissioner.

* Consider making corruption a capital offence.

* There is not just too much discretion but abuse of discretion. The interference of Executive in the day-to-day running of government affairs needs to be stopped. As long as discretion is exercised with accountability it can make things work.

* Establish an Ombudsman office.

* We need annual declaration of wealth by those seeking public office.

* Parliament?s salary levels be linked to the performance of the economy.

* Independent parliamentary calendar necessary to cushion it against executive mischief.

* We must embrace the principle of Equity in law for all citizens.

* Basic education be made a right.

* Cabinet should not be more than 25% of the legislature. President should not be able to abolish offices without reference to Parliament. Public servants should not hold office at the pleasure of the president.

* National president; not party president

* PSs to be truly permanent and be accountable to parliament.

* Statutes of Limitation should be brought in but it should exclude corruption cases.

Another, Sam Mwale, proposed a shift of sovereignty from the state to the people. Allow for privately instituted civil prosecutions. Provide for citizen enforcement mechanisms to cure the problem of Executive inertia in prosecution. Further that it is vital that we create the office of Custodian of Public Assets. Presently, it is not clear who keeps an inventory of all public assets. Neither is it clear whose responsibility it is to secure them. There was also consensus on the need to strengthen the media through stronger freedom of information principles or provisions.

Another, Jeremiah Opar, of the Institute of Policy Analysis and Research (IPAR), cautioned that we must check institutional inflation. What happens when anti-corruption institutions collude or collaborate against the people? Uganda has most of the institutions we are proposing but corruption still thrives ? why? She has a Parliamentary Budget Office; a Privatization Act; Inspectorate of Government, which is an equivalent of an Ombudsman etc yet the misuse of public resources continues unabated. We must be careful not to engage in an institutional creation binge. We may actually discover that what we need are fewer institutions and the strengthening on the existing ones. We may want to even merge some of these bodies for their optimal functioning.

Secondly, we need to provide a mechanism for social audit. We need to protect whistle blowers.

Thirdly, we need to provide a mechanism or framework for disclosure of public expenditure in a friendly fashion. The Government Appropriations Accounts are not only irregularly published but they are presented in a manner that obviously invites dis-interest.

It is unethical for people to hold public office and be able to vote themselves salaries and benefits. This responsibility needs to be shifted to an independent body which may be specific to the sector or even be national in character to govern all the welfare issues of all holders of public offices ? ad hoc or permanent.

There was also consensus on the need to provide in law that any tax waiver should be reported to Parliament. This will check abuse in the application of ministerial discretion. Further, we need to make the budget legally binding. Presently the minister can suspend a section or the entire budget and still be within the parameters of the law.

Prof Ghai, the Chair of the Constitution of Kenya Review Commission (CKRC) added that, in addition to focussing on the national accountability institutions it is important to think about local accountability mechanisms as well. This is particularly so in view of the rising demand for devolution or decentralization. In CKRC meetings and encounters with the public in the field, there is a strong quest for local control. He noted that the CKRC would be interested in thoughts and proposals on this front and probably TI-Kenya and other organizations may be interested in pursuing this further.

B TRANSPARENCY AND ACCOUNTABILITY IN PUBLIC PROCUREMENT

MODERATOR: PROF. T. RYAN, University of Nairobi

DISCUSSANTS: MR. JOB KIHUMBA, Association of Professional Societies in East Africa (APSEA) and DR MBUI WAGACHA, Institute of Public Policy Analysis and Research (IPAR)

RAPPORTEUR: KWAME OWINO, Institute of Economic Affairs

The Report covers the two discussants? presentations, sequentially; it incorporates the group?s responses and general consensus in each of the two sub-sessions.

First Discussant: Mr. Job Kihumba: Transparency and Accountability in Public Procurement

It is only possible to see the question of corruption in public procurement in Kenya by looking at the practical issues that face government and the institutions that manage public resources in the country. Till very recently, government procurement was coordinated through the Ministerial Tender Boards (MTB) and the Central Tender Board (CTB). The MTB was largely responsible for procurement by the ministry by administering the procurement and authorization of payments. As matters developed and as scrutiny of its operations became more critical, it became apparent that the MTB operated inefficiently and non-transparently. In response to the concerns that the structure and composition of the MTBs did not allow for effective scrutiny of their decisions, the government set out to establish a new system for the management of public procurement.

Public procurement in Kenya is a critical area in the reduction of corruption because public officers tend to have unlimited discretion in procurement. While seeking to inject a high measure of transparency and accountability in the arena of public procurement, we should adequately address ourselves to the fact that procurement consists of both goods and services. Both goods and services are consumed by government in fairly large amounts and attention should therefore be cast towards services are these are intangible and therefore easier to inflate in terms of cost. Corrupt practices have occurred in both the procurement and delivery of services and goods hence the need to realize that statutory and constitutional responses must take the broader view and capture services too.

A new set of public procurement regulations were gazzetted in March 2001. It is thought that while there had been calls for the government to revise the system of public procurement, the impetus for the new regulations came entirely from donor insistence. These new regulations essentially formalized the establishment of the Central Tender Board (CTB). There are some flaws to these regulations that already affect the ability of the CTB to operate above-board and transparently.

Some of the Flaws

The regulations require that the Chief Executive Officer of the organization doing the procurement should be the chair of the tender committees that consider proposals. This means that at the district and ministerial levels for instance, the District Commissioner and the minister respectively would chair the tender committees. This administrative structure undermines some major principles of good public procurement to the extent that it centralizes procurement power in a single office(r). Procurement decisions should be subject to review for the purposes of transparency and accountability and this is made especially difficult when the powers are centralized.

Secondly, given the expanded role of the chief executive officers of the institutions carrying out the procurement function, the Central Tender Board that had a limited oversight function has been declared redundant. It is not possible for the CTB to continue in this function as it would be duplicating the role that has since been taken up by the tender committees.

Thirdly, the Appeals Board takes up all appeals that result from applicants. The Permanent Secretary of the ministry that awarded the tender is mandated to be the vice chair of the appeals board. This definitely raises the possibility of conflict of interest when it is considered that the ministries take a lot of procurement decisions that may be the subject of review by the Appeals Board. It would be difficult to trust that the Permanent Secretary would be impartial since the majority of the appeals would emanate from decisions taken at the ministry, including decisions that the Permanent Secretary may have been privy to.

The three points on the regulations that drive the administration of the Ministerial Tender Boards show that the government was more or less forced to try to make the procurement process more transparent and open. However, the new regulations that resulted from external pressure established structural flaws hence do not go far enough in terms of avoiding conflict of interest and establishing an impartial appeals system that is crucial for public procurement. Efficient procurement can only be guaranteed where the procurement officers are aware that their actions will be scrutinized objectively and that they have no interference from superior government officers. This point then leads to the realization that public procurement cannot be divorced from the use of power by public officials. This implies that the unless there is an restructuring of the power relations within the ministries, the good public procurement will still be compromised by the ability of senior officers to manipulate procurement officers.

Points to Consider in strengthening the New Regulations

1. Government must build in more stringent checks and balances to reduce the level of discretion that individuals may have in the decisions on public procurement.

2. Good leadership is imperative in the tender boards since procurement is essentially a management process.

3. There must be a reliable adjudication process that is neither technical nor time-consuming. This will ensure that decisions are made quickly enough so that the procurement process is not unnecessarily held up during appeals.

4. The public should be empowered to understand the processes of public procurement through disclosure of the process before and after the awards.

5. Procurement should not be monitored at the point of central government since a lot of public institutions are involved in the procurement of goods and services.

6. Government should consider decentralization of the appeals since the Appeals Board cannot convene and hear the appeals from all over the country. This is necessary so that appeals are dispensed with promptly.

Second Discussant: Dr. Mbui Wagacha: Public Finance Issues and Public Procurement

The government has adopted the Medium Term Expenditure Framework (MTEF) as the principal instrument for budgeting and for the management of public finances. The MTEF consists of budgeting through the adoption of a three-year cycle. This means that budget priorities are always seen in terms of the three-year plans and the expenditures reflect medium terms goals. While MTEF is imperfectly applied in Kenya, it can be improved significantly to impact upon effective use of public finances through successive budgets. This is primarily because it would compel government to determine the expenditure priorities in line with the realistic revenue collection target. It is understood that part of the problem in Kenya that the MTEF would correct is that of inconsistency in policy application. Until recently the nature of planning in Kenya is such that it was done with absolutely no involvement of the people.

The MTEF approach to budgeting could help government in management of public resources in the following three ways:

* Entrench Fiscal Discipline

In that government may meet the development and recurrent expenditures that individual budgets require, revenue collection targets would have to be strictly set and met. The MTEF approach would ensure that revenue collection is stringent and that expenditure forecasts reflected in the budget are based on affordability. Affordability ought to be accorded more emphasis since the development challenges are great and yet the resource envelope is limited. Depending on the plan that has been put in place in the budget, government may then make the decision on the amount of deficit financing that is required. Because the expansion of public debt should always be a last resort, there should be some required legal (either constitutional or statutory) provision that embeds a deficit financing benchmark that the Minister of Finance may not exceed without seeking legislative approval. The main intention of this provision is not usurp ministerial powers in finance but merely to limit the discretion that government through the Minister for Finance has in expanding public debt arbitrarily. For instance, if the provision required the minister to seek authority from parliament if the financing gap were more than 5%, then the minister would have to justify the sum being sought and the legislature would scrutinize the proposals.

* Sector Priorities

The MTEF is also indispensable in the sense that its practice requires government to adopt consultative mechanisms before committing the use of public resources. Under the MTEF, it is expected that the government is obliged to find out people?s growth and development priorities and reflect them in the budget according to the resources that are available. These needs and priorities can then be translated by government into concrete expenditure plans that will be in line with the medium term framework.

* Checking

Through the MTEF, it is possible for government to constantly check the efficiency and effectiveness of the resources committed and spent in the preceding financial year. Because each budget in the cycle is supposed to be a follow up of the last one, then it is also easier to monitor the progress that has been made in respect of some development plans and whether the real expenditures reflect the priorities that were agreed upon. Government expenditures may then be audited not only in terms of the real expenditure on the items that were planned but also a value audit to ensure that the money was used in the most efficient manner.

In trying to ensure that public finances are well utilized and guarded, it is absolutely instructive to first examine the pattern of losses and identify the points of leakage and how they may be sealed. These windows of failure may then be closed through constitutional guarantees of the three MTEF rubrics i.e. entrenched fiscal discipline, sector priorities and keeping a check on efficiency and effective expenditures.

The 5 Windows of Failure

* Wasteful expenditure

These occur through where there is no authorization for expenditures. Examples include direct embezzlement and unplanned and arbitrary expenditure of public funds. Also included here are the instances when goods and services are overpriced with the intent of ensuring that more money is paid out than would be due.

* Undelivered Goods and Services

Where prompt payment is made for goods and services that are not delivered. Because in such instances there is the intention to defraud the government, it may well be that the goods were never required at all.

* Irregular Payments

Where sums of money are paid without documentation specifying for whom and for what services the money is due.

* Unsurrendered and Uncollected Funds

This occurs in various instances where the money that is due to the government from particular ministries is not paid in. More significantly, it may also involve the conspiracies that allow for goods passing through the country to evade taxes.

* Pending Bills

Occurs because of the wide discretion allowed to the Minister of Finance to use pending bills by converting them into debt. This discretion is often used to absorb unauthorized expenditure without legislative scrutiny.

General Issues to Take into Account

1. It is important to find out whether the windows of failure result from constitutional failure or from other statutory failures that allow particular officials too much discretion. This is necessary to avoid overloading the Constitution with details and provisions that may be better dealt with at the statutory level.

2. The Permanent Secretary as the chief accounting officer within the Ministry should ideally be able to judge the quality of expenditure and determine whether the procurements were carried out transparently. The Permanent Secretary should be able to apply some sanctions in situations where public finances are not being efficiently and effectively used. It may therefore be surmised that the windows of failure reflect the lack of complete vigilance by the permanent secretaries.

3. The main constitutional question in public finance and procurement is the clear division of power. The clearer the power is divided between the various officials such as the ministers, the permanent secretaries and the internal auditors, the better the nett result because it will be possible to determine faults whenever they occur.

4. It is also necessary to note that the Directorate of Personnel Management appoints the officials within the Ministry while the permanent secretary is an appointee of the president.

5. In light of the policy inconsistency that has characterized planning in Kenya in the past, it is prudent to consider whether plans sanctioned by the legislature could be captured in law so that budgeting would be based on these plans.

6. The main institutions and offices that could impact on the public finance and public procurement are the Permanent Secretaries, the Controller and Auditor General and the Central Bank. The roles of these constitutional offices and institutions must be fortified within the constitutional review dispensation.

7. While the office of the Controller and Auditor General (CAG) is meant to perform both the audit and control functions, it only performs the audit role. This renders the office highly ineffective in the reduction of wastage of public resources as the reports always come after the finances have been misused.

8. The Central Bank of Kenya should play a critical role in the management of the public debt that the government may issue. The Central Bank ought to be the primary agency in monetary policy and this should be secured to the extent possible through independence from the Executive and Treasury.

Pertinent Issues for the Constitution of Kenya Review Commission

1. There is recognition that the appointment of members of the cabinet and permanent secretaries are the prerogatives of the President as the chief executive. However, in the appointment of the permanent secretaries, the Constitution should provide for either a parliamentary committee or a joint board to vet the professional record of the nominee. This vetting may be done by the establishment of the Constitutional Office Holders Appointments Board that would consist of some members of the legislature, professional groups and other objectively appointed persons.

2. As the chief accounting officer within any ministry, the permanent secretary should be identified by the Constitution as the individual who is accountable for ministerial expenditure. This makes the office responsible to the legislature for ensuring that all expenditures are in accordance with the approved budget plans.

3. Because the Controller and Auditor General?s office is already a constitutional office, its further independence should be secured through independent budget provisions for the performance of its role. This may be done through allocations from the Consolidated Fund Services (CFS).

4. There should be an expansion of the duties of the Controller and Auditor General to enable the office to be involved in the internal audit functions within ministries.

5. The Constitution should consider the increase in the independence of the entire Central Bank of Kenya by disentangling it from the Treasury and executive?s influence. A provision should be made for the President to appoint the Central bank Governor and allow for the parliament or the proposed Constitutional Office Holders Appointments to vet the nominee. In order to eliminate the possibility of professional misconduct, the legislature should be empowered to entertain a motion of impeachment of the governor for a just cause. The removal and vacation of office can only be secured by at least two-thirds of the legislators voting in favour of such motion.

C LAWS TO FIGHT CORRUPTION

MODERATOR: Ms Raychelle A. Omamo, Chair, Law Society of Kenya (LSK)

DISCUSSANTS: Messrs Lee Muthoga, Advocate and George Kegoro, Secretary, LSK

RAPPORTEUR: Philip Kichana, Institute of Education in Democracy

The purpose of this session was to address and make draft proposals on various questions of legislation such as: -

* What if any new laws are necessary to institutionalize anti-corruption in Kenya?

* At what level should such laws be enacted (Constitutional amendment vs. Ordinary Statute)? Should there be new special jurisdiction adjudication bodies created to deal with corruption? If new courts are created should a new appeals structure also be created?

* Will it be necessary to consider retrospectivity to anti-corruption laws in order to give them efficacy?

* What Codes of Conduct should be legislated and in respect of which public officials should they be enacted?

First Discussant: Mr. Lee Muthoga

With regard to the current legal regime in Kenya and its efficacy in fighting corruption, the discussant cautioned that it is not so much what law we make; it is the manner in which it is made and it is implemented that counts. He said the current law that deals with corruption is the Prevention of Corruption Act1. It is not the lack of law that has put us in the abyss that we find ourselves in today. The decay was initiated when private service was introduced into public service. Mzee Jomo Kenyatta, Kenya?s first President, set the culture of corruption rolling when at a public rally he castigated Mr. Bildad Kaggia saying he gave him a number of positions, but the latter gained nothing-from holding those positions; this was read to mean that if you have a position use it to get rich.

The Ndegwa Commission also had its contribution to the growth of corruption. The Commission found that one could be a public servant and still engage in private business. This killed the check encapsulated in the doctrine of conflict of interest. Recalling the principle that one must not be a judge in his own cause, appointment to certain bodies/authorities should be streamlined so that self-interest is checked.

On ethical codes, he said these were necessary because the public does not as yet see what is wrong with reaping from public coffers. It views reapers from public coffers as heroes - rich men are good; no one cares how they become rich - once rich one can wine and dine with anyone. Codes of Conduct will help in changing attitudes and bringing to an end the visualization of rich men as necessarily good.

Public selection laws should be changed. These are laws, which relate to authority and administration. Such laws should limit people from getting obedience by use of their offices. He concluded by saying that abuse of office cases which have declared that one may not be prosecuted if the crime was committed 7 years ago are wrong. There is no limitation period to when a crime may be prosecuted.

On the basis of the above remarks, Mr. Muthoga proposed that:

* A constitutional provision to enable prosecution of corruption cases be provided.

* There is no need for special courts.

* To contain the perfidy of corrupt influence it is better to have the Office of an Ombudsman to check abuse of power by public officials.

* Public officials, Judges, and MPs, should be required to observe a set Code(s) of Ethics

* Criminal law should remove the honour and security acquired from corruption. This should be done by restitution of property acquired corruptly to the public.

* Those convicted on corruption charges should be prohibited from holding public office.

Second Discussant: Mr. George Kegoro

George Kegoro began by cautioning that there is always a danger in the process of reviewing adequacy of existing law because the existence of law is not an end in itself. Good laws represent standards by which conduct in a given area may be judged. He then went on to propose a three-pronged analysis of systems of fighting corruption, namely:

* Systems that exist to assist in the detection and documentation of that which is corrupt.

* Systems that prosecute those who are accused of corruption offences.

