Kenya turns to lifestyle audits to tame runaway corruption

The corruption is so entrenched that a report by the Kenya’s auditor general’s office which tracks spending of public funds, indicated that up to 74 per cent of funds spent by various government institutions in the 2013-2014 financial year could not be properly accounted for.

The vice manifests itself through diversion of public funds, irregular payments, unauthorized expenditures, staff fraud and bribery denying the citizenry crucial services like access to affordable healthcare, employment and affordable education for the country’s young ones. The annual corruption index by Transparency International places Kenya at position 139 out of 167 countries and third most corrupt country in East Africa after Uganda and Burundi.

According to the Kenya Private Sector Alliance, KEPSA, an association of private companies in Kenya, the $683 million loss in government revenue in the country through corruption is enough to employ 25,000 graduates every year at a time when the country is grappling with unemployment which stands at 40 per cent of the working class population.

The corruption has become so embedded that President Uhuru Kenyatta last year declared it a threat to national security, arguing that it was crippling economic and social development of the country. Corruption has on numerous occasions been quoted as having made Kenya’s borders porous, with terrorists bribing police to bypass checks and carrying attacks on Kenyan soil.

“I believe that corruption is a standing threat to our national security. The bribe accepted by an official can lead to successful terrorist attacks that kill Kenyans. It can let a criminal off the hook for them to return to crime and harming Kenyans. Terrorism itself is a national security threat. The damage to our economy puts millions of lives at peril and undermines our very aspirations as a nation. I am therefore declaring with immediate effect corruption as a national security threat,” said the president in a state of the nation address last year.

The private sector is also reeling from the debilitating effects of the vice. From the largest telecoms operator Safaricom to commercial banks, the private sector has not been spared with staff perpetuating the fraud. A study conducted by audit firm Ernest & Young showed that Kenya was reeling under corporate fraud emerging among the worst four countries globally after Namibia, Nigeria and Egypt.

But Kenya has found its saving grace in a new model that involves an intensive probe into the lifestyles of employees with a view to detecting a sudden and suspicious affluence that may suggest fraud. Such audits use various parameters like a suspect’s consumer index, which is measured by adding the spouse’s income, the family’s declared assets and the average spending of the family every month.

“It is one of the sure bets for nabbing criminals and has assisted South African companies and even governments save billions of stolen money. Forget about these lengthy investigations in Kenya that don’t seem to be heading anywhere, lifestyle audit reports have returned remarkable results and small wonder there are Kenyan companies who are actually embracing them, “said Muthini Muthuke an anti-fraud expert in East Africa.

Government institutions that are perceived to be breeding grounds for corruption including the judiciary, the tax man and the ports authority are already in the process of auditing their staff. The staff’s lifestyle will be compared with their remuneration to identify any inconsistencies in how they got their wealth.

The private sector on the other hand is running its own set of audits on their employees with heads of corporate leading the exercise by declaring their wealth. This allows the auditors to probe if they have any other source of revenue. Already, Bob Collymore, the CEO of the largest telecommunication service provider in Kenya Safaricom has declared his wealth in a bid to support the government’s efforts in fighting both public and private corruption.

“Corruption distorts markets and has a negative impact on society as a whole, in both the developing and the developed world. It is the reason why the responsibility to turn the tide against corruption ultimately lies with us as individuals,” Mr. Collymore told journalists in a press conference.

Mr. Joshua Oigara, the head of Kenya Commercial Bank, the largest bank by asset in Kenya followed suit. “My public declaration is driven by the need for us as private sector players to initiate greater transparency. Kenya is bleeding from corruption mainly driven by secrecy in organizational operations. Corruption takes away equal opportunity and hurts growth by consuming funds which could otherwise have gone into social and economic projects like health and education, “he said in a statement.

Traditionally Kenya’s public officers have been required to declare their wealth but the information has been kept away from the public making accountability and transparency hard to achieve. The new wave of lifestyle audits is therefore promising a change of tact.