Investigators probing the Kalonzo Musyoka Foundation suspect the money wired to the NGO from Cyprus came from a fictitious organisation.
They have also narrowed discrepancies between audited accounts and those declared to the NGO Board, withdrawal of cash from ‘illegal’ bank accounts and reference to non-existent donors as sources of some of the millions received.
Kalonzo, the NASA candidate for deputy president, is leader of the Wiper party and a former Vice President. He calls the investigation a witchhunt and plot to hurt NASA’s chances of election on August 8.
Kalonzo denies allegations of money laundering and any wrongdoing. He filed suit in May challenging the Board’s decision to close the foundation, freeze accounts and dissolve the board.
A court ordered the accounts unfrozen. The case will be mentioned on July 31. In 2012, the foundation received Sh44.9 million donations and so indicated in audited accounts. It declared Sh11 million to the NGO board.
The foundation acknowledges the Cyprus Association for Famine Relief has been a longstanding donor, but only one grant of Sh933,000 has been declared.
“KMF receives donations both in cash and kind. Audited accounts are silent on names of donors in as much as they have given proportions of cash and in-kind donations.
However, from annual returns forms, the names of donors are declared. The organisations, including Cyprus Association for Famine Relief, did not seem to exist,” said an internal NGO Board memo seen by the Star.
Kalonzo has close relations with Cyprus and is regularly given university scholarships to award students of his choice to study in the Mediterranean country.
In 2011, his foundation received Sh2 million from Metropolitan Chrysostomos of Cyprus. The following year, the foundation received Sh1.4 million from the Orthodox Coptic Church.
In 2015, KMF received Sh933,000 from the Cyprus Association for Famine Relief. The foundation is said to be linke d to politician Nicos Tornaritis, an MP since 2001.
Nicos, a 52-year-old lawyer, met Kalonzo when he was minister under President Daniel Moi from 1993 to 1998.
Nicos was appointed honorary consul of Kenya in Cyprus from 2001 to 2005.
Kalonzo again worked closely with Tornaritis when he was Foreign minister in Mwai Kibaki’s government from 2003 to 2004. Tornaritis has been Vice President of the Democratic Rally Party of Cyprus.
Investigators are also checking NGO claims it collaborated with the China Youth Development Foundation (CYDF) to construct and furnish classrooms in Ukambani under Project Hope for Africa.
Kalonzo Musyoka during Nasa rally at Kamukunji Grounds on Friday
AUDITOR TOO FRIENDLY?
“These items were handed over to KMF at completion. The entire project was estimated at USD500,000 (Sh50 million). The donations directly through KMF or otherwise were not captured in returns and audited accounts of the Board. CYDF seemed not to have a known legal footing in Kenya,” the memo said.
It also said the foundation has been audited by one auditor for over 10 years since its registration in 2006. “The situation creates familiarity threats, which directly affect independence of an auditor,” the report said.
In May the NGO Coordination Board went after the foundation for alleged non-compliance. It said the charitable trust received Sh50 million from China that could not be traced, part of Sh146 million the organisation could not account for.
“The Board finds sufficient cause to warrant forensic investigations into the affairs of the Kalonzo Musyoka Foundation on possible cases of money laundering and diversion of donor aid,” a letter dated July 6, 2017, and signed by Executive Director Fazul Mahamed said.
“Subsequently, the Board has already initiated a legal process of ascertaining the level of criminal culpability of the directors of the foundation with respect to their fiduciary responsibility to the laws of Kenya, the intended beneficiaries and the people of Kenya,” Fazul said.
His letter was addressed to the foundation, CBK, Kenya Bankers Association, I&M Bank and the Director of Criminal Investigations.
“The Board has noted the Kalonzo Musyoka Foundation cannot fully account for Sh146 million; funds the foundation received from donors with the promise of improving the lives of marginalised communities, provision of healthcare and quality education, among other poverty al- leviation interventions in Machakos, Kitui and Makueni counties,” the letter said.
The Board said the foundation “has consistently made false declarations in its financial status, annual returns and audited accounts”.
FOLLOW THE MONEY
The organisation deliberately and continuously failed to disclose its donors and donations, it said.
“The foundation received Sh50 million from The China Youth Development Foundation for construction of classrooms in Ukambani.
However, these funds are not traceable in the foundation’s bank accounts, annual returns, audited accounts of the foundation’s bank statements availed to the Board for review.”
The Fazul letter was a response to a government compliance notice dated March 1, 2017. The notice questioned the source of funding, secret illegal accounts; the fact only one auditor has audited the accounts for 10 years and said instances of creative ac- counting were noted.
The Kalonzo Musyoka Foundation was registered in August 2005 and began operations in January 2006. Kalonzo and his wife Pauline Musy- oka are the officials, alongside Mulaki Kioko.
By 2012 officials were Kalonzo, Johnstone Kioko and former MP Prof Philip Kaloki.
In 2013, Pauline returned to the list of offi cials. In 2014, Kalonzo, Prof Kaloki and Kioko were out, and the officials were Pauline, Kalonzo’s son Kennedy Musyoka and Martha Mulwa.
The foundation operates three bank accounts at I&M Bank, 2nd Gong Avenue Branch in Nairobi. Investigators say it may be a US dollar account.
The foundation has dismissed the NGO Board’s investigation. In a letter to the Board dated March 9, 2017, secretary general Kennedy Musyoka said, “I wish also to state categorically the foundation has never used the funds received from any donor for any unethical or unintended purpose as sinuated (sic) in your context.”
Musyoka said the organisation’s bank accounts are not illegal or secret because they are accessible and have always been disclosed in annual reports.
“Besides, all funds received are accounted for as per donor’s procedure and audited for as per provided rules and regulations. Additionally, no account has ever seen millions of shillings as mentioned in your letter,” he said.
Musyoka said no law was violated by retaining its auditor for over 10 years. Musyoka says the only long-standing are donors are Kalonzo himself and the Cyprus Association for Famine Relief.