NASA Presidential running mate Kalonzo Musyoka risks arrest for suspected money laundering and diversion of donor aid by his Kalonzo Musyoka Foundation.
The NGO Coordination Board says the charitable trust received Sh50 million from China that could not be traced, and was among Sh146 million the organisation could not account for.
“The Board finds that there is 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 yesterday and signed by Executive Director Fazul Mahamad 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,” Fazal said.
Last evening Kalonzo told the Star that he will respond to the issue today, once he has seen the letter.
“We have not seen the letter,” said Kalonzo.
Other sources in the KMF, however, said Fazal’s actions were politically motivated and that the Kalonzo family was considering legal action against him.
“We know where they met on Monday to plan this. The whole idea is to spoil Kalonzo and his family’s reputation,” one source told the Star.
According to KMF sources, one of the accounts has Sh300,000 and the other has Sh500,000. It is from these two accounts that the foundation has been running the Mama Malia School.
Mahamad announced that the organisation’s accounts have been frozen and the Board of Directors dissolved.
An official at the foundation, James Waitiki, declined to comment on the letter.
“I am not allowed to respond to the media and the whole team is at the Coast. Kindly get a comment from them,” he said, referring to the fact that Kalonzo and his aides were in Kilifi yesterday for talks on the NASA campaign planning.
Kalonzo is a Trustee and the Patron. Other officials are his wife Pauline Kalonzo (Trustee and Chairperson), his son Kennedy Musyoka (Secretary) and Martha Mulwa (Treasurer).
The letter from the NGO Coordination Board is addressed to the Kalonzo Musyoka Foundation (KMF), Central Bank of Kenya, Kenya Bankers Association, Investment and Mortgages (I&M) Bank, and the Director of Criminal Investigations.
“The Board has noted that 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 alleviation interventions in Machakos, Kitui and Makueni counties,” said the letter.
The Board said it had noted that the foundation “has consistently made false declarations in its financial status, annual returns and audited accounts”.
It adds that the organisation has also deliberately and continuously failed to disclose its donors and donations received.
“The foundation received Sh50 million from The China Youth Development Foundation for the 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.”
Fazul added that the Board had confirmed the existence of secret, illegal and unauthorised bank accounts, both local and foreign, and that they are operated by “strangers”, contrary to the provisions of the enabling charity law and existing financial regulations.
The Fazul letter is a response to a government compliance notice dated March 1, 2017. The compliance questioned the source of funding, secret illegal accounts; the fact that only one auditor has audited the accounts for the last 10 years and instances of creative accounting were noted.
The Board has noted financial inconsistencies with the foundation’s financial accounts and it has started the process of closing the organisation.
Fazul said the foundation’s audited accounts do not represent the true reflection of its financial status in light of the highlighted review findings and notable instances of creative accounting.
The Board warns it will not admit or depend on the foundation for review of the annual returns as required by the law.
Kennedy Musyoka replied by stating the long-standing donors of the foundation are Wiper leader Stephen Kalonzo Musyoka, the foundation Patron, and the Cyprus Association for Famine Relief.
On March 4 the NGO Coordination Board announced that it was investigating a foreign currency account associated with Kalonzo through his foundation.
The Board has subsequently written to the KMF seeking information about the foreign account, which, it says, was opened in contravention of the NGOs Co-ordination Act.
Fazal wanted the foundation to disclose within 14 days the source of funds in the account and the projects they were intended for.
It threatened unspecified legal action against the foundation if it fails to comply within the next two weeks.
Specifically, the Board is accusing the foundation of “receiving donations both in cash and in kind from foreign donors” whose identities are not revealed in its Audited Accounts.
Kalonzo was Kenya’s 10th and last Vice President under the old Constitution and had served in Cabinet for more than two decades, notably as Foreign Affairs minister and final mediator of the Sudanese civil war.
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