19 June 2017

Kenya: Politicians Term Limit on Campaign Finance as Wrong

Politicians have resorted to keeping millions of shillings in their houses or using their trusted friends to withdraw money from their accounts beyond the Sh1 million cap imposed by the Central Bank, it has emerged.

With campaign expenses ranging from millions to billions of shillings, depending on whether one is vying for a parliamentary seat or the presidency, it has become necessary to devise ways of circumventing the Central Bank guidelines introduced last year to fight money laundering.

Politicians require large sums of money ahead of the August 8 General Election, billed as Kenya's most competitive and most expensive.


MPs who were interviewed separately registered their displeasure with the guidelines even as they devised ways of circumventing the rules to run their campaigns.

Suna East MP Junet Mohamed said the law was not well thought out "and is even stifling the economy".

He said the cap is hurting politicians since they are fully in campaign mode, following the indefinite adjournment of the 11th Parliament on Thursday last week.

"We are having a serious problem at the moment with that cap, politicians are not having it easy," Mr Junet told the Nation.


The MP said the country has not developed to a point of using cashless transactions and many people still depend on withdrawing huge sums of money from banks to run errands.

Another MP who wished not to be named said there are many ways of circumventing the guidelines.

"I have opened five accounts with different names and therefore I can withdraw five million in one day," the MP, who refused to be named, said.


Kikuyu MP Kimani Ichung'wa said the regulation is irregular and illegal and should he make it back to Parliament, he will move an amendment to have it revoked.

"Why should I be limited on the amount of my money that I should withdraw? The regulations have totally no standing in the law, and I will sue the bank should they block me from accessing my money," he said.

As a way of circumventing the guidelines, Mr Ichungwa said many politicians transfer money to their trusted friend's bank accounts then withdraw it.

"It has really made life difficult for us. At the moment, we need to pay people whose cars we hire for campaign tours, tents, chairs and other items.

"When you have a big function and the bills of all these surpass Sh1 million, what do you do? Nobody trusts a cheque from politicians, especially during this campaign period, we have to pay in cash."


He said the regulations were never taken to the delegated committee of Parliament to check their legality and whether they were in the best interest of Kenyans.

Ugunja MP Opiyo Wandayi described the guidelines as a nuisance and unnecessary inconvenience.

"There are many ways of going round it, the guidelines are causing a lot of challenges for us at the moment," he said.

The directive was put in place in January last year by CBK Governor Patrick Njoroge amid revelations that suspects in corruption scandals were freely carting away millions of shillings in sacks from banks.

"In compliance with this requirement, all customers making transactions that meet the stipulated amounts will be required to complete a form that captures the source of funds, reason for the transaction rather than electronic means and where the money will be taken after it leaves the bank," Dr Njoroge said in the guidelines.

"You can use different names in a cheque and withdraw even Sh10 million in a day, so as much as the law is good, those with more money still get their way," Bondo MP Gideon Ochanda said.


Other tricks used by politicians, Mr Ochanda said, is keeping the money in the house to avoid hassles in the banks.

"You have seen when the Ethics and Anti-Corruption Commission officers raid a home of a politician or anybody under investigations and millions of shillings in cash is recovered, an indication that people keep money in their houses instead of taking it to the bank."

Kajiado North MP Joseph Manje said he has no problem with the guidelines, saying they are good because they would stop money laundering.

"The guidelines will not affect us much because if you withdraw Sh1 million as a politician that should be enough for you for the day, moreover banks only need a reason for the withdrawal so nobody has been stopped from withdrawing more than one million," he explained.

While releasing the guidelines, Dr Njoroge had said: "This new guideline aims to reduce the risk inherent with cash transactions, such as losses due to fraud and theft.

"We encourage you to consider use of electronic payments, which are an alternative and secure channel."


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