* Systems of punishing those accused of being corrupt.

He then paused the question whether the above systems are in place under Kenyan law. In answer, he proved that indeed systems that assist in the detection and documentation of that which is corrupt are in place, naming at least 9 public institutions: -

1. Office of the President which has authority over parastatals

2. Office of the Auditor-General

3. Office of the Auditor-General - Corporations

4. Parliamentary Accounts Committee

5. Parliamentary Investments Committee

6. Office of Inspector of State Corporations

7. State Corporations Committee

8. State Corporations Appeals Tribunal

9. Local Government Oversight Board

He submitted that at the level of documenting corrupt activities, these institutions are in place. They contribute to fighting corruption (in the context of systems that assist in the detection and documentation of corrupt activities)

In addition to the institutions named above, there have been ad hoc commissions, for example the Ndegwa Commission, that have prepared reports in given areas of concern.

At the second level, that is systems that prosecute those accused of corruption, he submitted that the Attorney General sits alone. But it is incumbent upon him to look at the reports of the above offices and decide whether or not to take action.

At the third level (punishing those guilty of corruption offences), one finds the judiciary, which he submitted, also sits alone.

Having set the above scenario, he concluded that we have well documented accounts of corruption but that is where it all ends. He castigated the Office of the Attorney General, as a culprit in the systematic set up. He gave the example of a judge and another person on whom there is well-documented evidence of corruption, in the hands of the Attorney General yet he has not commenced prosecution. This, he said, was ample indication that the Attorney General?s office is not interested in prosecuting corruption cases.

Mr. Kegoro then proposed that there is need for a public tracking system of the Office of the Attorney General. After detection and documentation of corruption is completed, the Attorney General should give an account of how many of those cases he has prosecuted, how many he has not prosecuted and reasons why he has not prosecuted and when he will prosecute. This audit of the said office should be presented to the public periodically.

He termed the recent Gachiengo and Arap Ng?eny decisions, perfidious. It is would be absurd to say that 7 years after a corruption offence was committed, the culprits would not be prosecuted.

What options are available to streamline the justice system so far as corruption is concerned? Do you set up special courts? Do you change personnel in the judiciary? Or do you write more rules? Mr. Kegoro singled out judicial power and the discretion that goes with it as the most abused power. He said that setting up special courts and change of personnel in the judiciary would be for the better. In fact he referred to the Economic Crimes Bill intended to resurrect the Kenya Anti-Corruption Authority (KACA), as an attempt to set up special courts, which in his view are needed.

He added that a serious purge or retrenchment of judiciary personnel is needed. The process does not need new rules because it will take the form of truth and reconciliation hearings. Amnesty would then be given to judicial officers who confessed their participation in corrupt activities and who named the givers of bribes.

He noted that the Office of the Auditor General Corporations was provided for illegally under an Act of Parliament. If the office has to exist it must be provided for in the Constitution. It has however not been a useful office, there has been no improvement in government parastatals audit nor has there been improvement in the performance of parastatals.

General Dialogue

The Moderator the opened the discussion by throwing the following two questions: -

* Are the existing laws sufficient for detecting and documenting corrupt activities?

* Is there prosecution of corrupt activities in Kenya today?

A respondent emphasized that there is need for a constitutional basis in the fight against corruption. A constitutional provision would facilitate follow-ups and prosecution of cases on evidence in the Parliamentary Accounts Committee (PAC) and the Parliamentary Investment Committee (PIC) reports. He also proposed the initiation of a process of identifying a number of statutes that need to be amended. In his view the most abused statutes, which need amendment, are:

* The Traffic Act

* The Immigration Act

* Licensing statutes

* Electoral Statutes

* Public Services statutes (for example, the Employment Act)

* Customs

* Regulatory statutes

These statutes should have clauses providing for investigative and prosecutorial powers.

He also proposed the establishment of an anti-corruption commission with in-built mechanisms for investigation and prosecution.

A second participant pointed out that what is needed is the integrity of individuals and systems. He proposed that Kenya follows the Ugandan and South African constitutions, which have entrenched provisions on integrity stated in the constitution. He added that constitutionally established commissions be set up and held as constitutional offices. These will act as a check against civil servants. He concluded by urging that we must look at integrity issues beyond government (in response to Mr. Kegoro?s analysis). We must also look at Acts establishing professional bodies and the concomitant disciplinary bodies. These bodies must be joined in the fight against the perfidy of corruption. He suggested the Association of Professional Societies of East Africa (APSEA) should formulate a Code of Conduct for professional bodies, then each professional association ? lawyers, doctors, accountants, architects, engineers, etc ? can then formulate its professional code and disciplinary organs in this light.

A third participant proposed that the appointment of members to the Public Service Commission and Judicial Service Commission should be subject to Parliamentary approval.

The Moderator intervened asking participants to address, among others; the questions- is the office of Attorney General sufficient? Is the judiciary sufficient?

Respondents reiterated that ethical standards must be set and observed. We must transcend the law and look for short-term and long-term measures like introducing civic education in the school curriculum right from primary school to University. Such education should emphasize good citizenship and inculcate anti-corruption values. It was also restated that morality is part of growth, and that civics, which was previously taught and examined in school, should be reinstated into the school curriculum.

It was noted that there is an urgent need to make existing bodies sensitive to fighting corruption. The Kenyan judiciary does not seem to be sensitive to the national fight and public policy against corruption.

It was proposed that the office of the Attorney General be delinked from the Executive arm of government completely.

A participant observed that there was need to address transitional issues. He said there was need to redefine or improve the existing anti-corruption framework. How will new institutions, which take a long time to establish, be designed and welded into our legal system? How do we balance the institutional changes (slow) with the people?s desire for immediate change? Another participant expressed a different view in that, transitional or no transitional justice, there is no limitation to prosecution in criminal cases. He wondered how one would deal with corrupt judges, 40 years of age, with security of tenure. This participant added that there were several options that could be pursued. One is to go for severe surgery and kill a patient or two, administer drugs to the patient slowly until recovery or thirdly wait upon the patient to recover naturally. He emphasized that whatever option was taken, the assertion of the rule of law must be upheld and existing laws reinforced. There is need to set up constitutional organs that can endure the assault of corruption.

Yet another proposed that transitional justice may be achieved through a truth and reconciliation process. Both agreed, however, that laws (constitutional and statutory) do not need to be contradictory, they may be complementary.

The Moderator then posed the question: How do we deal with corrupt judges? Sack them and ask them to reapply? Establish a commission to investigate them or an amnesty framework that incorporates return of corruptly acquired wealth?

Some respondents felt that we had already come to a dead end with the death of an internationally supported Kenya Anti-Corruption Authority (KACA). We have to begin as if we were in a nursery nurturing a newborn baby. We need to develop a new court structure, a new court system right from the subordinate courts to the highest court in the land. Today, we have seen Pinochet and Milosevic prosecuted for crimes against humanity and war crimes. So the notion that crime prosecution may suffer a limitation period is wrong.

He went on to state that corruption crimes are crimes of unjust enrichment. Transitional justice should therefore, aim at freezing accounts in this country and those abroad while proceedings are instituted anywhere in the country. Freezing assets will ensure that trials will not be in vain.

The Moderator also posed the question: What if the money was brought back and forgiveness sought, would we forgive? We also need to be mindful of the fact that we can paralyze a new system with old cases.

The process of truth and reconciliation was revisited; a participant felt that this process could not apply in corruption cases because the former is personal and rights-based while corruption is property based. Mr. Kegoro gave the example of Hong Kong where the government authorities gave culprits a cut off date to return stolen property or face prosecution. In his view it is the same people who commit crimes that are involved in corruption. He observed that the judiciary has not been engaged in the fight against corruption. How are we going to re-organize the judiciary without making overtures to it to co-operate? He submitted that there has got to be a political process of integrating it in its reformation before beginning the purge.

There was some consensus that the CKRC is the ideal body to deal with the judiciary. If it does not, then there will be no change. There was an anecdote that, after a mutiny there is always need to restructure institutions in their own way. Our judiciary should develop a mechanism that allows a process of reapplication for jobs. Recommendations for a higher court were okay if people of integrity would staff it. There is need for caution here because although desirable such a court may face a crisis of expectation. Participants drew examples from South Africa where an Economic Investigation Unit was set up to look into corruption cases. It provided a mechanism where those guilty of corruption could pay restitution or a given percentage of the corruptly acquired property, then be allowed to go on with business.

A participant proposed the registration of a voluntary organization to provide a corrupt-free asset certification service to be applied to those who wish to serve the public. It would clear citizens and corporations by interrogating how they acquired their assets and will issue certificates to those who are ?clean.? Those who are not certified or who do not submit themselves to the examination will be barred from bidding for contracts for public works. There would also be exemption from prosecution of all persons who submit to the vetting process. If any such person or corporation is found to possess proceeds of corruption, these would have to be repaid to the relevant government department before that person or corporation can take part in public works.

It was agreed that a code of conduct should be created for all categories of public servants. The Association of Professional Societies in East Africa (APSEA) should develop a Code of Ethics/Conduct for professionals in the private sector. Then each professional society would be expected to realign and refine its own professional practice guidelines and codes of ethics and conduct to reflect the APSEA principles. Each would also be expected to realign and refine its disciplinary mechanisms to appropriately punish conduct found to be unethical in this regard.

It was further agreed that the public needs to be engaged and involved more on the question of amnesties. There was also need to revisit the Criminal Procedure Code and the Penal Code and redefine the crimes and penalties that relate to corruption. In this exercise, provisions for forfeiture of stolen property in lieu of imprisonment need to be considered and provided for.

D FINAL PLENARY

In final plenary, a number of issues were raised or revisited. Among these was the fact that it was difficult in the current Kenyan context, to agree on what should or should not go into the constitution, there is a tendency to want to incorporate everything into the constitution. The point was made that law, whether constitutional or statutory should be seen as a starting point ? a means and not as an end in itself. Further that the laws must be supplemented with strong public education to achieve a holistic anti-corruption strategy. It was also accepted that, where there were contradictory arguments or proposals (i.e. proposals in the alternative), there should be an attempt to combine these proposal or ideas into hybrid solutions.

A further suggestion was made that, perhaps we should create one institution to scrutinize and harmonize terms and conditions of service for all public officials and government employers. Participants also reiterated that the controller and auditor general should carry out performance and value for money audits as well as the traditional financial audits.

Harry Mule, the Vice-Chair of TI-Kenya, in his concluding Remarks, summarized the day?s output thus: -

1. That corruption is a very important and serious issue.

2. That it should be addressed by and in the constitution to give it a firm foundation.

3. That its specifics should also be articulated in Acts of Parliament.

4. Further that it goes beyond the constitution and the law? it also has social, cultural economic and moral facets and therefore requires a multi-faceted approach that includes ? among other things ? public education and advocacy.

5. That there are good comparative experiments and experiences that had been given in the course of the conference.

6. That very specific points of consensus and recommendations around the three thematic areas of laws and policies, public procurement and Parliamentary action had been rendered, which should be employed, first by the CKRC, but also by parliament, government in general and other stakeholders.

He finally thanked everyone for their patience and participation.

Prof Yash Pal Ghai, the CKRC Chair, in his Formal Closing Remarks, also thanked all participants for their had work and sacrifice. He also appreciated and recognized the valued contribution of several Civil Society Organization, Thinks Tanks, etc especially in publications and written memoranda presented to the CKRC. He looked forward to a concise and easily assimilabe Conference Report.

He then gave the following specific responses to issues directed at or affecting the CKRC.

1. The CKRC will highlight and entrench the role of civil society in the constitution. He remarked that not many constitutions explicitly articulate this; the Philippine Constitution does, perhaps because of the central role of citizen mass movement that removed the Marcos dictatorship from office and necessitated writing of a new constitution.

2. The CKRC already appreciates the importance of underscoring the nation?s principles and values into the constitution and will do this. He identified the mechanisms of doing this as the preamble and directive principles of state policy. He also noted that in modern constitution making, it is also common to have them at the beginning of every chapter of the constitution.

3. The CKRC appreciates public sentiment, also raised at this conference, or appointments, (and proper criteria thereof) to public office, including the judiciary, diplomatic corps and permanent secretaryship within the Executive arm of government. He agreed that some countries now have a very representative constitutional office holder appointments board, vested with enough power, authority and to be effective.

4. On the transitional justice issues and recommendations, he noted that these were not explicit, even though they may be implicit, in the CKRC statutory terms of reference. He further reported that they had received only a few representation on this matter and therefore the CKRC had no clear sense of how important this was to Kenyans. He suggested that TI-Kenya take up this agenda and pushes its horizons.

5. He also noted that some duties and roles had been imposed on non-state actors such as the private and corporate sectors, the professions, etc. He requested for more representations on these, and perhaps Kenyans? views and proposals on constitutional provisions protecting citizens against these players.

CHAPTER FOUR ? SUMMARY OF PROPOSALS AND RECOMMENDATIONS

This is the Rapporteur?s synthesis and summary of the key proposals and resolutions arrived at during the conference in general, and especially in the plenary reporting of the three breakout workshops.

A FOR THE CONSTITUTION

1. Explicit articulation, in the Preamble to the Constitution, of the deleterious effects of our corrupt past, and of the commitment for a meaningful pro-integrity and anti-corruption ethos for all organs of government and sectors of society.

2. Explicit and comprehensive articulation, in the Directive Principles of State Policy in the Constitution, of the mainstreaming a pro-integrity and anti-corruption focus in all organs, structures, procedures and activities of government. This could also include a principle on the use of public finance efficiently and equitably.

3. Creation and entrenchment of a national anti-corruption body in the Constitution, complete with provisions for its institutional independence, autonomy of finances and operations, and insulation from state, private sector or other interference.

4. Creation of the Office of an Ombudsperson.

5. Senior public appointments need to be subjected to confirmatory hearings either by Parliament or a specially constituted constitutional body. This principle should be reflected in the Directive Principles of State Policy.

6. The right of access to official information should constitute a core component of the Bill of Rights. The right to and freedom of information should strongly underpin our constitutional principles and institutional formation.

7. Due regard to other constitutionally created or mandated bodies that can champion the pro-integrity and anti-corruption initiative and/ or play an oversight role over governmental organs, offices and officers. Key among these are: -

a) The Legislature, especially as an overseer and institutional check on the Executive, Executive budgeting and expenditure, and public procurement.

b) Parliamentary Committees, especially the Parliamentary Accounts Committee (PAC), Parliamentary Investments Committee (PIC), the Judicial and Legal Affairs Committee (proposed). This could include establishment of a Parliamentary Budget Office.

c) The Controller and Auditor General.

d) The Governor of the Central Bank (The Central Bank should play a critical role in the management of the public debt that the government may issue.)

Further underscored was the need to re-orient these offices and institutions, especially the Controller and Auditor General, to be able to conduct value-for-money audits and performance audits, in addition to mere financial audits.

B FOR STATUTE LAW

1. Clear and comprehensive elaboration, in one statute, of a national anti-corruption body. The body will already have been entrenched in the Constitution. The statute will set out its mandate, structures, scope of operation, principal organs and offices, and will flesh out its independence autonomy and insulation from external interference.

2. Encoding, in one statute, the government?s procurement guidelines, principles and procedures, whether at central government, local authority or parastatal levels and spheres of operation.

3. Abolishing the Office of Auditor General (Corporations) and its enabling statute, since it is unconstitutional in the first place, has proven to be ineffective and a watering-down of the constitutionally created Office of the Controller and Auditor-General.

4. Establishment, under statute, of an Independent Police Complaints Commission to receive and investigate complaints against the police and offer appropriate redress and remedial action.

5. Enactment of a Freedom of Information Act, which establishes a system of Information Appeals Tribunals; also strengthening the independence of the media.

6. Establishment of the office of Custodian of Public Assets. Presently, it is not clear who keeps an inventory of all public assets. Neither is it clear whose responsibility it is to secure them.

7. Sufficiently deterrent punishments and motivational rewards to be written into statute law, especially for public servants e.g. those involved in public procurement.

C FOR POLICY PAPERS, ADMINISTRATIVE OR OTHER ACTION

1. A written, national Anti-Corruption Policy and Strategy Paper that clearly contextualizes and outlines the mandate, scope and ambit of the various governmental, private sector and civil society actors. This policy should be reviewed and/ or overhauled periodically to keep pace with environmental changes and societal development.

2. The Association of Professional Societies in East Africa (APSEA) to draw from the national Anti-Corruption Policy and Strategy Paper, and from the Constitution and all other instruments, a comprehensive Plan of Action and model Code of Professional Conduct and Ethics. This would lay the basis, set the pace and identify the issues for its various member professional societies ? accountants, architects, engineers, doctors, lawyers, land and quantity surveyors, etc ? to review the content of their individual Codes of Conduct, practice guidelines and the efficacy of their disciplinary organs and enforcement mechanisms.

3. Consideration for the need for urgent establishment of a broadly representative Task Force for Public Procurement Reform for Kenya.

APPENDICES

A CONFERENCE ILLUSTRATIONS OF CORRUPTION

Some of the manifestations and illustrations of corruption captured by the Conference Presenters as well as participants are: -

Acts of omission or commission

Betrayal of public trust

Breakdown of set systems/ control mechanisms

Bribery ? becomes a prerequisite to obtaining simple public services

?Commercial deals? that may prevent pro-poor policies, e.g. partnering with pharmaceutical firms and therefore resisting generic medicines, or collaborating with import firms thus reducing incentives for local industry

Conflict of interest

Court decisions/ awards for damages that are excessive or disproportionate to injury actually suffered

Democratization, elections and multiparty politics as a source of corruption: increasingly fuelled by money. A lot of such money is often corruptly acquired in the first place!

