One lady, 200 companies, and big government contracts
What you need to know:
- In the heart of Nairobi a woman, in her modest office runs 200 companies. In a country that boasts about having the best policies against corruption, how have the corrupt morphed to stay afloat?
Nairobi Central Business District: busy, bustling, claustrophobic, convenient... These are some of the descriptive words that most people associate with the city. The minute you arrive you are met with a variety of hooting mostly from matatus - Kenya’s public transport.
Some are your ordinary car horns; others are a mix of the relentlessly booming vuvuzela sound and synth renditions. Drivers of these matatus exercise no modesty when using their horns. Occasionally they’ll accompany the hooting with shouting out either curses or a joke at a fellow driver. This all depends on the time of day.
If it’s cursing, more often than not it's rush hour and the driver has a ridiculous target of trips to beat so as to earn a little above minimum wage for the day. So he’ll curse at a colleague, nearly run pedestrians over and break any traffic rule in his path.
He might run into a traffic cop somewhere along his route, who’ll demand a bribe whether or not the driver is on the wrong. The traffic cop also has a target to meet, you see. He’s an undercover extortionist with a convenient alias and a boss to answer to at the end of the day.
But that’s not the crazy CBD we’re focusing on today. Today’s ‘crazy’ is different. It’s cordoned off in a small office in the middle of the same CBD. An office so small that ventilation is a luxury. It’s one of hundreds of other offices in just one of the many other old building blocks in that one part of the CBD. The office is partitioned by dull, unassuming MDF boards and hosts nothing but a desk and chairs. The office is owned by one Stella Nyamu. This is her company: Samatha Associates. Stella is modest in her fashion sense and wears her hair in a simple ponytail. She is known to meet her visitors with a warm smile and hearty handshake. She’ll easily break into laughter and her soft eyes and matching voice remind you of that aunty. You know the one! The one who holds all your family’s dark secrets. She’s chill! She’s always been. You can tell her anything you can’t tell your folks and come to think of it she probably holds more of their secrets than yours. Something about her calls for your trust. It’s those eyes. You can always tell what someone is capable of if you really look into their eyes.
This office is where Stella spends most of her day. It’s where she earns her livelihood… and then some! You see, Stella Nyamu is a Corporate Secretary. A corporate secretary or company secretary is more or less the primary advisor and administrative assistant of the chairperson of a company’s board. She helps the chairperson guide their board of directors in upholding the guidelines stipulated under the Companies Act, the Capital Markets licensing requirements and any other regulations that companies have to follow. Think of her as a mediator between the law and the company. She’s tasked with knowing everything about the company’s dealings and keeping the chairperson in line with the law. But also, a company secretary could even help a company bypass the same laws she is tasked with guiding them to uphold, as we shall soon see.
That being said we still haven’t answered why this warm looking, soft-spoken woman is so critical to this story. Well, let’s leave the concrete jungle that is Nairobi and take a trip to the thickset Arror Forest in Elgeyo Marakwet. A beautiful forest set on plains with the Arror River running through. This is the location of a meeting hosted by then Deputy President William Ruto, according to an account by Beatrice Elachi, the former Nairobi County assembly speaker. He flew a group of Senators, Governors and MPs to this part of Marakwet to affirm a promise he had made a year before. According to the article by Dauti Kahura in The Elephant, in 2016 William Ruto had announced the construction of Arror, Embobut and Kimwarer dams estimated at 80 billion shillings. Construction of the Arror Dam was to begin in 2018. The plan was to buy 400 hectares of forest land and replace it with 570 hectares of private land. 63 billion had even been set aside for resettlement and compensation of the 800 affected families. However, in March 2019 the Kenya Forest Service backed out, claiming the project was full of corruption. A scandal was looming! A scandal that steers this story all the way to Italy.
For older generations and film buffs, especially those who watched The Godfather movies; one hears Italy and thinks of the mafia, Michael Corleone, “I’m going to make him an offer he can’t refuse.” There’s a juicy fact they left out in the movies though, according to an article by Italian writers Alessandro Da Rold and Lorenzo Bagnoli. Ever since the seventies until quite recently, Italian criminals considered Kenya a ‘safe haven- a place to run from justice’. But that’s obviously not the only relationship Kenya has with the European country. In September 2015, former President Uhuru Kenyatta made a trip to Rome where he met with former Italian Prime Minister Matteo Renzi. This is a man who is mostly remembered in Kenya for a photo between him and President Kenyatta in which he was wearing a bulletproof vest. The photo had been taken two months before President Kenyatta’s trip to Rome. The purpose of both trips was a 34-billion-shilling deal with two banks, BNP Paribas and Intesa San Paolo, for the construction of Itare Dam in Kuresoi. The construction contract itself was given to an Italian Company called Co-operativa Muratoi Cementisti Di Ravenna (CMC Di Ravenna). But why specifically this Italian company? Allegedly, according to an Italian right-wing newspaper La Verita, a contract had been signed between CMC and a company in Kenya associated with Lamu West MP Stanley Muthama. The contract guaranteed that the MP got a fixed fee of three percent in case CMC signs a contract with local development authorities in Kenya. CMC Di Ravenna, according to Alessandro and Lorenzo’s article, is an Italian company with a very murky history riddled with the misappropriation of funds and allegedly obtaining government contracts illegally.
