Dream Team was all about suing for peace with donors

Starting from the mid-1980s, President Moi’s rule was under considerable economic and political pressure. The economy was collapsing amidst debilitating corruption.

The Government had lost the respect of the citizens, but it did not seem to care. The regime was perceived to be characterised by repression, abuse of human rights, nepotism and negative ethnicity.

These factors fed upon each other to accelerate the decline of the economy and deterioration of public service delivery. This spurred domestic opposition against Moi’s rule.

Civil society blamed the burden on poor management of public affairs as well as corruption, which had thrived unchecked, on account of lack of unified Opposition to tame excesses in Government. There also was agitation for greater political freedom and more generalised economic benefits.

Similarly, a donor community fatigued by ever-increasing African needs had, under the aegis of the World Bank, argued that underlying the litany of African development problems was a crisis of governance.

The more the Moi administration heaped blame and insolence on the donors, but the more they piled their own pressure and tightened the noose around the Government.

It was just a matter of time. Moi was going to “sue for peace” with the donors, if only to gain some support for a collapsing national economy. He also wished to stave off political opposition that was gaining stable ground.

The Dream Team was around the corner. A key member was Martin Oduor-Otieno, now the outgoing Chief Executive Kenya Commercial Bank, who had been head-hunted from Barclays Bank. He was appointed Permanent Secretary to Treasury. On Thursday, we start to serialise his biography, “Beyond the Shadows of My Dream”.

The team was headed by founding head of the Kenya Wildlife Service Richard Leakey. Mr Titus Naikuni, now Kenya Airways CEO, came in from Magadi Soda Company to become become PS for Transport and Communications.

Others were Dr Wilfred Mwangi Energy PS, Mr Mwaghazi Mwachofi, Financial PS, Kitili Mbathi Investstment PS and Prof Shem Migot-Adhola Agriculture PS.

When appointing the Dream Team, Moi mentioned that the country was going through a very difficult time and that this was why he had appointed this team of six people to help restore sanity to the country.

This was of the essence, because in his own Cabinet there were people who were totally against this appointment.

He was essentially asking them to hold back their daggers and allow the new kids on the block to work. They did this for the first one year. The daggers would however come out in year or two.

Margaret Chemengich was the Permanent Secretary in the Ministry of Finance at the time. Her minister was Yekoyada Masakhalia. Neither knew that the changes were coming.

When Martin arrived in the office and introduced himself to the secretarial staff, they were just as taken aback. The PS was attending a conference at the Kenya School of Monetary Studies in Ruaraka.

The Minister was present in his office. He introduced himself to the Minister, who seemed surprised about the appointment. Masakhalia advised him to take things slowly. “I have been around for a long time, one thing I can tell you is that you should take it easy here.”

Masakhalia had been Chief Economist in the Government for many years before joining politics and returning to the Ministry as the minister. This was quite the converse of what Martin understood to have brought him there. But he still took mental note of it. Margaret came in shortly.

She was not happy with the developments at all, as one would expect. Martin consoled her, telling her that this was life. He was, moreover emboldened by the Presidential appointment.

He had also been cautioned that from the moment the appointment was made, he was in charge. The outgoing person would not be held liable for anything going wrong after that moment. Yet there was no handover, formally.

He nonetheless agreed with Margaret that he would give her the weekend to put her act together, to hand-over on Monday. He also needed to go back to Barclays to close shop. Barclays staff of course were in the picture, Gareth George, the Managing Director, having informed them.

For Barclays, this was recognition for the role they were playing in developing talent for the country, now that a member of their senior staff had been picked for such an important and national appointment.

Soon after, the team held its first informal consultative meeting. The Dream Team was born. Apart from Leakey, Martin and Naikuni, others present were Prof Adhola, Prof Mwangi and Mwachofi.

That historic meeting was held at the official residence of Dr Leakey, located in the middle of the Nairobi National Park. There was a bit of shyness and caution because most of these people were strangers to each other, meeting for the first time.

There was conscious sizing up of one another, even as everyone tried to be composed and relaxed.

Channel would be Leakey

The Six were now in Government. They had to get their agenda together. The President had not met them as a team. Nor did he ever meet them as a team, other than in the meetings with all Permanent Secretaries or Ministers.

The channel would be Leakey, who met the President regularly and linked up with the team. They needed to understand the Government and how it worked.

Who was who? What was the agenda? Moi’s agenda was probably just one – bring back the donors. The rest was neither here nor there. But he understood that it was this team that would bring them back.

They sat down and gave themselves a 100-days-agenda. They identified a number of issues, civil service reform, financial sector reform, infrastructure development and reform in agriculture.

Underpinning all this was accountability. Mechanisms were required to reform the Judiciary, police force and the anti-corruption institutions and initiatives. This would be their agenda for the next two years.

They had their day job, when the regular office work was done. Then come 6.00 pm, there would be a team meeting to address the strategic agenda. Initially the meetings took place at the Cabinet office at State House.