Distortion of patterns of government expenditure: preference for large infrastructural or military projects rather than social welfare spending

Economic, Social and Cultural rights hindered as a consequence of corruption and the negative effects of widespread corruption on the functioning of government institutions2

Electoral malpractices: gerrymandering, rigging and buying votes, thus diminishing the integrity and value of the vote, contaminating the political process and undermining democracy

Ethnicity, ethnic affiliation and the politics of ethnic patronage

Extortion

False declarations and false tariffs

Forest/ deforestation projects with substantial financial rewards for giving large and unwise concessions to big firms or powerful individuals

Fraud and embezzlement

Gross inflation of charges for services rendered or commodities supplied

High tolerance for illegal practices

Illegal use of public assets/ office for private gain

Impunity

Indefinite adjournments of hearing of court cases or giving awards

Insufficient performance of contractual or other obligations

Justice becomes a preserve of the highest bidder

Lack of properly set, institutionalized systems/ control mechanisms

Misuse of laid-down, customary or reasonable procedures or of policy instruments e.g. tariffs, credit, enforcement of laws and rules or observance of contract regulations

Neglect or negligence of duty, since one is paid for work not done

Nepotism

Networks of illegitimate interests (mafia)

Obstructing public welfare through over-bureaucratization of procedures

Over-invoicing and under-invoicing

Patronage systems among the elite, which thrive on secrecy

Payment for goods not supplied or services not rendered i.e. ?air supply?

Payment of salaries and wages to non-existent/ ?ghost? workers

Privatization, foreign investment, sponsorship arrangements: increased lobbying and easier flows of money and laundering

Promises

Promoting personal gains rather than legal obligations

Removal of documents from case files or even disappearance of whole case files

Selective prosecution

Sexual favours in return for official action or inaction

Skewed access to State apparatus

Ten per-cent (?10%?) commissions

Threats

Transition to a democratic country with a market-based economy undermined by corruption, organized crime, tax evasion and bureaucratic inefficiency, resulting in inadequate funding for social welfare expenditure and for the payment of wages in the State sector3

Tribalism and sectarianism

Undercharging of taxes and duties on imports and exports, involving false declarations

Unfair recruitment and promotion

Unjust official enrichment

B LIST OF PARTICIPANTS

For convenience, the conference participants are listed in the manner in which they participated in the Breakout Workshops.

BREAK OUT 1: THE CHALLENGES OF INSTITUTIONAL RENEWAL

NAME

ORGANISATION

TELEPHONE

E-MAIL

1

Mike Mills

KARA

351147/8

kara@nbi.ispkenya.com

2

Wole Adebayo

Office of the President-Nigeria

09-3142940

oadeba@yahoo.com

3

Dr. John Orora

ACPU

310748

acpu@swiftkenya.com

4

Lattif Shaban

SUPKEM

216963/65

ncep@supkem.co.ke

5

Sam Mwaura Waweru

KPSF

230016

privatesector@kpsf.or.ke

6

Jedidah Nyongesa

WPA-K

7

Njeru Kirira

GEIFIC Ltd

251167

tattuah@wananchi.com

8

Wambui Kimathi

KHRC

574998/9

wkimathi@khrc.or.ke

9

Jeremiah Owiti

IPAR

251179

owitio@ipar.or.ke

10

Sam Mwale

SUNY

310961/2/3

sam@sunykenya.org

11

Yash Ghai

CKRC

318841

hrllayp@hkucc.hku.hk

BREAKOUT 2: TRANSPARENCY AND ACCOUNTABILITY IN PUBLIC PROCUREMENT

NAME

ORGANISATION

TELEPHONE

E-MAIL

1

Usha Shah

Hindu Council of Kenya

Usha@sunripe.co.ke

2

Kwame Owino

IEA

717402

owinok@ieakenya.or.ke

3

Eve Lwembe

Ti-Kenya

advocacy@tikenya.org

4

Terry Ryan

223220

aceg@aceg

5

Rose Arungu-Olende

MYWO

mywo@africaonline.co.ke

6

Kevin Rodrigues

Ti-Kenya

newsservice@tikenya.org

7

Salome W Muigai

CKRC

343601/2

smuigai@insightkenya.com

8

G. M. Muketha

ACPU

9

J. K. Kihumba

APSEA

336146

10

Mbui Wagacha

IPAR

251179

mwagacha@ipar.co.ke

BREAKOUT 3: LAWS TO FIGHT CORRUPTION

NAME

ORGANISATION

TELEPHONE

E-MAIL

1

Rashmin Chitmis

Hindu Council of Kenya

748456

dbrugatchi@kenyaweb.com

2

Mbuthi Gathenji

Dispute Management Centre

5600235

disputemc@yahoo.com

3

Tim Gitau

Children's Cabinet

242939

timgitau@hotmail.com

4

Grace Adera

FIDA

adera@iconnect.co.ke

5

Maryceline Oluoch

KPWC

6

Domitilla Obiero

KPWC

7

Don Deya

ICJ (K)

575981/2

d.deya@icj-kenya.org

8

Zein Abubakar

CKRC

9

Wambugu Kanoru

Radio Citizen

10

Ibrahim Lethome

CKRC

11

Jean Odhalo

KWPC

072-831635

jamodhalo@yahoo.com

12

George Kegoro

LSK

311337

lsk@nbnet.co.ke

13

Njeri Thuku

KARA

551147/48

kara@nbi.ispkenya.com

14

Raychelle Omamo

LSK

migiko@iconnect.co.ke

15

Lee Muthoga

IRC

lmuthoga@mgmail.co.ke

C LIST OF RESOURCE PERSONS/ PRESENTERS

1. Mule, Harris ? The Opening Remarks

2. Ghai, Prof Yash Pal ? Keynote Speech On ?Constitutional Review And Governance?

3. Ruzindana, Hon Augustine, MP ? Paper On ?The Ugandan Experience In Fighting Corruption?

4. Ezekwesili, Ms Oby ? Paper On ?Practical Aspects Of Governmental Action: Fighting Corruption In A Transitioning Country: The Case Of Nigeria?

5. Gitu, Dr Kang?ethe Wamaitha ? Paper On ?Making And Implementing Pro-Poor Policies In Kenya: The Importance Of Transparency And Accountability In The Process?

6. Ikiara, Prof Gerrishon K. ? Paper On ?Instilling Transparency And Accountability In The Public Procurement Process?

7. Kirira, Njeru ? Paper On ?Restoring Accountability To The Legislature As A Means To Combat Corruption?

8. Ndii, David ? Moderator: Breakout Workshop On ?The Challenges Of Instituional Renovation?

9. Ryan, Prof Terry ? Moderator: Breakout Workshop On ?Transparency And Accountability In Public Procurement?

10. Omamo, Ms Raychelle ? Moderator: Breakout Workshop On ?Laws To Fight Corruption?

11. Kihumba, Job ? Disucssant: Breakout Workshop On ?Transparency And Accountability In Public Procurement?

12. Wagacha, Dr Mbui - Disucssant: Breakout Workshop On ?Transparency And Accountability In Public Procurement?

13. Muthoga, Lee ? Discussant: Breakout Workshop On ?Laws To Fight Corruption?

14. Kegoro, George ? Discussant: Breakout Workshop On ?Laws To Fight Corruption?

15. Okello, Duncan ? Rapporteur: Breakout Workshop On ?The Challenges Of Instituional Renovation?

16. Owino, Kwame ? Rapporteur: Breakout Workshop On ?Transparency And Accountability In Public Procurement?

17. Kichana, Phillip ? Rapporteur: Breakout Workshop On ?Laws To Fight Corruption?

18. Deya, Donald ? Conference Rapporteur

D MR HARRIS MULE?S REMARKS ? FULL TEXT

Welcome to this conference on constitutional reform to fight corruption. It is Transparency International-Kenya?s pleasure to co-ordinate this conference at the request of, and on behalf of the Constitution of Kenya Review Commission. The process the Commission has undertaken is an arduous one and we felt obliged to assist in any way we could to facilitate the achievement of the task they have been set by law, which is to make recommendations for a new Constitution of Kenya.

Apart from the views of the public as collected by the Commission through direct presentations and constituency constitutional forums, the Commission is mandated by its enabling law to make recommendations based on expert consultations or hearings to be conducted by the Commission at every stage of the process.

Today, we hope to harvest expert views from all of you on two themes. At the end of the conference we would like to have concrete proposals for the Commission on institutional and legislative reforms to enhance transparency and accountability in government; and on how we can reform public finance management and particularly the law of procurement to fight corruption.

To provide us with comparative experiences, we have invited two members of the Transparency International movement who have substantive responsibility for the management of anti-corruption agendas in their home countries.

We have the pleasure of hosting the Hon. Augustine Ruzindana, MP of Uganda. Mr. Ruzindana is the immediate former chair of the Public Accounts Committee of the Ugandan Parliament; prior to joining elective politics Mr. Ruzindana served as the first Inspector General of Government of Uganda. He has had a long and dedicated career of public service in his home country. He is a member of the global Advisory Council of Transparency International, and chairman of the African Parliamentarians Network Against Corruption; a continental parliamentarians caucus.

We are also honoured by the participation here of Ms. Oby Ezekwesili, Special Assistant on Budget Matters to H.E. Olesegun Obasanjo, President of the Federal Republic of Nigeria. Ms. Ezekwesili, a Chartered Accountant by profession, joined the Obasanjo administration on secondment from the Centre for International Development (CID), Harvard University, where she is the Director of the Nigeria Economic Strategy Project. Apart from being one of the founding global directors of Transparency International, having served until October 1999, Ms. Ezekwesili is also a current member of Transparency International?s Ethics Committee. She sits on the Board of Tuft University's Education for Public Inquiry and International Citizenship (EPIIC) and the UK based Centre for Democracy and Development.

It may seem ironic that, at a conference hosted by the Constitution of Kenya Review Commission, I should say that today corruption is domestically perceived as being a more important issue than the Constitutional Review Process itself. But this is how Kenyans view corruption. In October 2001, an opinion poll by the International Republican Institute4 found that ?24% of respondents say that corruption is the single most important issue facing Kenya now followed by poverty (22%) and unemployment (15%).? We are no longer shy to say that corruption poses a real and recognized threat to democracy, and to economic and social development. No doubt, corruption has seriously undermined the international perception of Kenya as a destination for financial and social investment.

Corruption distorts the economic liberalization process of privatization by transferring state assets into private hands at the expense of the public interest and purse. High-levels of corruption sour relations with development partners as economic malfeasants and their crimes go unpunished often with extremely grievous effects on our nation?s physical and economic well-being. Especially vulnerable to the ill effects of corruption are women and children.

Corruption in the electoral and political process lowers the confidence of wananchi in democratic institutions such as parliament, the executive and the judiciary. A cynical and apathetic culture is becoming pervasive amongst voters and politicians alike.

Corruption eats at the moral fibre of a nation. Positive norms and traditions, once appropriated by the corrupt, instantly transform themselves into curses. Take the uniquely Kenyan institution of Harambee, as an example: it has been changed from what was once a positive manifestation of the culture of philanthropy and community service into a political tool highly concentrated amongst political rent-seekers that fails to deliver what it promises. For example, whereas 60% of all Harambee proceeds are ostensibly for education related projects, the fact remains that the future of our youth is being stolen from them by consistently low-levels of educational achievement5. The Ministry of Education heavily mismanages its vote through uncollected and unsurrendered funds each year and yet teachers go unpaid. A society that is not educating its youth and glories in vanity Harambee projects turns those youth into a future criminal and dysfunctional class.

The phenomenon of corruption is, in Kenya, systemic and buttressed by an elaborate legal and institutional framework6 that simply doesn?t work. Hence the need for constitutional, legislative and policy reform. Without accepting this fact, it is not possible to explain the consistent failure of existing legal institutions to curb corruption.

At present the Kenyan dispensation and governmental system invests officialdom with largely unfettered discretion, which ultimately promotes extensive corruption and rent-seeking behavior amongst market participants and government officials. The determinant factor in most corrupt decisions is monopolized discretion that is not accountable7. This is true in tendering processes, contract awarding and privatization processes. The result of misused discretion is the emergence of a restricted private sector market that thrives amidst massive economic waste. The extent of such waste has been quantified at 475 billion shillings in a recent study8 of the Controller and Auditor General?s Report on Government Accounts for the years 1991 through 1997.

And at the end of the day, United Nation?s statistics say that Kenya is a very poor country with over 50% percent of its population living in absolute poverty. Corruption is an important cause of poverty because it promotes unfair distribution of income and inefficient use of resources. Poverty and inequality in turn breed discontent and instability. Inequality in Kenya is stark, and by the last decade it was estimated that 25 percent of Kenyans could not meet their minimum daily calorie requirements even if they concentrated all their spending on food. At about the same time, a World Bank report indicated that the top 10 percent of Kenya?s population earned 47 percent of the national income. According to the same report, these inequalities were second only to those reported for Brazil. The political implications of sharp economic inequalities are sometimes even more potent than those of poverty when considered alone as an issue. It can lead to insecurity.

The link between corruption and insecurity is well understood by Kenyans. Beyond conventional perceptions, corruption now poses a serious threat to regional and international security. Testimony at the trial of the Nairobi Embassy Bombing Trial recently concluded in New York, and the ongoing investigation into the events of 11th September 2001 clearly make the nexus between terrorism and corruption. The best security structures are certain to be compromised if undermined from within by the corruption of, for example, registration and immigration officers or customs agents.

Corruption may also have causative effect by so impoverishing people as to supply desperate recruits for terrorist organizations particularly as arbitration and dispute resolution mechanisms such as the courts are eaten away and the public feels helpless and loses confidence that it can obtain justice. Effective anti-money laundering laws and non-corrupt immigration and customs agencies are key to reducing the capacity of terrorists to operate with impunity on a global scale. These should now be special concerns of all Kenyans bearing in mind the terrible experiences of 7th August 1998 in Nairobi.

For all the above reasons corruption is a matter for concern by all promoters of the rule of law ? the Constitution of Kenya Review Commission especially so. With the realization that corruption is the central issue, the question then is what to do about it?

We believe that if we assemble enough people of goodwill positive steps can be taken towards ensuring that the new constitutional order will be one in which corruption, its causes and effects, is systematically prevented, prohibited and punished. It is in this spirit that we have invited all of you today. At the end of today?s deliberations, we hope to have done our bit to assist the Constitution of Kenya Review Commission to make recommendations for a new Constitution for the Republic of Kenya.

My fellow Directors at Transparency International-Kenya, Evelyn Mungai and Ahmed Abdallah will share moderator roles throughout the morning. I would like now to call upon Prof. Yash Pal Ghai, Chair of the Constitution of Kenya Review Commission to set the ball rolling with his presentation on the constitutional review process and governance.

Thank you

E PROF YASH PAL GHAI?S REMARKS ? FULL TEXT

F HON AUGUSTINE RUZINDANA?S PAPER ? FULL TEXT

G MS OBY EZEKWESILI?S PAPER ? FULL TEXT

?PRACTICAL ASPECTS OF GOVERNMENTAL ACTION: FIGHTING CORRUPTION IN A TRANSITIONING COUNTRY: THE CASE OF NIGERIA?

Let me start by saying how honoured and privileged I feel to be invited by the Kenya Constitution Review Commission and Transparency International- Kenya to share practical experience of the government of my country, Nigeria in fighting corruption. Many historical cultural ties bind Kenya and Nigeria. But, perhaps the most important shared goals of our two great nations today is to change the very damaging perception of our nations as very corrupt. Nigeria has set off on the journey toward transformation with the advent of our nascent democracy. It is my hope that our sister nation, Kenya will resiliently carry through its political reforms and join us in the very difficult but mandatory task of transforming both governance and the image of our nations.

THE CHALLENGES AND THE GAINS OF TRANSITION

Nigeria as a polity in transition confronts numerous challenges. The political, social, moral, institutional and economic degradation that were bequeathed the new democracy after over eighteen years of corrupt appropriation are issues of daily pressure to the current inheritors of governance. In the case of Nigeria, the tragedy of the perception of the country as systemically and endemically corrupt represents for Obasanjo?s reform -driven administration an albatross of immense proportion. This carry-over perception problem constitutes the worst variant of a de-motivator that can potentially truncate the zeal to continue with the difficult task of deciding and implementing naturally incongruent political and economic reform measures necessary for national transformation.

Some of the challenges of our transition are:

* Abysmal depth of institutional and infrastructure decay resulting from the military regimes neglect of the basic social and welfare needs of citizens.

1. Public sector resistance to change and slow speed in embracing the government?s campaign for a new culture of transparency and accountability

2. The stoking of ethnic and religious tensions and conflicts by the dislodged interests that benefited from the structure and ways of the past.

3. The culture of public distrust and cynicism arising from disconnect of citizens from political leadership and the state as a vestigial of long-drawn repressive rule.

4. The difficulties of pushing through reforms in a resource ?starved economy and capacity lacking economy

5. Balancing economic rationality with pragmatic political expediency in policy and execution

6. Translating institutional and process reforms successes into reduced poverty and improved quality of life for all Nigerians

7. Harmonizing micro elements of economic management into a coherent piece of economic strategy

8. The rising levels of incidence of HIV/AIDS and other related diseases

9. Competing demands for available resources by strictly poverty reduction spending items, like health and education on the one hand and by infrastructure-restoring spending (as dictated by the acute and near collapse of all forms of infrastructure, especially, energy, roads, sanitation and water supply)

Undoubtedly, the biggest cheerleader of the Obasanjo administration has been the prudent accumulation of several billions in oil revenue as reserves arising from increased oil prices. This contrasts sharply from the grand corruption that was the norm in previous regimes when oil proceeds including any windfalls were usually rapaciously squandered. There is a wide consensus among fans and foes of Obasanjo that his personal integrity in matters of fiduciary responsibility is beyond reproach.

