IMF gives Kenya until March to reveal secret ‘entrepreneurs’
The government must disclose the names of the secret owners of all companies that win government tenders under a program it has with the International Monetary Fund (IMF).
It will begin in April next year as part of the 38-month program that aims to help the country improve its finances by reducing waste and corruption, according to the IMF.
By the end of March, the Washington-based institution said, Kenya is expected to “adopt revised standard tender documents to obtain beneficial owner consent to publish beneficial owner information for calls. tenders awarded on the Public Procurement Information Portal (PPIP), and begin requiring consent for all new tenders.
The publication of these names, the IMF noted, “will reduce the risk of corruption by increasing transparency and improving surveillance.”
Disclosure of all beneficial owners of companies doing business with the government was due to start in late June but was delayed following legal snags that included the right to privacy.
The revelation of the names is expected to solve the mystery behind the controversial 7.8 billion shillings scandal at the Kenya Medical Supplies Authority (Kemsa) in which grim wheel merchants lined their pockets at the expense of a population that had been harshly affected. paralysis affected by the effects of the Covid-19 pandemic.
As part of Kenya Power’s fight against rot, the electricity distributor has launched a lifestyle audit of its 10,000 employees with the aim of exposing those who may have siphoned off money from the listed company.
The delay in publishing the rules was due to fear of invasion of people’s privacy – an issue that was addressed by requiring beneficial owners to give their consent before signing the contract.
In August 2020, Kemsa, who had been legally responsible for procuring protective gear against Covid-19, came to the president’s attention after being blamed for the looting of 7.8 billion shillings.
A report by Auditor General Nancy Gathungu into the Kemsa shopping scandal found that 2.3 billion shillings had been lost in the purchase of Covid-19 medical supplies. Ms Gathungu, who tabled the report in the Senate in September last year, revealed billions of shillings had not been accounted for and there was no evidence of budget approval by the relevant authorities. .
The auditor general concluded that Kemsa was irregularly using the universal health coverage budget to purchase Covid-19-related items worth 7.6 billion shillings.
“The procurement process was not initiated on the basis of a needs assessment and planning, resulting in an overbought of Covid-19-related stock worth $ 6.3 billion shillings which is still held in Kemsa warehouses. 97 percent of the stock has been in Kemsa warehouses for more than three months, implying inadequate forecasting and market planning practices, ”the audit report said.
The audit revealed numerous violations of procurement and public financial management laws and inefficiencies in the procurement process.
In July 2019, the attorney general issued a regulation requiring companies to keep a register of beneficial owners, a move that would reveal details of shadow shareholders of local companies, including foreigners.
It was a new attempt by the state to tackle money laundering, with Kenya joining other jurisdictions such as the European Union in instructing companies to reveal personal details of individual owners with at least 10 percent participation or voting rights.
The Companies (Beneficial Ownership Information) Regulations 2019 require companies to disclose a myriad of details about an individual who owns a business, either directly or indirectly.
The regulation aims to expose shadow shareholders who could be involved in illicit financing or even corrupt practices.
Some shareholders have taken advantage of a loophole in financial laws that hide their wealth in listed companies. Currently, if a person searches for a business, it is likely that they will not be able to see the identity of the individual owners of an attorney with a significant stake in a business.
However, six months after the publication of the regulations, each company is required to provide the Companies Register with the personal information of natural persons holding at least 10 percent of the shares or voting rights in a company.
This includes full name, telephone number, date of birth, postal and residential address, occupation, email address, passport number or national identification number and nationality of the beneficial owner. .