Nyakang’o saga: Lessons from Koinange and the Sh5.8bn Goldenberg payment

Elijah arap Bii (left), former PS Treasury Dr Wilfred Koinange and businessman Kamlesh Pattni

Former General Manager Kenya Commercial Bank(KCB) Elijah arap Bii (left), former PS Treasury Dr Wilfred Koinange and businessman Kamlesh Pattni (right) in court when the trial of Sh5.8 billion Goldenberg began.

Photo credit: File | Nation Media Group

Behind his well-trimmed cypress hedges in Kiambaa, Dr Wilfred Karuga Koinange hid the pain he was going through as a suspect in the multi-billion-shilling Goldenberg saga.

Koinange had made the same mistake Margaret Nyakang'o, the controller of budget admits to having done as the Jubilee regime reached its nadir.

They both signed off some billions in response to some political demands. When the time to climb his Calvary came, Koinange had to carry his cross. The man who asked him to pay – Daniel Toroitich arap Moi – was nowhere near the dock.

When we met in January 2009, the medic-turned-permanent secretary at the Treasury was a bitter man. His name was in tatters.

The unending Goldenberg case, in which the taxpayer lost billions of shillings through fictitious mineral export compensation payments, had left him broken. His confidence was gone – and so were the immaculate designer suits he used to wear.

On the strength of three letters he signed on April 19, June 28, and July 8, 1993, a total of Sh5.8 billion was paid to Kamlesh Pattni's Goldenberg International Ltd.

During the Justice Bosire Commission of Inquiry on Goldenberg, instituted by President Mwai Kibaki to get to the bottom of the scandal, Koinange recounted how former President Moi commanded him to pay Sh5.8 billion to Goldenberg — an outfit he co-owned with James Kanyotu, the spy chief.

Dr Koinange had nothing to show that President Moi contacted him — and Moi's lawyer, Mutula Kilonzo, made sure Koinange would become the fall guy. And he was.

When the controller of budget talked of 'self-preservation' as her reason to pay Sh15 billion — I went back to the Goldenberg scandal. During the clamour for a new constitution, Kenyans decided to cure the Koinange mess by shielding public officers from presidential pressure.

In one notable clause, the Constitution warns public officers against approving funds contrary to the law: “If the holder of a public office, including a political office, directs or approves the use of public funds contrary to law or instructions, the person is liable for any loss arising from that use and shall make good the loss, whether the person remains the holder of the office or not.” That is the trap that Ms Nyakang'o has fallen into.

More so, Part 7(4) of the Constitution says that the controller of budget “shall not approve any withdrawal from a public fund unless satisfied that the withdrawal is authorised by law”. The same Constitution reminds us that any instructions from the President should be in writing and must bear the seal of his office.

President Moi always claimed that his signature was superimposed on documents.

As we walked by the garage, Koinange turned to me by the junk tractor in the former car yard.

"Do I look like a billionaire?"


The broken-down lorry, two rotting tractors, and two vehicle shells in the compound were the best indicators of how far Koinange's world had gone to waste.

“This case has exhausted me,” he told me, referring to the Goldenberg trial. That was long before he pleaded with the courts to give him a lawyer. He could not sustain a lawyer after he was charged with theft alongside Pattni, Eliphas Riungu, Lazarus Wanjohi, Michael Wanjihia Onesmus, and Job Kilach.

Koinange was angry that after all those years in government service, he was left fighting to clear his name over the theft of billions of shillings via instructions he had given to the Treasury. While he told the Commission of Inquiry investigating the matter that then-President Moi commanded him to do so, it was an interesting case since the permanent secretary was not the accounting officer for the Treasury. That duty was the financial secretary’s.

Margaret Nyakang'o

Controller of Budget Margaret Nyakang’o. 

Photo credit: Francis Nderitu | Nation Media Group

Koinange's testimony sounds similar to that of the controller of budget: “Sometime in early April 1993 I received a telephone call from Prof Phillip Mbithi, who was then head of the Civil Service and Permanent Secretary in the President's Office. He told me that the President wanted the Treasury to pay immediately to Goldenberg Sh5.8 billion mineral export compensation, which was being withheld. 

I old Prof Mbithi that Treasury could not afford such an amount, as we would further overdraw the ministry's Pay Master General account, which was the only possible source of funds. He instructed me to consult with the Governor of the Central Bank and find a way of sorting out the problem.

I called the Central Bank of Kenya Governor, Mr Eric Kotut, and sought his advice on how we could comply with the presidential directive. I later walked over to the Central Bank building and discussed the matter with Mr Kotut.”

According to Koinange, it was Kotut who, on April 19, went to his office with a solution on how to effect the payments. 

“While in my office, the governor drafted the text of a letter, which he told me if I sent to him, the Central Bank would use to effect payment. The draft was in his handwriting, save for the opening word “please”, which I inserted as a matter of courtesy. I gave the letter to my secretary who typed it. I then signed the letter.”

The letter was then handed to Eliphaz Riungu, the deputy CBK governor, who was asked to comply. Unfortunately, his fate was thus sealed, and as he said, he never followed up on the matter.

“Do I look like a person who swindled the country billions of shillings?” he asked as we entered an old colonial bungalow with ageing terracotta tiles. The wooden floor was polished, and the backyard had a round hut. “I can spend my day there reading books and listening to music.”

African music

The medic was also a collector of African music and plants on his farm. Each flower type, he said, had a history, and each tree told a story. The library was well stocked with biographies and history books. There were artefacts and souvenirs. We walked to the verandah, and he returned with canned beer. We started talking about Chief Koinange wa Mbiyu — the story that had taken me there.

Dr Koinange had been abandoned by most of his friends. He cut the image of a lonely man, and this was no longer his family home. "I usually come to this house for solace," he said. And sure, it looked therapeutic. It was quiet. Apart from a water bottling plant — he bottled the Broomhill Springs water brand — there was little other economic activity on the expansive farm.

Down the undulating hill was a spring, which Dr Koinange had protected as his last source of income. “It is the only naturally carbonated spring in Kenya,” he claimed.

During the Goldenberg hearing, he acknowledged the illegality of his actions. He did not seem to know the inner workings of the Treasury, having been catapulted from Director of Medical Services (1979 – 1987) to PS in the Ministry of Research, Science, and Technology before being moved to the Treasury. Here he was at the mercy of Riungu, who admitted that at CBK, they would generally cook figures on foreign exchange to impress both the World Bank and IMF on the government’s performance.

When Riungu was asked by the Justice Bosire Commission why he did that, he said: “We were cornering the IMF, we were being cleverer than them.”

The Justice Bosire Commission appeared to absolve President Moi of blame, which left Dr Koinange holding the smoking gun: “There is no clear evidence that the President asked for money to be paid, which was in fact due to Pattni or Goldenberg International and it would certainly have been possible for Dr Koinange to tell the President that the money was not due.”

On Koinange, he said: The PS Treasury, Dr Koinange, the governor and his deputy Mr Riungu were personally responsible for this (loss). He and the governor of CBK, among others both in Treasury and CBK, were the economic managers ... if as he says a decision was reached to pay out in a discreet manner, it is only fair that they bear the responsibility for the illegal payments.”

The Goldenberg case against Koinange took a toll on him. “My main worry is that my name will forever be tarnished ...I am not a thief,” he said.

This Koinange lesson brings me back to Nyakang'o — and is a lesson to other Nyakang'o's in government offices: The signature you put on a document could sink you in misery.

[email protected] @johnkamau1