The establishment of the Independent Corrupt Practices and other Offences Commission headed by a retired Chief Judge of the Appeal Court with unimpeachable integrity was the apogee of the Administration?s avowed commitment to ending erstwhile profitability and low cost of corrupt conduct. The institutional and staffing capacity of the Commission is currently under build-up. Over Fifty significant cases are already under attention before the Commission.

To eliminate the duplication and inefficiency in government programs and policies that facilitated corruption and waste, the government created the Economic Policy Coordination Committee under the chair of the Vice President to ensure integrated economic management.

The stoicism with which the government has been implementing the Privatization program and the relative success with targets set for the Bureau of Public Enterprises, culminating in recent privatization of the telecom monopoly, NITEL ? although we are still anxiously awaiting the conclusion of this transaction. While not being unbridled free marketers, the commitment to privatization is a tacit acknowledgement of failure of state stewardship in the area of resource allocation to activities better undertaken by the private sectors.

Through the globally acknowledged transparent execution of the GSM auction that the government has since adopted as a model for future procurements and licenses, the government dealt the final blow to the corruption in the communication sector by providing long-suffering Nigerians with alternatives to the previous tyranny and corruption of the state monopoly, NITEL.

The creation of the Debt Management Office (DMO) that crystallized the current effective structure and management of the country?s external debt and accelerated the agreements with the Paris Club of creditors was the answer to the corruption that thrived previously in the management of the country?s strangulating debt. Today, no secrecy attends the external debt of government. Now, every Nigerian has a fair idea of the details of creditors and the amounts owed them and the repayments and debt service flows annually.

These are a few of the numerous on-going reforms that the Federal Government is implementing. I shall however today limit myself to an aspect of the reforms that I am most identified with - the reform of the budgeting and expenditure management activities using the instrument of the Due Process Compliance (DPC). To ensure efficiency, effectiveness and prudence in budgeting and expenditure management, the government established the Budget Monitoring and Price Intelligence Unit within the Presidency. The institution of a value-for-money audit and a due process review of the 2001 Budget by the government helped provide the learning curve needed to arrest the institutional deficiencies in the procurement and payment systems.

BACKGROUND TO THE DUE PROCESS: THE WAY WE WERE

Except for a few who are driven by altruistic goals, most people are unfortunately attracted to public office by the opportunity to control public resources as symbolized by the Budget. The Budget is the single most important instrument of power and governance whether in a democracy or in any of its aberrant alternatives. It is therefore the case that access to public resources wherever and whenever no form of oversight and sanctions exist provides the non-altruistic seekers of public office the huge opportunities and incentives for massive corruption. The antidote therefore is to crystallize budgetary and public expenditure management systems and procedures that have transparent and effective oversight. Recognising this to be the story of our nation, the President, Olusegun Obasanjo in demonstration of his personal commitment to transparency and accountability spearheaded the move for budgetary and expenditure management reforms.

The reforms started with the creation of a full fledged Budget Office in the Ministry of Finance in early 2000 and followed with the creation of the Budget Monitoring and Price Intelligence unit in the Office of the President in mid 2001. Through the Due Process Review of the budget and expenditure management process embarked upon by the BMPI between May and August 2001, many lessons were learnt of the systemic flaws that facilitated misappropriation and corruption in the financial activities of government.

The inherited budgetary process lacked up-to-date system plan and the absence of any economic cost/benefit analysis of projects made it difficult to determine the benefit of additional investment in one sector, say, power sector, compared with other sectors such as health or education. The budget for a given year was usually finalized well into that year and was simply a wish list of public officials on which no form of oversight existed. There was a lot of uncertainty regarding the timing and amount of actual releases.

The budget would usually be spread over so many projects that individual projects are likely to be under funded. Funds for new projects were not assured before starting new projects. This delayed realizing the benefits of individual projects and led to higher costs. For example if contractors expected delays or incomplete payment, they were likely to increase their price compared to the international market. If the project took much longer than expected to complete, price escalation can become significant.

The financial guidelines then even stipulated open tender as the basis for procurement and exceptionally permitted selective tendering. However, the reverse became the case in practice. Ministries habitually considered every capital project, urgent and conducted bid on selective or limited basis to save time. However the implementation process often took much longer than necessary so the objective of quick delivery was never met and extra expenditure was incurred because the opportunity for competition was wasted. Wherever competitive or long list bidding was used, the time given to bidders and for bid evaluation was too short for adequate preparation or analysis, resulting in poor quality of bids and evaluations.

Tender specifications were often not clearly understood by the bidders, another reason for higher bids. Due to loose specifications in the bidding documents, bidders offered varying designs making the comparison very difficult. Objective bid evaluation criteria and adequate details for preparing the bids were often missing in the bidding documents. Because of this, the consultants used their own subjective (often biased) criteria with different standards for evaluation, resulting in inconsistencies. For example, a preference for bids in Euros over dollar may be made without specification in the bid document. More weight was given to reputation than the details in the bid proposal and thus restricted competition. Minimum qualification to become eligible for participation were not often not pre-specified in the bidding documents, making the process subjective instead of transparent. Some of the evaluation criteria used by consultants were incorrect, for example giving the same weight to inadequate bid security as for the payment of tender purchase cost. Fixing a band of price level and rejecting responsive bids with lower quotations, in reality means that consultants are forcing prices to be higher than necessary.

THE NEW WAY

In fulfilment of the promise made to the Nigerian people to curb corruption in the public sector, the Administration committed itself to fiscal transparency and accountability. It committed to using the Budget to generate sustainable growth, reasonable investment and significantly reduce poverty. We required fresh and creative ideas on the instruments that could reasonably achieve these lofty goals and found this in the Due Process Compliance (DPC) instrument. It is an instrument designed to enforce compliance with due process in budgeting and expenditure by all federal spending units. The instrument of the due process helps ensure that budgets and spending are not only based on authentic, reasonable and fair costing, but are also appropriately geared to the realization of set priorities and targets that were generated from medium range strategic plans. The Administration created the Budget Monitoring and Price Intelligence Unit (BMPI) to execute the mandate. The location of the unit in the Office of the President was a clear signal that highest political will to guarantee its effectiveness existed.

As is the case within the legal context from which it was borrowed, Due Process is an assurance that there has been full adherence to laid -down rules or regulations guiding budgetary, procurement and payment activity or action by all parties relevant to it. For us at BMPI, the Due Process is the ?design of a rapid response mechanism for ensuring fiscal transparency, strict compliance with due process, effectiveness and efficiency in the costing, prioritisation and execution of budget expenditure items resulting in an effective ?follow -the ?money? tracking process by utilising international and Nigerian expertise, and by adapting the best of information technology?.

We have simply integrated the expectation that things should be done according to the rules of the game into our budgeting process, our procurement process and our public expenditure payment process. To effectively enforce compliance, the BMPI needed the multi-sectoral technical capacities, the political backing and therefore the power to make decisions on whether a spending unit has complied or failed to comply with Due Process.

The adoption of the Due Process as a major extant financial rule and guideline of the Federal Government was finally in October 2001 formalized via a Treasury Circular issued by the Office of the Accountant General of the Federation. With this, the incentives and sanctions for compliance or non-compliance, the BMPI obtained the institutional authority for its mandate and the critical impetus for action.

A definition of Due Process as applied to budgeting and public expenditure may be not be as

valuable as a simple enumeration of the reasons for which due process is critical. Hence to foster

understanding for the concept, a breakdown of the gains derivable from the introduction of due

process as an underpinning philosophy for public sector financial resources management.

Specifically, the due process results in the following benefits to the government:

Good government of public money and assets resulting in the reduction of corruption

Improved system planning and project preparation work leading to accuracy of costing,

cost/benefit analysis and prioritisation in deciding the spending pattern and plan for any given

year.

Improved fiscal management through more effective expenditure management, institutions,

processes and control mechanisms

More optimal resource allocation decisions to achieve clearly articulated public policy

objectives through enhanced identification of the costs and benefits of alternative expenditure

decisions

Improved liquidity management of public funds

Improved technical efficiency in managing and utilising resources through improved

information flows more relevant to decision responsibilities of managers

Enhanced transparency and accountability of government, providing better historic

information as a guide to the future

BUDGET PREPARATION CERTIFICATION

10. Planning is linked to budgeting and accounting, especially through the process of selecting and monitoring of projects. Both of these aspects are fully integrated within the system to ensure consistent prioritisation, and the use of the accounting system to provide financial information on project out-turns.

11. To determine adequacy of project preparation, the BMPI sector specialists and staff evaluate the answers of spending units to some generic questions. Some of these include details of alternatives studied, anticipated benefits, feasibility study, technical feasibility, economic feasibility

12. The purpose of the question on details of alternatives studied is to enable the checking authority to ascertain whether all reasonable alternatives have been investigated and eliminated prior to framing the proposed project. Stringently carrying out this exercise will ensure that all proposals should be based on least cost and highest efficiency solutions.

13. Question on anticipated benefits seeks to elicit response on the specific benefits to be obtained from the projects as proposed. This requires careful study of all aspects of the proposal and the calculation of all benefits it may generate.

Examples of the kinds of benefits that may accrue and should be stated are:

14. Employment: Number and type of jobs to be created, temporarily during construction and permanently following the completion of the project.

15. Cost Savings: Financial savings to be gained from increased efficiency

16. Service Improvements: Improvements in service to general public to be specified

17. Productivity Improvements: Improvements in productivity of workers to be quantified.

18. It cannot be stated too strongly that the determination of the feasibility of each project is an essential and basic step in the process of project preparation and development. Technical, financial and economic feasibility studies must be carried out, and should address at least the following types of issue:

19. The availability of a suitable site

20. The availability of appropriate building materials and labour

21. The availability of necessary external services, such as water supply, power supply, highway and pedestrian access, foul and service water drainage and solid waste disposal.

22. Have the mechanisms for future operation and maintenance of the project been carefully studied and clearly articulated.

23. Has the demand for the project been clearly articulated, in general?

24. Has the specific demand for the project been determined by carrying out detailed surveys of potential users?

25. Will the project generate positive financial returns covering?

26. Over time, its capital cost

27. On an annual basis its recurring operational and maintenance cost.

28. Are counterpart (private and public sector) funds available to share project expenses?

In summary, certification of a project for budget preparation entails a decision that such a project has fully satisfied all due process requirements for start of implementation. Specifically, that it has met the following conditions:

29. It is well aligned with FGN strategic and sectoral priorities.

30. Project has been adequately prepared technically and financially.

31. Project cost is consistent with consultant/engineers? estimate and comparable with international practice.

32. Detailed project designs have been prepared.

33. Detailed and realistic financing, procurement and implementation plans have been prepared.

34. Measures have been identified to deal with adverse environmental and social effects where these exist.

35. Future operations and maintenance requirements have been assessed.

36. Project components are appropriately packaged for procurement purposes.

SELECTING AND CERTIFYING PROJECTS FOR INCLUSION IN BUDGET CONSIDERATION LEVEL

The decision point at the Budget preparation certification level is preceded by the classification of submissions made by spending units into three categories.

37. Category I These are projects that are fully prepared technically. That is, all the budget preparation parameters enumerated earlier were considered met by the project. (Additionally those projects that are ongoing, have received support in previous budgets and are required to be brought to an orderly and timely conclusion are included in this category).

38. Category II These are projects which are not fully prepared, but for which preparation could be completed by within the next budget cycle. For Category II projects, the Budget could provide limited allocations to fund consultancy or other costs required to complete the preparation of the Project. Full capital funding, once the project is fully and acceptably prepared, would be obtained from the following year?s budget, or through a supplementary application.

39. Category III Projects that fall into Category III are those for which the preparation is flawed or seriously incomplete, where considerable further preparatory work is required. Projects in this Category will simply be returned to the promoting Agency, who will themselves decide to shelve or abandon them, or to invest further time and effort in properly preparing and justifying them for inclusion in a future Budget.

At the joint meeting of the BMPI and the Budget Office, Ministry of Finance final coordination and selection of project proposals meeting the due process and other broad policy guidelines for the relevant fiscal year are made. The finalization of the Budget proposal at this meeting is followed by the submission to the Federal Executive Council by the Minister of Finance for discussion, adoption and transmission to the National Assembly.

At the National Assembly, dialogue between the Executive and lawmakers on the Budget Bill has in addition to strictly previously political and economic considerations also focused on the need to pass a 2002 Budget that contains only projects that have complied with the due process of project readiness for implementation. I am unable to confirm how much our expectation in this regard has been met, because the 2002 Budget Bill is still caught up in the National Assembly.

Contract Award Certification

Upon the Appropriation by the National Assembly, the expenditure management stream of the DPC commences. Specifically, the BMPI specialists working closely with all relevant spending units must certify that each appropriated project has met the following conditions before contract can be awarded for its execution:

40. Tender documents have been prepared in line with FGN?s guidelines.

41. The tender process has been carried out in compliance with FGN guidelines.

42. Pre-qualification criteria were appropriate, clearly stated and fully complied with.

43. Selection process has been carried out in line with FGN requirements.

44. The lowest/best- evaluated bidder determined to be qualified to perform the contract satisfactorily, was recommended for contract award.

45. Management has approved selection or good reasons for change in recommendation have been provided.

46. Contract price is comparable with international experience.

47. It has been verified that successful bidder continues to meet pre-qualification requirements.

48. Appropriate performance security has been indicated.

A certificate of compliance with contract award process by issued by the BMPI means that an appropriated project has fully satisfied all due process requirements for contract award, thereby permitting the spending unit to proceed with signing of contract and advising the Treasury through the Minister of Finance to make payment of mobilization costs.

Completion Work Certification

This is a certification that a project has fully satisfied all due process requirements for release of additional funds. Specifically, that it has met the following conditions:

49. Funds released earlier have been fully utilized.

50. Site visit has been carried out to assess progress of work on contract.

51. Contract work is being carried out as agreed in contract.

52. Percentage of work completed is commensurate with funds spent.

53. Anticipated project results are being achieved or if not appropriate measures have been taken to ensure that results and goals identified under the contract are fully achieved.

Hence, no further releases are made on an awarded contract until the BMPI sector specialist working jointly with relevant officials of each spending unit issues a certification that a project has met all the conditions listed above.

CONCLUSIONS

The unique feature of the BMPI is its use of external sector specialists to both validate and track budget and expenditure activities effectively, efficiently and effortlessly without having to depend on a huge internal technical staff. This has been the critical complement to the integrity of the lean staff of the BMPI. The success of the unit in terms of re-establishing systems, structures and procedures is generally acclaimed within the public service after the initial period of muted resentment.

A re-awakening of the nation to the tools of cost /benefit and incentives/sanctions have helped in the move toward articulation of public budgets that aim at improving the welfare of the people. The 2002 Budget proposal submitted to the National Assembly contained only the 25% of the submissions by spending units that passed the Due Process. We have also recorded cost reductions and savings running into several billions of Naira since last October when we effectively commenced the Certification of capital expenditure of spending units. We are working on a list of public officials who have engaged in any form of activity targeted at circumventing the laid down process.

Sustaining the integrity and the expertise of the unit is a major challenge in institution building. Integrating the federating units (that is the states and the local government) to the process is another.

A major lesson of my work in government is a confirmation of what we have always known in Transparency International about the importance of personal integrity of leadership as the critical ingredient for governmental action to curb corruption. And so, clearly the greatest of the challenges is how my country and Kenya will attract not just competent but impeccably honest people into all levels of public leadership for sustainability of any governmental action against the cankerworm of corruption.

Once again, I thank you very much for the opportunity to share the Nigerian experience with you. God bless you.

H DR KANG?ETHE WAMAITHA GITU?S PAPER ? FULL TEXT

?MAKING AND IMPLEMENTING PRO-POOR POLICIES IN KENYA: THE IMPORTANCE OF TRANSPARENCY AND ACCOUNTABILITY IN THE PROCESS?

1. Poverty is multi-faceted and is manifested where the majority of households lack basic needs such as hygiene and health, nutrition, education, food security and income generation opportunities. Poverty results from lack of empowerment, institutional failure, failure of regulatory mechanisms for competition, corruption and other excesses, lack of access to markets, lack of access to productive resources ? water, land, financial resources, marketing infrastructure, education and training, and institutions, which most strongly affect the poor as-well-as, inequitable access to economic opportunities. The poor typically have low income and are deprived of basic needs, resources, rights and even voice. This translates to poor quality of life.

2. Concern with the improvement of the livelihood of all Kenyans has been the driving force for policy making and implementation by the government, since Kenya?s political independence in 1963. At independence, the government identified poverty, disease and ignorance as enemies of development, which had to be eliminated as soon as possible. Despite the existence of well-written policy documents with very noble and desirable objectives, achievement of these objectives has been largely elusive. This is exemplified by the fact that almost 56 percent of the population is below the poverty line, the incidence of diseases is on the rise while the level of illiteracy is not declining.

3. To make any significant impact on reducing poverty, increased economic opportunities for the poor must become available. The population must have access to basic goods and services. The poor must have access to social services such as education, health and nutrition, and water, new technology, markets, credit facilities and information. These will increase opportunity for employment. It has been said that inappropriate policies, poor macro-economic climate, deteriorating infrastructure, insecurity and poor governance limit these opportunities and have tended to reduce investor confidence and options for the Kenyan poor to build productive assets and create wealth.

4. Kenya will not succeed in reducing poverty unless we make and implement pro-poor and pro-growth policies. The success of the policies must be measured on the basis of how much they translate into poverty reduction. However, it is only through sustained economic growth that we can be able to generate the resources needed to significantly reduce poverty. In our efforts to improve the quality of life for the majority of the people, we must establish and strengthen transparency, and ensure accountability, for effective management of economic and socio-political affairs. In this regard the need to effectively decentralize power and decision-making and defining a set of values and guiding principles cannot be gainsaid. The ultimate responsibility and authority for defining and effecting policies, programmes and strategies aimed at reducing poverty however, should rest with the poor themselves. The poor must be empowered to demand good governance ? transparency, accountability, rule of law, respect for human rights, gender equality and effective leadership issues.