In 2018, the Italian company filed for bankruptcy. In 2019, the same year the Kenya Forest Service backed out of the project crying foul, President Kenyatta ordered the cancellation of the Kimwarer Project after it was found ‘technically, economically and financially not feasible.’ The Arror project continued at a reduced cost. Allegations of graft followed soon after. Hearsay, lies, finger-pointing, and smoking mirrors; are the usual ingredients of a good scandal. The DP’s supporters came out guns blazing in his defense, claiming the President and his supporters were out to besmirch his name. The President's critics were not left behind. They called out his inability to keep his house in check and accused him of failing to deal with corruption. Additionally, claims were made that the president was diverting attention to his DP while using his authority to appoint his allies as officials in government parastatals. The new officials were alleged to change regulations in favour of the president's private businesses.
In 2021, the former National Treasury Secretary Henry Rotich among other suspects is going down for the multi-billion scandal. In June 2021, Rotich was charged with 21 charges of corruption, among them: conspiracy to defraud the government of more than 63 billion shillings in the Arror and Kimwarer dam scandal. A deeper look into the scheme reveals that the 2015 negotiations with CMC were planned by the Ministry of Treasury. So much drama, intrigue, lies, betrayal and deceit. All ingredients for catchy headlines and intrigue!
But what does all this have to do with Stella Nyamu? Well, Stella is the less glamorous side of the story. It’s a path less taken by most Kenyan journalists. The path that we have come to learn, enables us to ask the right questions. Allow us to take you back to the Nairobi CBD. Back to our ‘favorite aunt’s’ cosy office. One afternoon in 2019, a team of journalists from Africa Uncensored paid Stella Nyamu a visit. They had received a data leak from Kenya’s Finance management portal IFMIS. The leak contained a list of 25,000 transactions from 8 government ministries, dating back 4 years. Most of the transactions appeared to be legitimate but the rest… not so much. After a thorough investigation that had them cross-checking the data they had received with data from the other public databases like the Kenya Public Procurement Portal, they stumbled on a discovery that took them to that nondescript office in downtown Nairobi.
To understand a bit of Stella Nyamu’s world we have to take a look at how the world of procurement works. Whenever there is a multi-billion-shilling project, the government favors international contractors over local ones. In a Standard Newspaper article, KeNHA affairs manager Charles Njogu was quoted saying that although it would have been desirable for Kenyan contractors to undertake the multi-billion-shilling projects, they simply do not have the muscle. According to him, most local contractors do not have the financial and technical muscle to complete such extensive projects. However, Charles Njogu also adds that the biggest hindrance to local contractors' involvement in some of these projects is the “special condition” in most of the donor-funded projects. The condition requires a contractor to be on the approved contractor list of funding agencies to be considered.
Once a foreign company lands a big tender, local companies battle for a chance to be subcontractors. Often, this means that only well-connected directors and shareholders, who reside in Nairobi, manage to land the deals. These companies are administered by a clique of company secretaries like our very own Stella Nyamu.
According to the Africa Uncensored expose, the DCI released a list of 107 local companies that benefited from the CMC Di Ravenna contract. Although very little is known about the specificities of the CMC contractors, it was uncovered that some were given contracts to supply services that had very little to do with the dam’s construction. We’re talking food and wine supplies worth a little over 16 million, towels and pillows worth 4.3 million and air tickets worth 1.4 million shillings.
In the course of their investigation, the journalist from Africa Uncensored noted one particular company in the list of a hundred and seven that had been highlighted. It had received a small contract to supply furniture and transport services. The company’s name was Longrock Engineering Limited. They soon realized that there were five other companies under the name Longrock. But this was just the tip of the iceberg. Further investigation pointed to the director of two of these 5 companies: one Dinah Chelanga, a board member of the Kerio Valley Development Authority (KVDA). This is the same government parastatal that had been tasked with the construction of the dam and the contracting of local authorities. This conflict of interest was just one of Dinah’s offenses. Upon further assessment, the journalist found two other Chelengas. These were Eliud Kipkoech Chelanga and George Chelanga, both assumed family members of Dinah Chelanga. These two oversaw the 3 remaining Longrock companies. And the icing on the cake: the Longrock Group’s company Secretary was our very own Stella Nyamu.