This was the safest place for confidential working, or so they thought. There was need to keep things away from diehards from the old regime, some of whom worked in the OP, in various capacities.

Soft spoken and influential, Dr Sally Kosgey was another key link with Government. She had been part of the Dream Team agenda from the very start. She was a link, like her or not.

She came to the meetings from time to time. She represented the president’s mind and a vital sounding board. She was supposed to be an ally.

The team was however conscious that when they began talking about their six point agenda, they might step on sensitive toes.

It soon became clear that the meetings at State House were being eavesdropped into. The six therefore decided to move to Leakey’s office at Harambee House, which was also the official Office of the President.

They began positioning reform-minded people in some positions, through recommendations to the President. Masakhalia moved from the Treasury and was replaced by Chrysanthus Okemo.

Okemo was young, intelligent and energetic. The team thought he was the best choice for the Finance docket among the existing members of the Kanu Cabinet, as he would support the reform process.
There was no indication that he had been involved in scandals, or overtly anti-reforms. Similar appointments were made elsewhere. Permanent Secretaries were swapped around.

The team began working with the Donor Community. They worked around the accountability agenda, civil service reform and the like. Some 28,000 civil servants were laid off in this process, to try to make the service lean, mean and efficient.

This was a difficult assignment, as is any task that involves laying off people. However, once the criteria had been set and agreed up front, there was no going back.

The ministries were trimmed down to 18 from 27. But the number of ministers could not be cut down, for political reasons. So the ministers would remain, but the Civil Service component would be slashed drastically. Some Permanent Secretaries would leave.

This was a half way position between what the team wanted and what Moi wanted. The public was a little confounded about this, but this was the best in the circumstances.

In Martin’s Finance docket, for example, was added the Ministry of Planning, and so he became Permanent Kenya’s debt bill was high. Engagement with the Paris Club was vital.

The Government had no money and was literally in the ICU. Simeon Nyachae had said just as much earlier and was demoted for it. The team set off for Washington to table the agenda and agree on the way forward with the Bretton Woods Institutions.

It was critical to bring the IMF back. They held the key to donor funds, regardless of what else was thought of them. The high-powered Kenyan delegation to Washington included Richard, Martin, Cheserem (CBK Governor), Sally and Okemo as the minister.

As they ambled in the corridors of the IMF headquarters telling their story, nobody really took them seriously. They were seen as fellows who just wanted funds, after which they would revert to their bad old habits. So long as Moi was in charge, nothing would change.

This was the view in Washington and among the donors generally. The expectation back home was of course that they would come back with a big cheque and with an endorsement of the IMF to the Paris Club, but neither happened.

However, the critical thing was that they had tabled their agenda, they had showed their faces, put up a spirited case for support and asked to be given the benefit of doubt as they had put their reputation on the line with regard to implementation of the reform agenda. They had given IMF food for thought and created a platform for further engagement.

They spoke of anti-corruption campaign initiatives, privatisation of state owned companies, civil service reform, strengthening of governance institutions and the like. This was Washington Round-One.

The annual meetings of the World Bank were next. On the sidelines were many formal and informal meetings with key people from the Donor Community. Amidst a lot of hostility, they tried to persuade them that there were changes and that they should now open up donor support.

They were advised to return and continue working; they would be visited at home for evaluation at an opportune time and the sooner they began to show results, the greater their chances of accessing the donor funds would be.

Debts rescheduled

It would take about a full year before debts were rescheduled to give some relief to the cash flow crunch. The Paris Club meetings on debt rescheduling would require a whole book on their own.

It is quite humbling to be put through mortifying grilling on behalf of one’s country, and especially if you are answering to sins committed by other people or regimes. You put on a straight face, you justify and commit to the requirements and denounce all the past evils and swear not to waver again.

The actual agreements are signed at midnight, following a day of rigorous meetings. The creditors make you look really small. They stretch you to the limit.

Martin said during interviews for this book: “I salute those dedicated Civil Servants who have managed similar processes over the years. Africa deserves better. This begging bowl syndrome is demeaning, and is certainly not sustainable.

That’s why we need visionary leadership, effective governance, strong institutions, accountability and integrity in our leadership and processes. Citizens must demand these of their leaders, and they must play their part in the development agenda of their countries.”

The top brass of the Public Service was given to gossip and cheap talk, even at very senior levels. A lot of this got into the ears of the President, who would usually act upon it without checking the facts. Some of the follow up action would be quite harsh. Quite often, one felt like giving up altogether.

Mercifully, for Naikuni, he worked mostly with parastatals, where some measure of reform had been accepted and was going on, under the parastatal reforms programme.

Initially, the Dream Team held regular one-hour morning meetings, from 6am. The approach was methodical. Every member of the team displayed high ethical standards and commitment to the reform agenda.

It was exactly this commitment and method that ran them into trouble with their colleagues outside the team. It was not that they intended to isolate themselves. But everything seemed to be destined to lock them out – from the manner in which the team had been established to its agenda.

