Kenyan Authorities Arrest Seven CRBC Officials in Bribery and Fraud Investigation

On November 23, the Kenyan newspaper Daily Nation reported that detectives with the Kenyan Ethics and Anti-Corruption Commission (EACC) arrested three senior Chinese officials and four Kenyan counterparts who work for the China Road and Bridge Corporation (CRBC) in Kenya.  The arrests were for attempting to bribe investigators looking into possible corruption associated with the Standard Gauge Railway (SGR).

The SGR line, which connects Nairobi with East Africa’s main port, Mombasa, was funded by China as part of its One Belt One Road (OBOR) Initiative and is one of the largest infrastructure projects of Ugandan President Uhuru Kenyatta.  The CRBC reportedly operates the SGR service at a cost of KES1 billion ($9.7 million) per month.  According to Voice of America News, the project already “has been tarnished by allegations of corruption and racism, and concerns about its economic viability” due to its $3 billion cost.  In 2015, two CRBC officials were arrested for allegedly bribing officials of the Kenya National Highways Authority in order to avoid sanctions for overloaded vehicles.  In August 2018, , Mohammed Abdalla Swazuri, the chairman of Kenya’s National Land Commission (which manages public land), and Atanas Kariuki Maina, managing director of the Kenya Railways Corporation, were arrested in connection with allegations “that officials siphoned taxpayer money through phoney compensation claims for land used for the railway.”

The most recent allegations pertain to a suspected multi-million-shilling ticketing fraud scheme, in which insiders are skimming a significant portion of revenue from each trip on the SGR.  All seven of those arrested reportedly were participants in the scheme.  Kenya’s director of public prosecutions Noordin Haji said, in a written statement, that the three Chinese officials would be charged with bribery for giving a bribe of approximately $5,000.

Note:  These latest allegations should prompt regional anti-bribery and corruption compliance teams to pay closer attention to CRBC-connected transactions and expenses, but should surprise no one who has been following developments with China’s One Belt One Road (OBOR) Initiative.  Since 2013, in a massive bid to expand its soft power globally, China has reportedly invested more than $700 billion of its own money in more than 60 countries, largely for “large-scale infrastructure projects and loans to governments that would otherwise struggle to pay for them.”  In fact, some governments that originally accepted China’s seemingly generous lending terms have found the debt they assumed to be crushing.  For example, the CRBC construction of a highway across Montenegro has already raised that country’s public debt to 83 percent of Gross Domestic Product, and Malaysian President Mathahir Mohamad  recently canceled more than $22 billion of Chinese-funded Belt and Road projects because “we cannot afford . . . [or] repay [them] and also because we don’t need these projects for Malaysia at this moment.”  In addition, because “China does not require its partners to meet stringent conditions related to corruption, human rights, or financial sustainability[, t]his no-strings approach to investment has fueled corruption.”

In 2017, two commentators expressed concern that the OBOR Initiative would create a risk for China’s “associating itself with rampant corruption in the autocratically ruled countries of Central Asia.” That assessment, unfortunately, was not only too late but beside the point.  By choosing not to require anti-corruption commitments from countries to which it offered massive infrastructure projects, Chinese officials –who no doubt were well-informed about which countries posed greater bribery and corruption risks — assumed the risk of becoming embroiled in corruption to further and complete OBOR projects.  If anything, as other countries seek to pull out of or scale back their own OBOR projects, CRBC officials in those countries are likely to encounter increasing temptation to engage in in-country bribery to maintain and complete those projects.  What happened in Kenya, in short, is likely to happen in more countries with OBOR projects.

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