According to the law, Dinah Chelanga as a government official should not be subcontracting. It is also illegal for her family members to be benefiting from the government contracts. We had earlier pointed out that it is the job of the company secretary to make sure that the company’s chairperson and directors follow the law. This is therefore something Stella Nyamu should have pointed out to Dinah Chelanga.
With their interests piqued, the journalists decided to dig deeper into Stella Nyamu. A massive iceberg emerged hidden under the waters. The discovery: Stella Nyamu was listed as either a director or secretary of 263 companies. Over a hundred of these companies are government suppliers, with 29 of them being awarded contracts. On the government portal, she stands out as the person with most companies. And how does she justify having so many companies?
“These are small companies that sometimes can’t afford to hire a company secretary. As a person who works independently, I can register as many companies as possible.”
The companies, with such an eclectic repertoire, obtain contracts associated with the supply of security services, environmental consultancy, delivery of laboratory equipment and the ever so infamous routine maintenance of roads. Further interrogation especially into the routine maintenance of roads contracts cast a spotlight on two projects: one for the Baragoi-South Horr– Sarima road for US$ 190 000 and one for the A1 Lodwar-Lorengelup for US$ 85,000, both in northern Kenya. These two sand roads, according to the expose, are still badly off. One of the two, the Baragoi-Sarima road is in such a state of disrepair that locals have long started using another, better road.
Other than that, Stella is also connected to three other scandals. In 2016, Kilifi County governor Amason Kingi named her as the secretary of Makegra Suppliers Ltd, a company that together with others defrauded the county of over US$ 500,000 for goods and services they did not supply. In 2018, a contract worth KES 40 million linked to Stella was connected to the Medical Supplies scandal, a scheme that had individuals delivering unusable equipment to hospitals that hadn’t requested them in the first place at the expense of other urgent needs. These two together with the Ravenna scandal are all connections Nyamu vehemently rejects. In her exact words:
“I have nothing to do with the (inner-workings or dealings) of the companies,” she says. “I just register them. I don’t receive any money beyond what I am paid for setting them up.”
The amount attributed to Stella’s contracts over the past four years is over KES 1.2 billion. With everything out in the open about Stella’s dealings, she still got released by the DCI. Even though she is in direct contravention of her duties as a company secretary, according to a few technicalities in the law, she emerged innocent. This is true of people like the chairman of procurement in the Ravenna Scandal. Even though he, allegedly, knowingly gave a bankrupt company a government tender worth 63 million, there is no actual proof of wrongdoing.
The most alarming thing about Stella Nyamu’s story is the ability of such dealings to be run right under the nose of the government. And even when the culprits are exposed and caught, they still emerge clear under the law. How is this possible? Auditor general Edward Ouko, called this State Capture. It is when the ruling elite and/or powerful businessmen manipulate policy formation and influence the emerging rules of the game (including laws and economic regulations) to their own advantage. A further loosely interpreted definition from Edward Ouko is when a few individuals understand the inner workings of the government enough to know which doors to knock on and the right people to talk to as to actually influence the budget and add to it. This according to John Githongo during the Africog State Capture Launch can be noted most conspicuously in ‘number one the regular miscellaneous amendment bills that come out and number two the regular gazette notices that come out listing the appointments of individuals to head parastatals or different government organs… Kenya Forestry, Kenya ports authority. You will find many of them are all connected to each other. They drink together, they went to school together…” They eat the spoils together.
We are at a point in Kenya’s history where conversations about corruption are more informed and clearly articulated even more so by the corrupt. Kenya is purported to have one of the best anti-corruption infrastructure in Africa supported by sound laws and institutions. At some point in Kenya’s history, the war was lost to politics. Political ideologies and alignments blurred the lines and the fight on graft was abandoned. And while Kenyans were engrossed in the drama and intrigue of politics, corruption was mutating. Now we are facing a multi-headed monster that dictates we change tact. Technical fixes have failed us time and again. And so if we rely on the law; the Stella Nyamu ’s and Henry Rotich ’s will be ousted only to be aided by the same regulations over and over again. And in the event that they do get fired or -more unlikely - jailed, corruption is so entrenched in the system that decapitation only means another head will grow in its place. If corruption has found refuge in the folds of politics, it means the only weapon Kenyans have is the consciousness to spot it in political corridors and challenge its hold with the only things that render politics powerless- the power of social sanction and the refusal to glorify people who are ‘just doing their job’, but throw us all under the bus.