5. The task of poverty reduction is not the responsibility of the government alone, but is a responsibility that must be shared by the private sector, non-governmental organizations, researchers and the poor. Many such organization and/or groups are committed to development, that is directly responsive to economic and social needs of the poor and are highly participative. A government pursuing pro-poor policies will thus forge links with such organization and attempt to involve them in policy-making and implementation. Poverty is closely linked to quality governance. Ample evidence shows that poverty has tended to increase as a result of poor governance9, which impedes economic activity resulting in increased poverty. Better governance is crucial for effective policy-making and implementation of pro-poor policies. Empowerment, voice, participation and consultation, ownership, trust, information, consensus, commitment, over and above all, transparency and accountability are key ingredients for good governance and for making and implementing optimal pro-poor policies.

6. Pro-poor policies must aim at not only generating economic growth, but also ensure equitable distribution of the fruits of growth and they must include all sectors of society and not marginalize those that are less fortunate and less able. In order to sustain pro-poor policies, it is essential that a mutually understood and respected framework is created upon the basic tenets of good governance. Any such framework must embrace:

* Free and fair elections that provide elected representatives with a legitimate mandate from the people;

* A judicial system that is reliable, neutral and independent;

* Clear established legal frameworks that provide security for persons and property, which are uniform and provide protection to the vulnerable;

* Empowerment of the individual and civil society through education, information, control over their own resources, and the opportunity to participate in the affairs of state;

* An administration that is committed and competent, accountable and incorruptible and applies the rules of law without favour; and finally

* A system of public management that is accountable, transparent and which provides clear delineation of powers and responsibilities that are universally applied.

PARTICIPATION, CONSULTATION, OWNERSHIP, INFORMATION AND CONSENSUS

7. As commonly said, ?if you are not part of the solution, you are part of the problem?. Pro-poor policy process must be participatory. All stakeholders, including the government, the private sector, non-governmental organization, policy researchers and the poor themselves, must participate in the making and implementation pro-poor and pro-growth strategies. This is built on the premise of building partnership as well as the philosophy of good governance: transparency and accountability. All must be accountable. Participation calls for all stakeholders, including the poor, to own the problems and to find their own homegrown policy solutions. This is because they know best their aspirations, resource base, needs, limitations and how best to plan to meet the policy challenges and to exploit opportunities. Participatory policy process engenders a feeling of common purpose and the spirit of togetherness among members of the community. It also implies domesticating and localizing pro-poor policy-making and implementation.

8. Participation through consultation through regularly scheduled programmes is important. The need to have the opinion of the poor in any poverty reduction strategy is justified. The poor are the true experts of poverty and we must learn to listen to their voices so as to benefit from both their experience, sufferings and wisdom. It has been asserted that previous government poverty interventions may have failed because policies were imposed on the poor without first gathering their views on anti-poverty strategies. Another weakness is that the interventions were usually formulated at the national level thereby ignoring the symmetries in the causes of poverty across regions. Strategies eliciting views of the poor are likely to succeed because they will ensure that the poor own, and to a certain extent, control, poverty reduction programmes, and that the programmes address their needs.

DEMAND FOR POLICY

9. One of the most dangerous elements of a pro-poor policy-making process is when a nation relies too much on supply-driven, rather than demand-driven policy determinants. If a policy is supply-driven it will lack continuity and will generally lack the support of both the implementers and the beneficiaries, who will usually view the policy as having a hidden agenda. The issue here is that the poor who are the beneficiaries of policies must influence the policies. Strengthening stakeholder participation will prevent policy-makers from influencing the policy process negatively.

CAPACITY BUILDING

10. All stakeholders must have the skills and tools needed to enable them to participate. Participatory process also calls for the establishment of a timeframe, which is possible only when the time allowed in the decision-making process is sufficient for consultation will relevant players in the policy arena. While it is usually urgent to get things done as quickly as possible, it is absolutely important that adequate time is allowed for consultation.

INFORMATION

11. For effective participation, all stakeholders must have access to relevant information so that they are able not only to make decisions based on sound, up-to-date information, but also to monitor implementation. The information must be adequate, accurate and timely. It must be simple for wider circulation. This is to say that the language for communicating policy must be directly understandable to the policy makers. It is essential that information is organized and presented in a manner appropriate for the potential users.

CONTROL

12. In the participatory policy process, the role of control and power in the implementation and execution of policy is important from the standpoint of efficiency. However, if the power to make decisions is highly concentrated in the hands of decision-makers and implementers while the poor are powerless, meaningful feedback from the poor is inhibited. The policy process is deprived of an important interactive source of information.

CONSENSUS

13. Consensus in policy-making and implementation is an issue generally ignored in the policy process. If there is no consensus, the probability is high that the policy prescribed will fail to succeed. Consensus, built by participation in the policy process, is needed to build policy confidence and consultation.

TRUST AND COMMITMENT

14. To increase the rate at which policy prescriptions are adopted, mutual trust among beneficiaries of policy and policy-makers, must be nurtured. An atmosphere of trust among stakeholders helps ensure that all participants are able to take part in the policy debate and that all contributions are respected and valued. Commitment to policy prescribed, is another important element of the policy process that is usually ignored. The pro-poor policy process requires commitment among stakeholders. They underpin the capacity to search for and share new ideas, increasing the aversion to cheating and increasing trust, creating a virtuous circle that acts as a self-reinforcing mechanism. But trust and commitment require full accountability and transparency.

POLICY DISTORTIONS

15. Sub-optimal pro-poor policy making and implementation can be caused by policy distortions. In Kenya, for example, the post-independence policy arena was characterized by policy distortions in agriculture, trade and industry, finance and public governance. We have witnessed policy distortions in producer prices, overvalued exchange rates, high tariff barriers aimed at protecting inefficient state-owned enterprises, symbolic budgets unconnected to actual funds available and identified priorities, bureaucratic inhibitions, ethnocentric priorities in projects, lack of political will, deliberate sabotage of projects by political rivals, and lack of meritocracy in selecting policy implementers. We have witnessed political instability and social tensions, which have had serious consequences because they discourage investment, promote capital flight, encourage brain drain, destroy social, economic and political infrastructure, displace people, and bring on the collapse of civil society. We have also witnessed corruption, which is associated with lower investment and high production costs. Corruption induces over regulation and diverts resources from vital development of pro-poor projects. It undermines the government?s ability to enforce legitimate regulations and collect public revenue for further investment in pro-poor and pro-growth economic and social infrastructures.

POLICY INSTABILITY CHANGES IN LEADERSHIP

16. Finally, sub-optimal pro-poor policy-making and implementation can be caused by the presence of policy instability and changes in institutional leadership. Policy instability can be caused by: frequent changes in government, impatience and changes in leadership. While the Kenyan policy process has not been affected by frequent changes in government, it is characterized by frequent changes in key policy institutions and actors. For example, between 1992 and 2001, in implementing small and micro enterprises programme, a key pro-poor and pro-growth strategy, 6 ministers, 12 permanent secretaries and 6 directors were involved. We also witness the programme moved from one ministry to another, thus interrupting its day-to-day operations. Unless pro-poor programmes are managed with some level of consistency, and unless the policy implementers and institutions of policy are stable, pro-poor policy-making and implementation will continue to be sub-optimal.

REFERENCES

Gitu, Kang?ethe Wamaitha, 2001: Strengthening The Link Between Policy Research and Implementation: KIPPRA Occasional Paper No. 1.

Idachaba, Francis S., 2000: Agricultural Policy Process in Africa: Role of Policy Analysts. ECAPAPA Monograph Series 2. Kampala: Association for Strengthening Agricultural Research in East and Central Africa.

I DR GERISHON K. IKIARA?S PAPER ? FULL TEXT

?PUBLIC PROCUREMENT: STRENGTHS, WEAKNESSES

AND IMPLICATIONS FOR ECONOMIC GOVERNANCE?

Table of Contents

1.0 Introduction

2.0 Review of African Procurement Systems

2.1 Key Features of African Procurement Systems

2.2 Review of Case Studies in Public Procurement

2.3 Common Abuses of Procurement Procedures

2.4 Summary of Main Flaws in Procurement Systems in Africa

2.5 Factors Behind Weaknesses in Public System

2.6 Towards Reforms in Africa's Systems

1.0 Introduction

Sub-Saharan Africa today features in the list of the most corrupt countries of the world. In the last report of the Transparency International, Sub-Saharan African region occupied several positions on the list of the top 10 most corrupt countries in the world, a clear indication of the poor state of economic governance.

It is difficult to discuss a country's state of economic governance without referring to its procurement and tax collection mechanisms. It is widely acknowledged today that the manner and efficiency by which a country spends and collects its resources is one of the key determinates of its quality of economic governance and greatly influences success or failure in the struggle against poverty and other forms of social deprivation.

In the rapidly growing literature on economic governance, there is virtual consensus that governments' fiscal policies in general and public procurement procedures in particular, are closely linked to the state of economic governance in any country. Wittig, for instance, argues that "procurement reforms, are often a key feature of anti-corruption efforts and help to promote good governance programs" (Wittig, 1999:5). Murray Petrie concurs with this view pointing out that corruption is to a large extent a symptom of poor governance and further observes that there is usually a strong and direct link between corruption and government spending and revenue collection due to the fact that spending and revenue provide a major opportunity for corruption to both politicians and bureaucrats, (Petrie, M. 1999). The same author adds "consistently poor and corrupt fiscal policies represent perhaps the biggest obstacle to make meaningful gains in the positions of the poor and the vulnerable", (Petrie, 1999).

A recent survey by Transparency International national chapters reveals that corruption takes more of less the same pattern and affects the same areas in both developed and developing countries. These areas were identified as: public procurement; revenue collection in both central government and local government appointments (Pope, C.O. 1997:10). The recent economic crisis of South East Asia has underlined the real dangers of failure to institute good economic governance in the emerging countries of the developing world.

Public procurement procedures features prominently in recent international conventions aimed at fighting corruption, such as the 1998 Convention on Combating Bribery of Public Officials in International Business Transactions by the Organization of Economic Cooperation and Development (OECD) member states, and the 1996 Inter-American Convention Against Corruption of the Organization of American States. The latter convention, for instance, covers a wide range of issues including public sector ethnics, public procurement, conflict of interest, government revenue collection and control systems, implementation of anti-corruption strategies, and the role of civil society in the war against corruption.

Government Procurement practices have attracted increasing attention by investors, donors and international institutions because of the enormous amount of resource which pass through public procurement. Public procurements today involves a large proportion of national resources in an average Sub-Saharan African country. It is for instance estimated that while in developed countries central governments' purchases account for between 5% and 8% of their GDP, the corresponding figures for African countries range from 9% to 13% of their GDP. The total amount of resources handled through public procurement in Africa is estimated to be between US $ 30-43 billions, annually with Nigeria and South Africa accounting for between US $ 16 billion and US $ 23 billion. The amounts handled through public procurement in the rest of Africa ranges between US $ 13 billion to US $ 19 billion. Public procurement constitutes the most important and largest domestic market accounts for between 50 and 70% of imports in most of developing countries (Wittig, 1999:8).

Appropriate procurement procedures enable governments to obtain goods and services in a more economic and fair way and make public expenditures more cost effective. The principal function of a procurement mechanism should thus be to facilitate government acquisition of the "right item at the right time and at the right price", (Wittig, 1999:4).

2.0 Review of African Procurement Systems

While procurement procedures differ considerably from one African country to the other in terms of structure, composition of the tender boards, checks and balances, the degree of transparency and predictability, there are features that are common in the majority of these countries.

Most of the current public procurement systems of the African countries were originally based on the procurement mechanisms of the former colonial powers. There have been, however enormous adjustments and changes made in these procurement systems by individual countries in the last 30 to 40 years of post-independence era. But what today accounts for the existing major differences between Africa and their former colonial powers procurement systems in terms of the level of abuse, is not so much the changes made in the structure of the procurement guidelines and laws but more so by the spirit and political will in which the guidelines are applied in the majority of the African countries.

2.1 Key Features of African Procurement Systems

Procurement systems in many African countries do not conform to the prevailing internationally accepted principles especially with regard to transparency, accountability and predictability. The most important international guidelines on public procurement is provided by the United Nations Commission on International Trade Law (UNCITRAL) Model Law on procurement of goods, construction and services (United Nations, New York, 1995).

Results from the World Bank supported programme, the Country Procurement Assessment Reviews (CPARs) show that in many African countries, the public procurement systems do not have either well-defined, clear and comprehensive criteria or procedures for evaluation of tender bids. Procurement procedures in most of the countries have been generally deficient in terms of availability of information and the required transparency. In many cases there are no pre-determined criteria for award before the bids are opened, introducing a strong element of arbitrariness in the process. What is even more worrying is that even where clear rules and procedures of tendering exist, they are not often adhered to in practice. The rules tend to be easily flouted without effective measures being taken against the offenders.

These weaknesses have been aggravated by inadequate checks and balances in the institutional set-up. The world Bank Procurement Assessment Reviews indicate that only a few countries had effective anti-corruption provisions, codes of ethnics, or other means of enforcing the implementation procedures or laws.

Although the procurement systems in many African countries are organized in different tiers for the central government, local authorities and parastatal institutions, there is a tendency for the central government officials to be involved in the regulation or supervision of the procedures in the other levels, leaving limited room for real autonomy at the lower levels.

One of the main weaknesses in public procurement systems in many African countries has been lack of strong public, private sector or civil society institutions bodies which regularly demand information and transparency in public procurement and other spending activities. Available data show that in most African countries, including South Africa, with its relatively more advanced procurement system, are not adequately transparent (IDASA, 1999). Due to the domination by the Executive over the arms of other government - the judiciary and legislature - demands for transparency and accountability are weak or virtually stifled in most countries in the region, creating a highly conducive environment for corruption and other forms of mismanagement of public resources. Lack of a strong culture of accountability implies that even when codes of ethnics or conduct are instituted they are generally ineffective. This has, however, been changing in a significant number of countries in the last ten years. As a result of the strong wave of democratization in the 1990s, which has led to the removal of some of the dictatorial regimes in Africa.

Lack of internationally recognized accounting and public procurement standards has made it relatively easy for governments to conceal shady deals, through inadequate reporting. Thus, while many countries in Africa have varying standards of transparency in procurement procedures, the standards have been relatively ineffective practically because of weak traditions of holding and institutions accountable.

There is thus an urgent need for procurement procedures to be standardized and made accessible to all in order to infuse the required degree of public scrutiny and pressure without which required the standards of transparency, openness, fairness and equity are unlikely to emerge in Africa's management of public resources and affairs. It is widely recognized today that for these changes to occur, domestic civil society institutions donor and other international bodies must all play their role in pushing for greater transparency. The IMF code for fiscal transparency is in the right direction in the efforts to standardize procurement and other fiscal procedures.

2.2 Review of Case Studies in Public Procurement

Kenya

Kenya's public procurement is organized in a three-tier system, with procurement procedures for:

(i) the Central Government;

(ii) Local authorities; and

(iii) Parastatal enterprises

At the Central Government level, the main procurement organ is the Central tender Board (CTB) and the District Tender Committees. The Ministerial tender boards are in charge of district procurement up to another specified amount. The prescribed values are revised regularly.

As a result of the on-going process of economic liberalization and decentralization of the public administrative structures, Kenya's public procurement system has undergone considerable changes to give individual ministries, public enterprises and local authorities greater freedom to procure ceilings, for instance, have been revised to give more procurement responsibilities to the ministerial and district tender boards, reducing the powers and the area of jurisdiction of the Central Tender Board. The latest changes are contained in the Exchequer and Audit (Public Procurement), Regulations, 2001.

The main objectives of these adjustments have been to facilitate decentralization for more efficient provision of public services and to empower lover level institutions to manage their affairs with more autonomy. This process of decentralization of the tending functions has been criticized for its tendency to multiply channels of corruption in the overall national procurement systems, (Ikiara, G.K., 1988).

Until 1999, Kenya's public sector tender boards were fully controlled by the government officials without any room for private sector and independent members participation. This structure and composition of tender boars at various levels has been a major source of weakness in Kenya's public procurement. The latest government circular on public admits this, "the current composition of the Central, Ministerial, Departmental and District tender Boards have been found to lack the capacity to effectively analyze and evaluate bids, particularly those requiring technical and specialized expertise (Republic of Kenya, 1999).

Kenya's procurement system has provisions to give 10% preferential bias in district tenders to materials and bidders from a given district. This was instituted as an instrument to promote utilization of local resources and participation of local suppliers. Kenyan firms are given 10% preferential bias especially in contracts which are fully funded by the Government. The main objective is to enable indigenous and national entrepreneurs to compete with international companies. However, no preferential treatment is accorded to firms in contracts that are partly or fully funded by Kenyan donors.

Impact of Misuse of Kenya?s Public Procurement System

The extent to which the procurement system contributes to corruption in the economy as a whole, it is fairly evident that misuse of the public procurement system is among the most important sources of corruption in the country.

One of the comprehensive analyses of government spending carried out recently was done by the Centre for Governance and democracy, (CGD, 1998) on the 1995/96 Controller & Auditor General?s Report. The findings from this analysis shows that failure to adhere to budgetary controls had cost the economy an estimated KShs. 107 billion during the 1995/96 financial year (Table 2).

Table 2: Summary of Public Spending Queried By The Auditor General, (1995/96)

Nature of Spending

Amount (KShs. Millions)

Percentage of Total

Unsupported expenditure

Unconstitutional expenditure

Goods and services not delivered

Diversion of Public funds to private use

Private debts taken by Government

Sums with head from exchequer

Unpaid bills

Imprests

Irregular transactions

Over invoicing

Under collection/evasion

Wasteful expenditure

Outstanding loans

Stalled projects

Arrears/uncollected debts

12,599

15,184

271

13

1540

1,049

3,627

100

7,691

231

4,729

9.989

34,424

1.961

13,211

11.8

14.3

0.3

0.01

1.5

1.0

3.4

0.1

7.2

0.2

4.4

9.3

32.3

1.8

12.4

Total

106,528

100

Source: CGD Policy Brief, June, 1998.

