This archive report was first published on 21 May 2020.
Kenya's Elite Siphoned Sh328 Billion of World Bank Aid ¶
Published on February 2020, a study titled 'Elite Capture of Foreign Aid: Evidence from Offshore Bank Accounts' reveals that Kenya's elite siphoned Sh328 billion of World Bank aid payments to offshore accounts in two decades.
The study, conducted by Bob Rijkers of the World Bank, Jorgen Juel Andersen of BI Norwegian Business School, and Niels Johannesen of the University of Copenhagen, covers the period between 1990 and 2010.
According to the study, Jordan topped the list globally with over Sh350 billion of aid to the Middle East country siphoned, followed by Kenya. Ivory Coast was third at Sh128 billion, while the Democratic Republic of Congo was fourth with Sh110 billion of aid money stolen.
The money was carted away to tax havens such as Switzerland, Luxembourg, the Cayman Islands, and Singapore, whose legal frameworks emphasize secrecy and asset protection. Part of the loot was also banked in non-tax havens such as Germany, France, and Sweden.
"We document that aid disbursements to the most aid-dependent countries coincide with significant increases in deposits held in offshore financial centres known for bank secrecy and private wealth management," the study says.
Kenya has been fighting to recover some of the money stashed in tax havens. In 2018, President Uhuru Kenyatta signed an agreement with the then President of Switzerland Alain Berset to help recover assets stashed in Swiss banks.
As the European Union prepares to sanction Mauritius, a tax haven, over money laundering and terror financing, some of Kenya's wealthy individuals have registered their companies through subsidiaries in Port Louis, Mauritius, due to its favourite tax regime.
