Jubilee MPs statement on Eurobond facts


The Euro Bond is a programme aimed at externalizing Government borrowing, which has been in the works since the last Grand Coalition government. The objective of this financing framework is to reduce Government borrowing locally to give room for the private sector and help reduce interest rates.

For the record, it was not possible to launch the sovereign bond in the last administration because of the limited confidence of international market in the country’s economy.

However, the launch of the Euro Bond last year was not only successful, but was oversubscribed by over 500%, with the country achieving the most competitive interest rates ever for a debut bond by an African country.

As is required of any transaction of this magnitude, the Government of Kenya engaged professional international institutions including the African Development Bank, JP Morgan Bank, Barclays Bank, Standard Bank and the Qatar National Bank in the execution of the Euro Bond issue. The following is the long and short of the details of the transactions.

1. How much was raised through the Euro bond?USD 2 billion, or KES 174 Billion

2. What was the purpose of the Bond? The Euro Bond was intended for general budget support, repayment of the KES 600 million syndicated loan, to reduce domestic borrowing thereby easing pressure on interest rates and to diversify the sources of funding by tapping the international financial markets.

3. Did the Government borrow any more money? Yes, the Government borrowed USD 750 million from a tap sale with a bonus of USD 65.5 million, making it a total of USD 815 million. The bonus was due to the performance of the bond, which earned earlier than expected interest.

4. When were the proceeds of the sovereign Bond received? First proceeds were received on 26th June 2014. Tap Sales proceeds of USD 815 million were received on 17th December 2014. Certified bank statements are available from JP Morgan and Citibank as well as SWIFT messages indicating the transfer of the funds from New York to the Central Bank of Kenya.

5. Why were offshore accounts opened in New York? First, the law allows the Government to open a foreign account to enable investors throughout the world to bank proceeds conveniently in a collection account managed by the consulting firms.

Secondly, the lead consultants are institutions of global repute. The account signatory was the Central Bank of Kenya, not the National Treasury.In keeping with prudent management, the National Treasury opened a special sovereign bond at the Central Bank to ensure that only development expenses were financed by the proceeds. Finally, the Controller of Budget and the Auditor General have confirmed that there are no missing or stolen monies from the bonds.

6. The former Prime Minister was very enthusiastic about the prospect of the Euro Bond and followed its progress with unprecedented keenness, which turned to exuberance at the promise of success.This extraordinary passion suddenly and curiously has turned into unconcealed anger occasioned by the manner in which the proceeds of the Euro Bond were applied by the Jubilee administration.

7. In his characteristic style, the former prime minister has weaved and propagated a narrative around the Euro bond that so far has given only half the story to the Kenyan people.There is the other half of this saga which RailaOdinga would rather it were not told. For the sake of completeness, we are here today to tell the country that other half.

8.It is on record that Hon. Raila Odinga has curiously and consistently been asking about the projects that were funded with the proceeds of the Euro bond. Raila Odinga and his shadowy partners operating out of an address in Westlands had lined up mega projects for Government financing just before the last General Election and he owes the country an explanation on the following.

9. The Jubilee administration inherited KES 120 billion debt from hastily signed contracts in the roads sector just before the last election. These contracts did not have a budget to fund their implementation. The Jubilee administration has had to delay its roads programmes for two and half years in order to pay this debt. Raila Odinga needs to explain to the country why these contracts were hurriedly signed in 2013 without a budget, and who collected the 10 per cent (KES 12billion) that was paid on all these projects?

10. The CORD leader must explain to Kenyans why the KES 65b (USD 650m) Green Field Airport Expansion Projectwas hurriedly signed without a budget before the last General Election, even after the EACC withheld the contract documents. Why did the former prime ministerchair the meeting which approved the contracts even after the Minister for Finance had stated publicly that there were no funds for the project?

Could this be one of the projects that he expected to be funded with the proceeds of the Euro Bond?

11. For the record, the ODM leader was prominently and conspicuously present at the launch of Green Field Airport Expansion Projectand this remains the only launch he has attended under the Jubilee administration. Unfortunately for him, the project has had to be cancelled when it became clear that it was yet another commission-seeking racket.

12. The National Youth Service Second and Third Phase Equipment Programme worth KES 16b was initiated and signed just before the last election by the same shadowy syndicate. Could this be one of the projects in RailaOdinga’s list of projects to be funded with the Euro Bond proceeds? Again, unfortunately for this corrupt syndicate, this project has had to be suspended by the Jubilee administration due to the stench associated with it.

13. The hastily signedUrban Commuter Train Project hatched under Raila Odinga’s watch in similarly dubious circumstances just before the last General Election is another scheme, that Raila Odinga would have wanted the Jubilee administration to finance using the Euro Bond proceeds. Unfortunately for him, this too the Government has declined to finance owing to the blatant rent-seeking scheme associated with it.

14. All these controversial projects, which the Cord leader hoped would be financed with the Euro Bond are massive kickback schemes presented as critical national projects.

Mr Odinga is obviously angry with the Government for its refusal to use the Euro Bondto finance these rackets, whichwere designed by shady and corrupt networks both inside and outside the Grand Coalition administration. He knows the full details of these schemes.

15. Obviously, in his scheme of things, the hysteria around the Euro Bond is occasioned by the Government’s refusal to be a commission agent for Raila Odinga and his syndicate. This has caused him much confusion and conflict as he pretends to run with the hares by day, yet hunts with the hounds by night.

16. The former prime minister demanded for the full disclosure of information related to the Euro Bond including the projects funded with the proceeds and when this was supplied, he fled and took cover behind fresh absurd allegations.
When he was asked to provide information to relevant constitutionally mandated investigative authorities, Hon. Raila Odinga has been engaged in dodgy and bizarre semantics. His reluctance to engage with the truth is clearly understandable, given his inability to reconcile his actions with his proclaimed principles. When it comes to the war on corruption, Odinga is the poacher masquerading as a gamekeeper.

17. The time for charades, bluster, empty rhetoric, musical chairs and wild allegations is over. The war on corruption is firmly on course. Raila Odinga, the leader and Raila Odinga,the citizen of Kenya must provide proper answers to all our questions and cooperate with the institutions of governance as we seek to get to the bottom of systemic corruption, which has derailed the implementation of development projects and caused much loss and pain to the Kenyan people.

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