There was feeling within the Public Service that they had been imposed on the service because the rest of the people there were perceived to be failures or deadwood.

There was, therefore, a deliberate move to ensure that they achieved little or nothing. Generation of the notion that they thought themselves superior to everybody else found fertile ground in the service and did little to help them deliver.

The Permanent Secretary Treasury was the de facto custodian of all Government equity in parastatals as well as in other companies. Part of the mandate of the Permanent Secretary Treasury was, therefore, to sit on the boards of these companies.

As there were numerous such investments in a wide range of companies, it was not possible for the Permanent Secretary personally to sit on every board. He was normally represented on most boards by an appointee.

As Investment Secretary, Kitili sat on a number of critical boards. One of his first assignments was to re-organise representation on the boards by Treasury staff. He would sit on some, while some other nominees would be placed on others.

It was a tall order sitting on these boards, leave alone reorganising them at a time when the Moi Government was under intense local and foreign pressure over its human rights, governance and corruption records.

Everybody was tough on the Dream Team; donors and development partners, the Opposition and the civil society. They were all calling for transparency and accountability in these companies. The expression became a password everywhere.

President Moi parodied those calling for openness, wondering aloud at one public rally at this time whether Kenyans had never heard of the two words, “transparency and accountability before the mzungu (white man) told you to start using them.”

Kitili found his new work environment very challenging, coming as he had done from the Private Sector where what counted were results, driven through effective systems, policies and laid out procedures. Here anything went, depending on power and patronage.

At the East African Portland Cement Company, for example, the Managing Director was literally running down the company. It seemed that this was his sole mission. The board was supposed either to watch quietly, or to endorse the running down.

It did not seem to matter to the Managing Director that on the board sat his supervisors and that he was supposed to demonstrate that the company was well managed.

It was clear that the top management at the company was involved in syndicates with agencies that were buying cement on the cheap and selling it to the public at exorbitant prices.

Sharing in the Treasury’s concern about goings on at the company was the French shareholder, Lafarge. At one point, the French suggested that an external auditor should come in to investigate the goings on in the company.

This was hotly resisted by the company’s top management, together with some of the board members. It was clear that they enjoyed support from elsewhere, outside the company.

Shortly after his first board meeting, Kitili received a call from Martin who wanted to know what was going on at the company.

Moi had personally called the Permanent Secretary late one evening on the hotline to find out what was going on at the company, and the Finance Minister had in turn received complaints from the inner circle, alleging that the Investment Secretary was working with foreigners to try to drive the cement company into bankruptcy so that the foreigners could buy it on the cheap.

Drop everything

The hotline referred to special, green phones that acted as direct lines through which only the President and a few senior Cabinet Ministers and Government officials could talk. When it rang, you dropped everything else to attend to it, almost standing to attention.

It was Martin’s considered view that EAP CCO was not one of the more strategic boards. It would be bad for Kitili to become a casualty with the political mandarins over disagreements on such a non-strategic board. It was agreed, therefore, that Kitili would be removed from that board before he caused more trouble.

While this would assuage the mandarins in high places, it would leave Kitili intact to engage in a better fight in a more strategic place in future. Elsewhere, Kitili represented the Finance Permanent Secretary on the NSSF board.

Also on this board was Wilfred Kiboro then the Group Managing Director at the Nation Media Group, publishers of Nation, a leading newspaper in the country and region. Kiboro represented the Federation of Kenya Employers (FKE) on the board. He was also the Chairman of the Federation.

Soft-spoken, Kiboro was adept at raising what were viewed as disturbing questions at board meetings, usually finding resonance with the Investment Secretary.

One such issue involved an invitation to review the lawyers who were representing the NSSF in a number of cases against the Fund. One such case involved a controversial company, owned by a young Kanu activist.

The fund had sued the company for hundreds of millions of shillings, for breach of construction contract. The company had in turn counter sued the fund, also claiming damages that ran into hundreds of millions of shillings.

The fund received instructions from the Office of the President to appoint a politically correct lawyer, who also represented senior Government officials in a variety of issues in their private capacity.

While the lawyer’s fees were negotiated and agreed upon on the then prevailing Law Society of Kenya (LSK) rates, the lawyer was nonetheless paid well up front, in total departure from the norm.

Something fishy was clearly taking place here. Where the Government should be concerned when it is taken to court, it was apparently happy to be taken to court, for top functionaries saw opportunity for self-aggrandisement in such activities.

Once again Kitili raised issues and had to be removed from this board, having stepped on super-sensitive toes over the question of who should represent NSSF in the matter, as well as how and when the lawyers should be compensated.

In response, Martin telephoned his colleague to say, “I understand your position on this matter very well. Unfortunately someone is extremely angry and I think we should remove you from that board for them to leave you alone. This reform process will be slow and tedious.”

It was decided that Kitili would now focus his energies on privatisation of key state companies.