The analysis shows that flawed public procurement system was a key factor in this massive loss to the economy, with about 48% of the loss arising from problems that are directly related to the procurement system, for example, unsupported expenditures, (11.8%), unconstitutional expenditures, (14.3%), irregular transactions (7.2%), wasteful expenditures (9.3%), over invoicing (0.2%), goods and services not delivered (0.3%), private debts taken over by Government (1.5%) and unpaid bills (3.4%).

Comparing the 1995 situation with that of 1993 when a similar exercise had been carried out by the Institute of Economic Affairs (IEA), the CGD reports shows that there has been a major escalation in the misuse of public expenditure mechanism during the period. The overall waste of public resources has risen by about 200% from KShs 34.7 billion in 1993/94 to KShs. 107.6 billion in 1995/96. This amounted to 17% the country's GDP in 1995/96, according to the report. Public payments made without supporting evidence as required rose by more than 6 times from KShs. 1.8 billion in 1993/94 to KShs. 12.6 billion in 1995/96. Unauthorized and unconstitutional expenditures amounted to KShs. 15.2 billion in 1995/96 financial year (Table 2).

The implications of this waste of public resources are clear. One of these is major reduction in the government's ability to provide essential services to the Kenya population. This is reflected in the dilapidated infrastructure especially with regard to such as transport and communication, education, health and housing facilities among others. Secondly, provision of public services is made unnecessarily costly as a result of generalized over-invoicing of a wide range of goods and services that are procured for the government. Interviews with donor institutions involved in financing road construction projects in the country revealed that, by not opting for open competitive tendering in many projects, the government incurred higher cost, sometimes by as much as over 30% over similar projects in which open tendering was applied. This burden is largely borne by the taxpayers who have had to shoulder higher levels of direct and indirect taxation to finance public expenditures. Another major impact of the country's flawed public expenditure system has been the general loss of credibility in Kenya's economic management. This is reflected in the general decline in the country's ability to attract foreign investments, that has contributed to low economic growth rates of most of the 1980s and 1990s.

Uganda

Like many other former British colonies, Uganda inherited a procurement system that was based on the British procurement procedures. The procurement system has, however, gone through considerable changes during the successive political regimes that have ruled the country in the last three decades.

Procurement activities in Uganda are today substantially decentralized to allow lover level authorities to enjoy some autonomy. Rules and regulations that guide tendering activities differ at each of the levels. The procurement procedures currently require advertising of tenders both locally and internationally as a way of promoting transparency. The current political regime in Uganda has put considerable emphasis and pressure on transparency and accountability in the management of public affairs and resources. The recent upturn in the performance of the Ugandan economy has been largely attributed to the radically improved economic governance in the last decade.

All major procurements are supposed to be carried out through by open tenders advertised and awarded by Central Tender Board (CTB) in the Ministry of Finance under close supervision of the Inspectorate of Government, the Auditor General, the Public Accounts Committee (PAC), and parliament. The parliament has powers to cancel any irregular tender awards and contracts.

The creation of a strong anti-corruption lobby in the country is said to be playing a major and positive role in the process.

Some of the weaknesses in Uganda's procurement system includes absence of standard contract document for procurement purposes, lack of adequate professionals and inadequate in-service procurement training and lack of a designated single unit charged with the responsibility of issuing, updating and monitoring the implementation of procurement rules and regulations (Wittig, 1999:1).

Guinea

Guinea's procurement system displays a number of weaknesses that are common to other Sub-Saharan African countries. Some of these shortcomings include:

* The procurements have been deficient with regard to transparency.

* A large proportion of government purchases has tended to be carried out through direct purchases, making it difficult to control public expenditures and increasing the opportunities for abusing the system.

* There was also an unnecessary large number of tender boards to delays and long and inefficient bureaucracy, which in turn created a conducive environment for corruption. The situation was aggravated by lack of clarity on authority that departments and ministries have on procurement, leading to confusion and duplication of effort.

Zimbabwe

In Zimbabwe, all public procurements are processes through a National Tender Board within the Office of the President. The Board consists of various categories of professionals. The Board is expected to select three bids and forward them to the relevant minister who thereafter presents the nominees to the cabinet, which evaluates and presents one of the nominees to parliament for approval.

One of the strengths of the Zimbabwean procurement system is the extent to which it involves the national legislature in the procurement process. The process has high potential to create strong checks and balances especially if the country has a truly independent parliament.

The system of checks and balances is further reflected in Zimbabwe's appealing mechanism for those who are dissatisfied with the decisions made by the National Tender Board. Unsuccessful bidders in Zimbabwe can appeal against the Board's decision through the country's courts of law.

Thus, the strength of Zimbabwe's procurement system is its inbuilt checks and balances, with the three arms of government having clear roles to play in the procurement system.

South Africa

The Republic of South Africa has one of the more refined and focused procurement systems in Africa. One of the unique features of the South African procurement system is its explicit inclusion in the national constitution and strong emphasis given to the fact that the public procurements and contracts must observe the principles of fairness, equitability, transparency and competition (Wittig, A., 1999:15). The system also stresses the need for public procurement to be effective. The procurement provisions in the constitution allow for some preferential treatment in the allocation of contracts and protection or advancement of categories of people who are disadvantaged by unfair discrimination in an attempt to address circumstances.

Thus, South Africa's current procurement procedures are relatively new, having resulted from the country's lengthy constitutional talks, which were concluded about seven years ago. The South African procurement mechanism is thus much more sensitive to the requirements of good governance and fairness than many other procurement mechanisms in Africa, partly due to the circumstances and period the new rules were formulated.

One of South Africa's current areas of emphasis in improving its procurement system is the "10 Point Plan on Procurement" whose main objective is to enhance the participation of the small and medium enterprises in the country's procurement activities. The key elements of the plan include improvement of access to procurement information widening the participation base to incorporate small contractors or suppliers of goods and services, partly by disaggregating large projects into small specific contracts, improving the government payment mechanism by reducing the time taken to pay contractors, developing a preferential system for small and medium enterprises, simplifying procurement procedures especially with regard to the submission of tenders and appointment of a procurement Ombudsman (Wittig, A., 1999:16).

2.3 Common Abuses of the Procurement Procedures

Procurement procedures in most of African countries have been greatly abused either because of existing loopholes or deliberate failure to strictly adhere to the laid down procedures. Some of the common abuses of procurement systems in Africa include:

* Loss of large amounts of financial resources due to procurement without competitive bidding. In Kenya, for instance, it has been found that when large donor funded projects are implemented under wholly open tendering, the projects costs go down by about a third, compared with similar projects implemented without full competitive bidding. Overvaluation of goods and services is another common abuse, leading to massive losses to government arising from over-valued materials, buildings, land and services purchased by governments, public enterprises or local authorities. This form of abuse of public procurement is especially prevalent where there are bidding cartels and when there is inadequate preparation and independent estimates before the tendering process is initiated.

* Another common abuse of the procurement procedures has been with regard to variation orders where, with connivance with elements of the tendering authorities, some firms deliberately bid low to win the tenders and thereafter ask for major variation of the contract.

* Many governments in Africa often pay for goods and services, which are not delivered as a result of collusion between unscrupulous public officers and suppliers.

2.4 Summary of Main Flaws in Procurement System in Africa

The following are some of the main weaknesses of Africa's procurement procedures:

* The principles and procedures of procurement are often not clear and easy to follow because they have not been compiled in one document in some of the countries. In Kenya, for instance, procurement guidelines are contained in many different circulars, issued from time to time, by the Ministry of Finance.

* In many cases, such documents are not known or readily accessible to all interested parties.

* Lack of adequate preparation before tenders and quotations are received, in terms of independent estimates of costs. This weakness has facilitated formation of contractor cartels who collude to deliberately quote much higher values than actual economic situation would justify.

* Inadequate checks and balances in the procurement mechanism with the same government officials being involved in several stages of the procurement chain, opening the system to extensive abuse by some of the usual.

* Many decisions are abased on inadequate information. Members of tender boards or committees depend heavily on briefing from government officials who are sometimes compromised through inducements or intimidations, or are interested parties in the deals.

* Absence of strong reward and punishment instruments for those involved in the procurement systems as a means of promoting discipline and ethical behavior in tendering.

2.5 Factors Behind Weaknesses in Public Procurement System

A number of factors have contributed to the massive misuse of the procurement mechanisms in sub-Saharan Africa.

The most important factor in many countries seems to be lack of political will to stick to the prescribed procedures, rather than the structure of the procurement system itself. In Kenya, for instance, despite the impressive work done by the controller and Auditor-general since 1960s to document in detail failure by individuals, departments and ministries to follow the laid down procedures, hardly any action has been taken to punish the culprits. This has tended to encourage people involved in procurement to ignore procurement procedures in the knowledge that there was low possibility that any action would be taken against them.

The problem is aggravated by the fact that some of the problems documented often involve senior government officials including ministries, permanent secretaries, directors, etc, who should be custodians of public resources. This has been one of the reasons why not much action has been taken against the offenders.

There are a number of loopholes in some of the national procurement systems, which have been greatly abused. First in an attempt to introduce flexibility for tender boards, there are often no strict provisions for open and competitive procedures. This has been fully exploited, costing some of the countries enormously. Invitations of quotations from a number of firms are often undertaken without adequate transparency, creating a conducive environment for favouritism, nepotism, bribery, parochial and harmful interests to be pursued by those in the tender boards.

Due to lack of an effective code of conduct and professional integrity, supervision and evaluation of implementation of government contracts are professionally and adequately done, contributing to the failure of the public procurement system to provide effective checks and balances. This has been compounded by lack of strong disciplinary measures against professionals who fail to provide professional services as required

Lack of well-established institutions and practices to provide checks and balances in national economic and political administrative set-ups is also a major contributing factor for the failure of public procurement. Parliament in many countries in the region have not been able to acquire sufficient powers to check the excessive powers of the Executive. The Executive branch of the government in many countries wields enormous powers, making it impossible for the other arms of the government to play their role of providing checks and balances.

Procedures are openly ignored by politically connected bureaucrat and politicians who are usually never punished. Under such circumstances, even the most ideally designed system, would not be able to eliminate abuse of the procurement procedures.

2.6 Towards Reforms in Africa's Procurement System

Today there is a widespread global movement to reform procurement system in both developing countries, although the need is much greater and urgent in developing countries.

In 1996, USA for instance, implemented a major programme to make its procurement mechanism more efficient. The United Kingdom entered into a similar exercise in 1998.

The last decade has witnessed encouraging efforts to reform and standardize government procurement of goods and services. The most important efforts have been instituted by the World Trade Organization (WTO), which in its ministerial conference in Singapore in 1994 established a working group to examine and make recommendations on the measures needed to enhance transparency in government procurement. This was expected to lead to a more standardized global procurement mechanism, which is more transparent and extends MFN treatment to all countries. Already within the General Agreement on Trade in Services (GATs), there is a provision (See article XIII) for multilateral negotiations on procurement of services by governments.

In Africa considerable attention has been given to streamlining procurement mechanisms especially for purposes of combating corruption. But so far, Africa does not have a continent wide convention or scheme to fight corruption (Wandibba, 1999:5).

The Global coalition for Africa has taken a considerable lead in the efforts to develop an African convention or instrument to fight corruption. Arising from the February 1999 meeting in Washington D.C. eleven African countries adopted 25 principles to fight corruption in the continent, with about one fifth of the principles being directly on procurement procedures.

These principles include:

* promotion of transparency in public procurement procedures, and sale of public assets to, ensure open and competitive bidding for government contracts.

* black-listing of individuals found guilty of corruption from bidding on public contracts or doing business with government.

* publishing details of companies engaged in corruption and preventing them from biding for public contracts or undertaking business with governments.

* Establishment of accountability and oversight mechanisms such as inspector general and audit offices.

* Taking preventive measures and harmonization of laws, regulations and procedures relating to public procurement, taxes, customs tariffs etc.

The World Bank has also taken a leading role in the reforms of procurement systems in a number of African countries. The assistance has been especially focused on those countries which are interested in introducing zero-tolerance procurement procedures with respect to corruption.

In Uganda, the reforms have been spearheaded by the Task Force for Public Procurement Reform, which was specifically created for the purpose. The main areas of the proposed reforms in Uganda include establishment of procurement of a Code of Business ethics for public sector employees and a comprehensive implementation programme of Development Plan dealing with specification of responsibilities for the procurement workers, identification of professional performance standards of members of training networks, development and distribution of national training plans, developing financial resources for training and monitoring success of the training programmes Wittig, 1999:17).

The World Bank is also behind reform efforts aimed at strengthening Guinea's procurement procedures. The key elements of Guinea's procurement reforms are contained in its new public procurement code, which was enacted in 1998. The codes' main elements include strengthening the practice of open competition in tendering to foster transparency, encouraging sub-contracting to enable small and medium enterprises to participate more effectively in the national procurement activities; improving system for access, quality and quantity of information related procurement, rationalization of the tender boards for greater efficiency, closing loopholes for corruption and introduction of sanctions against those who flout procurement procedures.

References

IDAS (Institute for Democracy in South Africa); (1999): "Transparency and Participation in the Budget Process: the South Africa Case Report". Paper presented to the Second International Budget Project Conference, Cape Town.

Ikiara, G.K. (1988), "The Role of Government Institutions in Kenya's Industrialization", in Coughlin, P and Ikiara, G.K. (eds.), Industrialization in Kenya: In search of a strategy, Nairobi, Heinemann, (K) Ltd.

International Monetary Fund, (1998). "The Code of Good Practices on Fiscal Transparency:

Declaration on Principles", IMF.

Petri, M. (1999): The IMF Transparency Code: A Potentially Powerful New Anti-Corruption Tool",

Paper presented at the 9th International Anti-Corruption Conference, Durban, South Africa,

10-15 October.

Pope J. (ed), (1997); The TI Source Book, 2nd Edition, Transparency International (TI) Berlin.

Republic of Kenya, (1978), Supplies Manual, Nairobi, Government Printer.

_________ (1998), Treasury Circular, No. 1, June

_________ (1999), Treasury Circular, N. 4, March.

Thiis, O and Geoff, F. (1997): Zimbabwe in Hugo, S., et al (eds) Human Rights in Developing

Countries: Hague, Kluwer Law International.

Wittig, W.A. (1999), "Building Value Through Public Procurement: "A Focus on Africa. Paper presented at the 9th International Anti- corruption Conference, Durban, South Africa, 10-15 October.

J MR NJERU KIRIRA?S PAPER ? FULL TEXT

?RESTORING ACCOUNTABILITY TO THE LEGISLATURE AS A MEANS TO COMBAT CORRUPTION?

Why worry about corruption?

Because corruption undermines delivery of public goods and services, slows down economic growth and imposes suffering to the people, through:

* increased costs of production,

* lowers competitiveness of goods and services in both domestic and export markets,

* creates disincentives for private investments, thus undermining investments, job creation and strategies to fight poverty

* leads to diversion of resources from provision of goods and services while encouraging expenditures on procurements and public projects, where corruption receipts are highest or where it is easier to get corruption proceeds,

* at political level, corruption leads to diversion of resources from high productivity to high visibility investments.

Types of corruption

Corruption appears in many forms ranging from, (a) bribery, (b) influence peddling (c) extortion, (d) nepotism, (e) fraud, (f) facilitation payments, (g) embezzlement, among others.

Factors which promote or encourage corruption

(a) weak and inappropriate institutional arrangements, between branches of government, (b) weak institutions, (c) too much discretion, (d) exclusion of public opinion and influence in management of public affairs, (e) inability of Parliament to enforce its decisions, (f) lack of transparency in conduct of public affairs, (g) lack of instruments to enforce accountability on the executive

Weak and inappropriate institutional arrangements

Separation of powers between the three branches of government in Kenya is weak and inappropriate for enforcement proper mobilization, allocation and utilization of public resource. This weakness affects the quality of resources use as well as management. This situation arises from the following factors:

* The Executive is responsible for appointments of chief executives in the, judiciary and executive branches, and the oversight agencies such as Controller and Auditor General (CAG) without reference to legislature. Therefore, loyalty is to the executive not the state

* The Executive, i.e. the presidency, can dissolve the Parliament at will, whether legislature likes it or not

* Under articles 16 and 19, the presidency can appoint more than half the Parliament to cabinet, either as ministers and assistant ministers, and undermine the institutional arrangements which in turn undermines accountability. Using provisions of these articles, the presidency has the capacity to use the ministers to pass legislation contrary to Kenyan interests, (e.g. saga of E.A. Assembly representatives). Currently, ministers exceed Parliamentary quorum by over three times, a situation, which is undesirable for effective institutional arrangements.

* Under article 24, the presidency, alone, can abolish any public office or create a new one, while Article 25 makes, holding of public office subject to presidents pleasure. The two articles tilt the balance of power in favour of the presidency and though the Constitution requires the president to observe the provisions of the Constitution, in exercise of these powers, in practice, this is not done. These powers give the impression the president is above the law, again an undesirable situation. Besides, since all senior judges, chief justice and public prosecutor are appointed by the president, there is a feeling, among the public, that the judiciary is answerable to presidency.

This feeling has been reinforced by many instances when court decisions appear to be consistent with positions publicly expressed by the executive. In addition, senior ruling party politicians can and do openly engage in incidents which clearly suggest incitement or threats to public order with no risk of prosecution. In this regard, Ministers often threaten people with destruction of property, publicly and get away with it, even when they carry the threat out. There have also been many instances when people with legal or Constitutional protection have left office under circumstances that clearly show the presidency is not bound to legal niceties.

