MPs censure CS Eliud Owalo over misleading report on Worldcoin

Eliud Owalo

ICT Cabinet Secretary Eliud Owalo before the National Assembly Committee of Inquiry on Worldcoin at County Hall Nairobi on September 11, 2023.

Photo credit: dennis Onsongo| Nation Media Group

Members of the National Assembly have censured Information, Communication and the Digital Economy Cabinet Secretary Eliud Owalo for misleading the country on the status of Worldcoin’s activities in Kenya.

The members of the Ad hoc committee probing the Worldcoin issue, in a report tabled in the House on Thursday, said the actions of Worldcoin “constituted acts of espionage and a threat to statehood.”

They now want the Directorate of Criminal Investigations (DCI) to investigate two foreign companies associated with Worldcoin - Tools for Humanity (TFH) Corp and Tools for Humanity (TFH) Gmbh for operating in the country illegally. The committee chaired by Narok West MP Gabriel Tongoyo also wants parliament to harmonise laws to regulate the cryptocurrency regime in the country.The committee in its findings noted that “the foregoing statement was inconsistent with the CS’ submission of September 11, 2023.

“In the said submission, the CS noted that Worldcoin started collecting data in public places on May 31, 2021 and applied for registration as data controllers in Kenya on August 22, 2022, one year after commencing their activities in Kenya, contrary to the Data Protection Act of 2019,” reads the findings of the committee.

The committee’s investigations were triggered by a public uproar over the questionable activities of Worldcoin that included mining data from Kenyans by way of scanning their irises in exchange for cryptocurrency tokens equivalent to Sh7,000 as an inducement.

The scanning of the Irises was done by use of the Orb, a telecommunication device with a capability to transmit real time iris images converted into digital code to Worldcoin third-party servers hosted outside the country. While castigating Mr Owalo, the committee took note of the CS’ remarks during an interview with NTV on August 2, 2023. The report notes that during the NTV interview, the CS stated; “as far as the Data Act 2019 is concerned, Worldcoin is acting within the law.”

The committee notes that when tasked to respond to his “contradictory statements” when he appeared before the committee, the CS denied his own statement.

“The CS denied the said statements at the plenary and during the proceedings of the Ad hoc committee, claiming no knowledge of the statements alluded to, whereas it is in the public domain that he made the said statements in an interview with NTV.”

The Office of the Data Protection Commission (ODPC) got wind of this, wrote to the entity and they have had several meetings. We are going to approach this issue from a multifaceted approach …”

Worldcoin camped in 30 locations in Nairobi including malls and learning institutions and started collecting data in May 2021 before registering as data controllers contrary to the Data Protection Act.

“The Orbs did not undergo type approval by the Communications Authority of Kenya contrary to the Kenya Information and Communications (Importation, Type Approval and Distribution of Communications Equipment) Regulations of 2010,” the report says.

Despite the claim by Worldcoin that data collected was safely stored in Amazon Web Services based in South Africa, it was not clear whether the data could be retracted and deleted should need arise.

This transfer of personal data outside Kenya did not comply with section 48 of the Data Protection Act.

To guard against this, the MPs want a legislative intervention to govern the collection of biodata from Kenyans “which has implications on privacy, security, health concerns and human rights.”

Mr Alex Blania, while appearing before the Ad hoc committee said by the time the activities of Worldcoin were being suspended by the government on August 2, 2023, about 350,000 Kenyans had registered. The committee found that Tools for Humanity Corp and Tools for Humanity GmbH, Germany and their associates guilty of violating Kenyan laws, including the Data Protection Act, Consumer Protection Act and Computer Misuse and Cybercrimes Act. The activities of Worldcoin also flouted Regulation 24 of the Kenya Information and Communications (Importation, Type Approval and Distribution of Communications Equipment) Regulations of 2010.

“The two companies do not appear in the Business Registration Services database of registered businesses or companies in Kenya and hence lack the legal mandate to transact any business in Kenya according to the provisions of the Companies Act, 2015,” the committee established.

The committee found that despite collecting data on behalf of Worldcoin, Sense Marketing Ltd and other local partners were not registered as data processors or controllers as required by section 18 of the Data Protection Act.

The committee wants parliament to harmonise the Data Protection Act with specific parts of the Companies Act to “expressly require foreign companies to provide proof of registration with local regulatory bodies before registration as data processors or controllers. The committee wants the requirement for full disclosure on how data controllers and processors will utilise and store personal and sensitive data collected in Kenya put in the law. Further, it wants the law amended to provide discretion to the ODPC in imposition of administrative fines, by amending section 63 of the Data Protection Act “to align to global standards so as to ensure that entities take matters of data protection seriously.”

There is also a push for the creation of a board where the Commissioner reports or accounts on its daily operations. If the report of the committee is adopted as it is, there will be a requirement for tax remittance procedures on taxes imposed on transactions involving virtual assets under the Income Tax Act.

Editor’s Note:

This article has been updated to correct an earlier suggestion that Members of Parliament had accused Information, Communication and Digital Economy Cabinet Secretary Eliud Owalo of acts amounting to espionage and threat to statehood for issuing misleading statements on the activities of Worldcoin in the country.

While in their findings members of the ad hoc committee probing Worldcoin’s activities in the country note that there were inconsistencies in Mr Owalo’s public statements during a television interview and his submissions before the committee, the allegations of espionage and threat to statehood were not directed at the Cabinet Secretary,  but rather at Worldcoin. We take this early opportunity to apologise to Mr Owalo for any inconvenience or embarrassment this might have caused him.