Weak institutions

Besides weak institutional arrangements, there are fundamental weaknesses in each of the three branches. A summary of these weaknesses reveals serious internal problems, for example;

The Executive

The major weaknesses in the public service include:

* lack of professionalism, note, Permanent Secretaries are not appointed on basis of qualification, competence or integrity

* lack of public role models, one does not need to perform or demonstrate competence to be appointed

* lack of tenure of office, PSs are the most temporary public employees, particularly in Treasury and head of civil service and secretary to cabinet, where frequent personnel changes occur almost on annual basis

* frequent shifting of departments, makes institutionalization weak or absent, same with institutional cultures and work ethics.

The result of these weaknesses which generates poor operational capacity making enforcement of rules and regulations difficult. Besides, the public service is also characterized by lack of respect for laws, regulations and operating procedures. Among the recent examples are

* handling of replacement of Governor CBK in 2001

* replacement of Commissioner General and other KRA staff (1997,2001)

* replacement of chief executive and members of Electricity Regulatory Board (2001)

In all these cases, there was clear evidence of lack of respect for the laws, yet, the Parliament, the custodian of public interest, could not or has so far not shown interest. In other instances, which give clear evidence of irregularities e.g. when the head of civil service has directly given instructions to officers under accounting officers or disciplined them, even though under the Public Service Act, Head of Civil Service is not authorized to discipline, or issue directives to officers under accounting officers. In such an environment, civil servants spend too much time and attention seeking to please the presidency and head of service or complying with decisions based on self-interest.

There many occasions when public officers were sacked simply because they were reported to have appeared in functions where opposition MPs were present. The situation is particularly precarious for policemen and provincial administrators who, on many occasions, have been summarily disciplined for political reasons which have been unclear. Such incidents encourage corruption in public services, as officers do not know the day or the hour. They therefore have had to provide for unceremonious departures as they ?follow instructions from above.? They therefore do many things, including incurring expenditure which they would otherwise not do, e.g. use of public resources for political campaigns.

Judiciary

With regard to judiciary, for a variety of reasons, people can be arrested, charged and the case deferred for several years only to be withdrawn without explanation. In the meantime, they are required to regularly report to police stations, which destabilize their lives. The situation is made worse by lack of resources which means the police may not carry out proper investigations, fast enough, or adequately. Thus an innocent person may be under prosecution for many years or a crook may get away.

Kenyans will no doubt remember many individuals who were detained in 1980s, some charged and released but who lost jobs yet they were not convicted. Therefore, in many cases, justice has not been done or seen to have been done.

Inadequate information accessed by public

In many situations, the public has little or no information on matters which affect them. They are therefore unable to exercise their rights. There are many situations when rural people have had to contribute to ?harambees?, on demands of the local administrators, simply because they did not know where to turn for help. Even today, it is common for DCs to ban exportation of cereals, such as maize, without reference to any law and nobody questions the order. Such orders can be lifted, for a particular person on payment of a fee or contribution to a harambee.

Too much discretion and with no transparency

In both public expenditure and revenue mobilization, there is too much discretion, which has no checks and balances. For example, under the consumption taxes, the minister can vary the duty or tax rate, in force, by upto 33%, without reference to Parliament. The timing of the variation can confer substantial revenue benefits or costs to businesses. He is not bound to explain who benefits from such measures, what benefits, or interests are served by the variation. This provision can also be used to target businesses or individuals with grave consequences to their financial position. Recent public complaints on sugar and wheat duty waivers raised concerns of possible misuse, as published in press.

On expenditure, under Article 48 of the constitution, the executive has monopoly of presenting finance bills to Parliament. Parliament cannot present or amend such bills to increase provisions, raise taxation or forgive debt. Parliament has no powers to correct abuses in allocation of public resources, which means the executive can legally misuse, misallocate, or deny public goods and services to people considered politically incorrect. Such practices encourage the executive to use public money to extract political support, which amounts to corruption, a matter which has been raised on several occasions with regard to famine relief. When this happens, the Government integrity is eroded together with that of individuals involved who institutionalize misuse of public offices e.g.. sell public goods for money or favours. Towards this end, the government can introduce public programmes for the sole purpose of getting votes and get away with it, a problem which is particularly common during by-elections.

Disregard of public opinion

There has been public outcry on several issues e.g.. recent degazettement of public forests, which have been largely ignored, government ministers charged in courts of law, can ride to court while flying national flags contrary to practices elsewhere. In this country, public servants are suspended, immediately, if they are under criminal prosecution yet the same rules do not apply to all ministers, only to some. Again such varied treatment of public officers creates incentives for public servants to take advantage of their offices.

Weak Parliament with no teeth to bite

On several occasions, in the past, Parliament has questioned public officers, including ministers on misuse of public resources. After due considerations, Parliament has discussed the PAC and PIC reports and passed resolutions to the effect that specified individuals should not hold public offices again. Some of these individuals have subsequently contested elections, gone to Parliament and been appointed ministers. Others have left public enterprises where they committed irregularities and been appointed as ambassadors etc. In a number of cases, some of these individuals have been reappointed to head public enterprises after collapse of enterprises they were previously in charge. As a general rule, it is those individuals who appear flexible on application of rules or those with flexible morals who seem to survive and progress.

In all these cases, Parliament has not been able to stop the new appointments not even tried to do it. Under such circumstances, the message which honest public managers get is that ?if you scratch the backs of the correct people, you can be protected irrespective of the problems you face?. This encourages corruption and abuse of office, sometimes openly. In majority of cases, colleagues know who is using the office for personal gain, it is not usually hidden.

Lack of accountability on the part of executive

Under Article 99, all public money is paid into Consolidated Fund or into Funds established by Parliament. This is followed by provisions of Article 100 which requires the minister for finance to prepare estimates of revenues and expenditures and lay them before Parliament.

The two articles have one fundamental flaw, with regard to good governance, in that the minister is not held accountable to his estimates. He can misrepresent the economic or financial situation without any legal consequences. Nowhere in the Constitution, is the minister required to ensure due diligence in his estimates of revenues and expenditure. As a result, he can overestimate receipts or under-estimate expenditures and get away with it since he is not required to justify his figures. The Constitution further allows the minister to spend money before Parliamentary approval if:

* money appropriated is not enough

* a new need arises which is not provided for

* more money has been spent than the appropriated amount

* money has been spent on an item for which no provisions have been appropriated.

All the minister needs, subsequently, is to present Supplementary Estimates for approval by parliament. He is not required to get additional revenues to fund the extra expenditures, he therefore decides which expenditure items, in approved budget, he can substitute. The minister has a free hand, consequently, the decision on what is to be substituted, deferred or removed all together, can only be based on what is politically safe or expedient, not what is economically high priority. Therefore, the current Constitution allows use of public resources, or waiver of taxes for political reasons which could easily lead to corruption. Once a minister uses the budget process corruptly, he loses moral authority to stop those under him doing the same.

The ideal situation would be to require the minister to observe a set of criteria before introducing new expenditure items, protect approved expenditures, and set a limit beyond which, he should not adjust the budget without reference to Parliament.

As regards tax waivers, these have serious economic consequences, which can and have been used to favour some businesses while penalizing the others. Consequently, tax waivers do affect the operating business environment and should be subject to complete disclosures to protect investors. In any case changes, to the budget and taxes should only be allowed where they are in identifiable public interests, in which case, the public should know when and where its interests are promoted.

11. Extra Budget Schemes

These are funds created for specific purposes but which for most part operate with very little transparency and accountability. There are many funds currently in place, among them:

1. National Social Security Fund, NSSF

2. Rural Electrification Fund, REF

3. National Hospital Insurance Fund, NHIF,

4. Sugar Development Fund, SDF

Over the years, one common denominator in all these funds has been lack of accountability and transparency in their management. For example, according to Parliament Investment Committee records, the NSSF has been one of the most abused funds, particularly with regard to purchase of real estate. It can rightly be called land acquisition fund, but in its acquisitions, the interests of contributors appear to be secondary to those of sellers, yet Parliament has not been able to put a stop the abuse. Similarly, the REF and SDF funds have for last couple of years not demonstrated any benefits to the public, or consumers who continue to pay the levies. There has not been any improvement in sugar production or rural electrification for some years. The same has been the case for NHIF, and in spite of recent improvements, public outcry has been going on for a long time many years. On many occasions, these funds appear to be more of cash cows than for public services.

Of grave concern is the collapse of the local sugar industry and the rural electrification programmes. These funds have been allowed to continue burdening the public without service delivery raising serious questions as to why any public officers feel concerned with improvement of public service or restrained from abuse of office if others are legally authorized to do so. We have a terrible state of roads yet every Kenyan traveling in a vehicle pays road maintenance levy. Kenyans may be tempted to call these funds ?income maintenance funds for some people?

To ensure full accountability and service to the public, Parliament should be involved in approving their budgets, monitoring execution, and evaluation of results, to ensure efficient use and results of these funds. In so doing, Parliament should ensure transparency so that the public is in the know.

12. Public borrowing

The Kenyan public budget has not had a current surplus for many years. As a result, all public investments are financed from public borrowing with over 80% funded from external donors. According to the Central Bank Monthly Economic Review, December 2001, as of October 2001, external debt accounted for Ksh.404.1 billion or 46.9% of GDP, formal domestic debt was Ksh.226.1 billion or 26.2% of GDP, making a total of 73.1% of GDP. In addition pending bills, according to a statement issued by finance minister, in early January 2002, amounted to Ksh.19 billion, about 2% of GDP, bringing the total public debt to 75% of GDP. While pending bills, considered together with 91-day Treasury bills (or Ksh.113.8 as at October 2001), account for 58.7% of domestic debt, which represents current liabilities. This does not include contingent liabilities such as guaranteed debt and un-funded public pensions which is not reported. This is not only heavy but also destabilizing. By any standard, this country is heavily indebted, compared to many other countries which consider a debt to GDP ratio of 60% is considered the upper limit of what is the sustainable debt level.

The large stock of 91-day treasury bills forces the government to go to money markets, every week, either to rollover the treasury bills or increase the stock. Looking at calendar year 2001, January to October, net domestic borrowing, Treasury bills and bonds increased by 27.7%, from a total of Ksh.144.7 billion to Ksh.184.8 billion, yet there is no public information, on why this rapid rise or what was financed has been provided. Why does Parliament not take interest in matters of debt and who protects the public against over exposure? Governance must not only be required of the government but also other branches.

As at October 2001, the stock of treasury bills was 34.9% of total deposits in the banking system,. If we consider 41.5% of advances are non-performing loans and the cash ratio takes another 12% of deposits, then we can appreciate the pressure government short-term borrowing puts on the money markets and why banks prefer government securities to private sector lending. Banks have consistently found it increasingly difficult to correct the bad loans, mainly due to various judiciary related problems. Without a solution to short-term government borrowing and improved determination of commercial disputes to enhance collection of bad loans, it is unlikely any efforts to lower lending rates can succeed. The question is why this debt problem?

The principal reasons are:

* poor economic governance in the country, both in public and private sectors

* public borrows without any supervision

* Parliament passive role in matters of public debt, simply approving payments

* lack of legal or constitutional requirement to ensure debt resources are efficiently procured, invested and serviced

* no requirement not to borrow for consumption

* no legal or constitutional limit to procuring debt and the government can borrow until it is unable to pay.

The situation is particularly bad for the domestic debt where there is no legal limit on total debt, and where the borrowing is simply based on cash requirements. Without oversight from Parliament, government will continue to engage in excessive domestic borrowing causing serious interest rate disruptions but more seriously without proper investments. The only reason why the Treasury bill rate is currently declining is because of the confusion caused by the so-called Donde Act which makes banks shy away from private sector lending. They are therefore busy competing with each other for Treasury bills driving the interest rate down as private sector is starved of credit. Unless we improve governance in management of public finance, particularly management of debt resources, the problem will get worse. It is time Parliament got involved to address the debt crisis effectively without looking for scapegoats.

While people may argue there is a ceiling on external borrowing, this is of limited value since it is a flat amount of Ksh.500 billion, not related to GDP or government revenue. In any case, the ceiling is already too high to be meaningful.

13. How can the situation be corrected?

It is critical and urgent that the Parliament gets back into the driving sit on public finance to ensure Government is fully accountable in formulation of sound fiscal policies, their implementation, consistent and, conducive to promoting economic welfare of Kenyans. Above all, Parliament should ensure decisions on public expenditure are, fair, equitable and efficient. As regards procurement where corruption is most prevalent, it is proposed that:

1. parliament enacts a Procurement Law with specific supervisory role together with accountability and transparency or disclosure benchmarks

2. the procurement rules and regulations excludes any person who has participated in any process of adjudication from involvement in subsequent appeals process

3. the budget approved to parliament be a firm commitment not subject to unilateral changes by executive without reference to legislature.

14. Governance and pending bills

In early January, the finance minister announced that claims on pending bills had risen to Ksh.19 billion compared to Ksh.13 billion in June 2001, which was an increase of 66.6% from KShs. 7.8 billion in June 2000. He expressed concern over this amount and suggested there could be fraud in these claims. Since 1997 many pending bills have been securitized but with limited disclosures as to whose claim is securitized, for what project, initial cost of the project and where located, together with the amount securitized. This would assure the public of fair play in securitization of these bills. Lack of disclosures can easily generate fertile a ground for corruption, in any case, since the public is being committed to pay these bills, they should have a right to know who is owed and for what purpose.

15. Supervision of regulatory agencies

Parliament appears to have abdicated its role as custodian of public interest when it allowed formation of regulatory bodies without proper supervision. The regulators have been overburdened Kenyan consumers making Kenya a high cost economy. In other economies, regulators operate under strict Consumer Protection Laws which ensures charges are lowered as soon as regulators get their target revenues. Not so in Kenya, as can be recalled, when CCK was formed, Kenya had a total population of about 400,000 telephones, now we have about 1,000,000. Using the same charge, the revenues of CCK should increase by over 250%. Such situations create ideal grounds for bad governance, as these bodies become targets of those seeking easy money.

In other countries the regulator would be required to give rebates if the market changed in their favour. The Parliament should therefore require such bodies to strictly operate on approved budgets and not to continue overcharging consumers, to generate excess funds which they either misuse or invest inefficiently as NSSF has done and to a lesser extent NHIF, mainly in acquisition of real estate. To protect Kenyan taxpayers, the Parliament should seek to know why the public sector loves construction of building. To promote good governance, we need to start by using available resources efficiently to improve social welfare and reduce poverty. A person deprived of basic needs cannot resist temptations to use his office to increase his income, particularly when he knows there is little hope of improvement through proper channels. Besides, there is need for common rules, not for some while others have it easy.

16. Improving governance in use of public funds

To improve governance in resource mobilization, allocation, and utilization, it is suggested as follows,

1. To protect institutional arrangements to provide adequate checks and balances.

2. It would be reasonable to raise the quorum of Parliament from 30 MPs to at least ? or 25% of Parliament, in order to avoid important decisions and laws being passed without proper consideration.

Articles 16 and 19

To ensure full accountability on part of the Government, articles 16 and 19 of the Constitution should be amended to restrict the total number of ministers relative to the number of MPs. This is necessary to avoid a situation where Parliament being used by the executive to cover wrongdoing.

Besides, if we are to fight corruption, government ministers need to be persons of integrity. Therefore ministers should be vetted by Parliament for competence and integrity to exclude any individual who has, previously, been involved in bad governance.

Article 22

Empowers the president to appoint permanent secretaries (PSs). Under sub-article 22(5) a government department can be placed under more than one permanent secretary. Appointment of PSs is not subject to any system of vetting to confirm whether they can perform, and to ensure appointees have not mismanaged public funds before.

Besides, providing for more PSs than the departments creates insecurity, just like the current number of ministers does. It makes people feel they are the excess who can be removed any time. To ensure proper people are appointed:

1. individuals appointed to office of PSs should be vetted by an appropriate committee of Parliament to exclude any person previously involved in incidents of bad governance

2. each government department should be under supervision of only one PS and one minister, in order to enhance accountability.

Article 23: Use of executive powers

This article confers executive powers to president, subject to the Constitution with provision for the authority to be exercised through his subordinates. Since independence, Kenya has had several instances when this authority was abused, especially through executive directives issued contrary to the law. There are also many pretenders who speak for the president, especially when they want favours. Granted that the president will not always be properly briefed, it is proposed that: this article be amended to provide that the executive powers shall be exercised in accordance with the Constitution and the laws of the land.

This would make directives contrary to Constitution and specific laws illegal, and subject to challenge in courts of law, especially in matters of public funds, including those under public enterprises. Some of the recent public pronouncements have been contrary to the law and have been intended for political gain, however Article 23 seems to allow the president to do so.

Article 24: Abolition and creation of public offices

Kenya has had a high turnover of institutional changes. Ministries have been separated, combined, abolished and new ones set up which creates insecurity and promote innovations by incumbent individuals to provide for the future since they do not know when their office may be abolished. It is therefore proposed that the Constitution lays firm foundations for permanent institutions and departments. Consequently, the Constitution be amended to provide that:

1. before any public office is abolished, or created, the Public Service Commission should evaluate the need for such action and advise the Parliament, only after Parliament approval should the executive act.

2. if establishment of a new office requires additional funds, the sources of funding be confirmed, before the office is established.

Article 25

Makes it clear that subject to the Constitution and written laws, every public officer holds the office during the pleasure of the president. There are many Kenyans who have been removed from public office contrary to the law which suggests the executive?s pleasure overrides the law. Without tenure of office we cannot fight corruption. (Remember recent cases in CBK, ERB, CBK). To improve governance, it is proposed that

1. holding of public offices be subject to public interests, and

2. where public interest conflicts with any other interests, the public interest takes precedent.

Article 39 (1) (d)

The article provides an MP will vacate his seat in Parliament if he fails to attend eight consecutive days, however, the provision gives the President authority to decide whether or not such an MP should vacate the seat, as he thinks fit. Leaving this type of provision open ended can invite misuse and can also be used discriminately.

To avoid abuse of this provision, it is proposed this provision be modified to provide for qualifications which would apply automatically, e.g. being out of the country, sickness, or similar unavoidable circumstances, which prevent an MP from attending to Parliament.

Article 48: Presentation of Financial Bills to Parliament

This article provides only the president, through a minister can present a financial bill to Parliament. MPs are prohibited from introducing a bill which:

* imposes taxation

* imposes a charge on Consolidated Fund or any other fund

* authorizing payment/withdrawal from Consolidated or any other fund or increasing payment

* amending any bill to make provisions to provide for any of these charges.

Since only the executive can introduce such bills, MPs are helpless in situations where the executive decides to use public resources to fit his political interests. These provisions make allocation of public money an instrument of political abuse and bribery, such that projects can be located in given areas to buy political support and not to realize national interests. This allows for institutionalized political corruption. To correct the situation, this article should be amended to:

1. provide that the president should present the budget in accordance with an agreed national strategy with clear objectives

2. the strategy to target national interests and priorities

3. if allocation of resources does not comply with national strategy, targets, objectives, or comply with principles of efficiency, stability and equity, Parliament to have authority to reallocate budgetary provisions in accordance with what they consider to be national interests.

17. Parliamentary summons, prorogation and dissolution

Articles 58 and 59 provide for summoning, prorogation and dissolution of Parliament, which undermines the concept of separation of powers and functions. It also makes Parliament subordinate to the executive, which is not conducive to accountability. The Constitution should ensure Parliament can not be dissolved or prolonged to suit interests of executive. It is therefore proposed that the Constitution be amended to allow Parliament:

1. set its own calendar

2. the Parliament life be established by Constitution and not by the president

18. Chapter IV: Appointment of Chief Justice & Judges

Appointment of the, Chief Justice, Judges and Public Prosecutor, are done by the president. To promote separation of powers, maintain check and balances, and also avoid undue influence and loyalty to the executive, it is proposed that appointment of:

* chief justice

* judges of High Court and Court of Appeal

* be made by the President on advice of the Judicial Service Commission, with the approval of Parliament

* Public Prosecutor, be appointed with approval of Parliament

* Appointments of members of Judicial Service Commission be approved by the Parliament.

19. Articles 99, 100, 101, 102 and 103: Preparation of the budget

Article 99 requires all public funds be paid into Consolidate Funds, or any other government fund, and paid out as the law or Parliament may decide. Article 100 requires the minister to cause preparation of annual estimates of revenues and expenditures and lay them before Parliament. But minister is not given any qualifications on which to base the estimates either in the Constitution or any other law, not even a simple statement of qualification ?to meet national needs.?

Under the Constitution, Parliament does not deal directly with self-accounting units or authorities. There is therefore no information availed to MPs to facilitate scrutinizing the budget or expenditures to assess their validity or its appropriateness. Indeed, there is nothing in the estimates to suggest the budget as presented is intended for implementation. This is confirmed by provisions of article 100 (3) which allows the minister to ignore the approved budget, at will and

spend more money than appropriated

introduce new items, as (3) (a) states ?a need has arisen for expenditure for a purpose to which no amount has been appropriated by that Act?

(3) (b) money has been expended

??. in excess of the amount appropriated ?..?

These provisions are further compromised by provisions of section 5 (2) or Exchequer and Audit Act, Cap 412, which allows Minister for finance to suspend the budget or any of its parts without reference to Parliament. Provisions of Article 100 (3) and Section 5 (2) of cap. 412, legalize use of public resources for political purposes which could be classified as corruption. Projects are put in the budget to influence voting patterns especially during by-elections, and then suspended soon after the wrong results are realized. Projects can be moved to areas of politically influential people e.g. rural electrification, road repairs,

there are areas where farmers cannot reach markets due to bad roads simply because they voted wrong candidate to Parliament

there are other areas where tenders were advertised three/four years ago but not awarded or work started, yet others have come later and have been implemented. Kenyans have seen projects started on eve of elections and then abandoned, generators installed for hospitals only for executive visits, and then removed.

While the Constitution and the laws, may not be responsible for people acting in bad faith, the Constitution does not give Kenyans an instrument to stop misuse of public resources. Once we institutionalize the use of public funds to get political mileage, it is not possible to stop the same for personal gain. Such incidents include suspension of projects after they have already started giving rise to problem of pending bills, while new projects are started elsewhere. This opens up an avenue for more abuse of public money as contractors claim more money for work not done.

There has also been rampant use of tax waivers to assist individuals at great cost to economy. While Parliament has given minister power to waive taxes, it does not require him to report back on:

* the total revenue cost as a result of such waivers,

* who benefits and by how much

* why the waiver was considered to be in public interest

* what benefits the government received from the waivers given.

What politicians fail to appreciate is that the more tax waivers are granted the less the revenue receipts. Ultimately, the government has to borrow from domestic sources to meet its expenditure needs, which raises cost of borrowing for the private sector which hurts the economy, and lowers growth.

The Parliament has therefore provided a fertile ground for abuse of tax waivers and tax related privileges, e.g.. waiver of penalties, waiver of inspection fees, etc to be used to do favours for friends and relatives or for personal gains. Actually, the damage to economy from mismanagement of expenditure and tax waivers can be traced back to Parliamentary readiness to abdicate its responsibilities in matters of accountability and transparency in use of special privileges.

The foundations to poor governance were laid when Parliament, judges, PSs, and senior government officers, accepted special tax favours, administered by the executive. From that point on, they could no longer fight abuse of tax waivers; otherwise theirs can be delayed too. Attempts to remove or limit power to waive taxes have been fought hard, especially by MPs, in order to protect their interests. In so doing, they opened a wide door for misuse of these powers, sometimes against themselves. Instead of fighting for establishment of rational criteria for expenditure and tax policies, they have sought to benefit individually taking credit for projects in their constituencies. When they fell out of favour, the same instrument was turned on them.

Where public officers know, a privilege granted is not deserved; they make use of it, which encourages corruption. Officers will do their best to assist their friends, relatives to get waivers. If not, they will make financial benefits out of facilitating access to special privileges.

How can this be stopped? By

* developing a neutral criteria for access to privileges, where necessary, this means removing discretion

* making it mandatory for full disclosures, any time the powers are used

* institutionalize regular reporting on, amounts waived, for who, why the waiving authority considers it to be in public interest, and finally what benefits the government gets out of granting such privileges

20. Article 102: Civil Contingences Fund

This article gives Parliament authority to establish Civil Contingencies Funds for unforeseen needs. It is therefore not necessary to spend money on needs which were not planned for under Article 100 (3), since unforeseen contingencies can be financed from this Fund. However, experience shows that most of the new needs do not fall under contingencies or emergencies. In his Appropriation Report for 1997/98, Para 12, the Controller and Auditor General (CAG) noted that a total of Kf.74,201,833 was advanced from Civil Contingencies Fund (CCF) to various ministries, yet he noted that the expenditures were financed from CCF because;

?the ministries concerned did not budget for the expenditure.?

Out of this amount only Kf.16,350,000 spent on ?Famine Relief appeared to be contingent in nature.? This is an abuse of the budget process, which reflects bad governance and suggests several possibilities, among them:

* the accounting officers do not take the budget they present serious and only use budget process as a legal formality

* treasury acquiesces to the abuse and therefore readily agrees to cover the expenditure through supplementary expenditure

* expenditure priorities change soon after the budget is approved, again disregarding the role of Parliament,

Parliament does not hold either the finance minister or other ministers accountable for accuracy of the information they provide in the budget. Consequently, there is no responsibility on their part, or the budget allocations are not guided by the need to achieve objectives, priorities or targets, but simply to simply to get resources out of Exchequer.

In this is environment any expenditure programmes will do since the policy is not predetermined to meet any objectives. One could consider many other possible reasons for these innovations to subvert the budget. But one thing is obvious, since revenues cannot be increased easily; the only option is to squeeze out the items in the approved budget to accommodate the preferred items.

The CAG Report further records that a total of Kf.17,920,327 was spent without authority of Parliament in 1997/98, again reflecting lack of budget honesty and commitment.

Looking at CAG Reports, every year, there have been reallocation of budget provisions; there have also been excess expenditures

The reason is can be attributed to lack of an appropriate Constitutional tool with which Parliament can use to discipline the executive, such that even where Parliament resolves that accounting officers are unfit to hold public offices, the executive simply ignores such resolutions. Under such circumstances, it is not possible to avoid misuse of public funds for personal gain, including corruption, theft, misappropriation or diversion of public money for personal political gain. The only way to curb the practice is to provide for firm and specific action related instrument to be used against those who do not follow the procedures, both at political and technical level. As regards:

(a) Ministers

Parliament should hold them personally responsible for effective supervision of their senior staff. The Constitution and specific laws should require them to ensure efficient and effective use of public resources to meet public needs. Where the ministers are unable to effectively supervise their staff, they should be deemed to be, incompetent, party to misuse or mismanagement, or involved in willful abuse of office. Towards this end, it is proposed that the Constitution be amended to give Parliament authority to pass a motion, with a requirement of at least 50% of MPs, to remove a minister who fails to provide convincing explanation to the House where corruption, misuse, or misappropriation of public funds has occurred, on grounds of:

* incompetence in handling his portfolio

* mismanagement of resources under him/her

* abuse of office

* loss of confidence on the minister by the House

* give Parliament power to withhold budget provisions for any affected ministry until corrective action is taken and confirmed.

(b) Permanent Secretaries

Though permanent secretaries are called accounting officers, they seem to account to the Treasury only.

To give management of Public Finance emphasis, it is suggested the constitution be amended to:

make permanent secretaries accountable to Parliament on all matters affecting public money and property

(c) Public Officers, Ministers, PSs and others

There has been a tendency for public officers to retire to avoid being held accountable for misuse or misappropriation of public resources. This allows those who have misused public money to enjoy the money and sometimes seek elective positions. On the other hand, there has been a tendency to victimize public officers who are perceived as gatekeepers. In a corrupt system, those who refuse to play the game become the villains. To address these problems it is suggested the constitution be amended to provide that:

* any public officer who gives instructions, allows, or uses, public funds contrary to the law and budget procedures, to be personally responsible, whether he/she is in office or retired, for the loss,

* such officers be required to reimburse the state, whether in office or retired, for the loss.

For those who resist misuse of public funds or to participate in corruption, it is proposed the Constitution be amended to provide that:

* no public officer or person will be bound by the Official Secrets Act on matters relating to illegal use, misuse, theft, or misappropriation of public funds

* remove the lid on disclosures of information relating to corruption, or abuse of office, so that disclosure of such information to the public will not be prohibited by any law

* an officer who comes across information concerning any of these matters be required to disclose it.

Article 103: Public Debt

Formal debt

Pending bills/liabilities

Guaranteed debt/contingencies

Kenya?s combined public debt, excluding public guarantees has reached unmanageable levels. As indicated earlier, total public amounts to 75%of the GDP, representing a rapid rise from 1997/98 when it was 42.5%. According to CAG Report for 1997/98, debt service, during the year 1997/98, absorbed 54% of the public expenditures which means after paying debt and wages the Government has little financial room to do anything else. Countries with much more developed economies consider 60% of debt to GDP as the sustainable level. But, even at this level, other macro-economic fundamentals, such as interest rate, balance of payments, budget deficit etc must all be at sustainable levels. There are countries which consider sustainability of public debt as a ratio of government revenues and set a ratio of around 150% of public debt to revenue as the reasonable level.

As regards pending bills the escalation has been equally rapid. The problem is so serious that while the government Quarterly Budget Review, of November, 2001, reported the total pending bills, as of 30th June 2001 to be Ksh.13.0 billion, a statement issued by the Minister for Finance, in early January, 2002, gave a total value of Ksh.19.0 billion or 46.2% increase in six months. This was a build up on previous year, 30th June 2002, when pending bills stood at Ksh7.8 billion but increased by 66.7% from Ksh.7.8 bill to Ksh.13.0 billion as of 30th June 2001. This means, in a period of 18 months, these bills increased by 243.6%.

Whether these escalations are properly contracted or not, it is obvious they are not sustainable. Referring to the CAG Report for 1997/98, once again, pending bills arise from ?inadequate planning and expenditure controls by Ministries and Departments?. These reasons are consistent with bad governance suggesting unplanned expenditures are brought on board to substitute those already approved, when on board, there are inadequate controls, resulting in cost over-runs which is consistent with lack of accountability and transparency and are conducive to bad governance, influence peddling and abuse of office. Though the CAG states that ? a large number of such bills are not properly payable?, he does not give reasons why. It would be of interest to establish how much of the bills he referred to as ?not properly payable?, remain unpaid to date.

What should concern Kenyans is the fact that most of the debt is tied in stalled or incomplete projects. While there is no up to date data, as of October 1997, when the last Public Expenditure Review was published, the government was only completing 2% of its annual project portfolio. This worrying because it means public debt is used to fund public investment, consequently, delays in project completion mean Kenyans repay the debt, in some instances, for rotting investments which may be rotting in stalled projects.

This situation makes public debt a net loss to the economy, simply investing in sunk costs. The reasons for this poor performance are many but it is reasonable to worry about the governance aspects of the problem. According to Paragraph 8.5.1 of the Public Expenditure Review, 1997, government investments do not contribute effectively to GDP growth on account of the fact that ?it is economically inefficient because the capital stock created is of lower value than the cost.? This is because of over-pricing, inadequate funding for operations and maintenance, too many stalled projects, poor project selection, lack of a proper evaluation criteria, lack of objective and verifiable selection procedures etc. All these reasons are consistent with poor governance, particularly, over-pricing, and selection of public investments to get political mileage not economic benefits; lack of legislative oversight; failure to relate public debt to viable social and economic investments; failure to monitor debt funded project; absence of effective guidelines and conditions on public borrowing; treating public budget as a formality which has no objectives; and for domestic debt, failure to set borrowing limits or guidelines.

To address governance issues and improve management of public finance, it is suggested that the Constitution addresses the public debt problem to provide that:

* government borrowing should be subject to specific conditions spelt out by Parliament

* government will not be responsible for any debt contracted contrary to the law or outside the approved budget

* public officer who commits Government illegally bears personal responsibility for such debt

* the minister provides information to justify sustainability of total public debt, on the basis of viability of projects to be funded, and the ability to pay, before Parliament allows additional borrowing for the year

* Parliament monitors public borrowing regularly

* every accounting officer be held personally responsible for ensuring projects in his/her department are targeted to fund viable investments which address public needs.

Looking at the pattern of expenditure over the last ten years, it is obvious that general elections have been misused to squander public money. This is clearly demonstrated by more than 50% increases in public expenditure during the fiscal year following general elections. To curb this menace it is proposed:

that the Constitution makes it mandatory for costing of elections and making the cost public at least fifteen days prior to the elections.

22. Appointment of Controller and Auditor General (CAG)

To enhance institutional arrangements it is proposed that the Constitution be amended to provide for:

* setting up a Public Audit Board with competent members, appointed by executive with approval of the Parliament, to supervise day to day operations of CAG,

* the CAG be appointed by the executive on recommendations of the Audit Board and approval by Parliament

* provide for retirement of CAG

* provide for value for money audits.

Improving Parliamentary Capacity

For the parliament to carry its mandate effectively, it needs to develop in-house technical capacity to analyze government budgets and financial statements. It is also necessary to increase the level of education, required of individuals seeking to be elected to parliament, they should at least have high school education or equivalent.

Conclusion

Kenya needs a Constitution which substitutes individuals for institutions such that it facilitates building of institutions with enough checks and balances. A Constitution that makes it possible, as and when need arises, for Kenyans to change the government without undue risks to the nation or the people. A Constitution, which focuses on institutional arrangements to protect the people, just as many other countries do. It should facilitate appointment of good leaders on the understanding that any organization can only be as effective as its managers. For this reason, the Constitution should create a system that identifies and selects clean managers for clean a government. The present management of public resources is characterized by nepotism and does not seek the best brains, people of integrity for effective service to the public. To realize the full potential, in the use of public resources, requires appointment of the most competent people, not based on any balance, tribal or geographical, but only on, qualification, competence, and in particular, ability to develop successors in an institutionalized system of self-replacement. For these reasons, all public service positions should be subject to institutionalized regular performance evaluations to assess officers? ability to meet these objectives.

1 Chapter 65 of the Laws of Kenya

2 An observation of the UN Committee on Economic, Social and Cultural Rights (ECOSOC)

3 Another observation of ECOSOC

4 Kenya Constitutional Review Poll Results, International Republican Institute, [Opinion Poll, Nairobi, October 2001]

5 See HARAMBEE: Pooling Together or Pulling Apart?, TI-Kenya & FES, [Research Report, Nairobi, June 2001]; and What is driving Educational Ineffectiveness in Kenya?: The Role of Economic Inefficiency, Institutional Corruption and Poverty, Parajuli, D., [draft research paper, Kennedy School for Government, Harvard, August 2001]

6 See Economic Liberalization and the People: Economic Conversion in Kenya Part, Centre for Governance and Development, [Research Report, Nairobi, September 2001]

7 Robert Klitgaard reduced this to an equation. C=M+D-A; where C = corruption; M = monopoly; D = discretion; and A = accountability. Arguably he ought to have included values.

8 A Survey of Seven Years of Waste, Centre for Governance and Development; [Policy Brief, Nairobi, February 2001]

9 Governance in this paper refers to a set of values, policies and institutions by which a society manages its economic, political and social affairs through interaction among the government, civil society and the private sector for the purposes of realizing the common good.