September 16, 2022 - 5 minutes read

Slaying state capture: The how and what next if the Ruto administration takes action 

By Kennedy Osore

The Kenya Kwanza manifesto proposes to set up a quasi-judicial commission of inquiry into state capture within 30 days of the new administration. The commission would aim to establish the extent of cronyism and state capture in Kenya and make recommendations.

Transparency International has defined state capture as a situation where powerful individuals, institutions, companies, or groups within or outside a country use corruption to shape a nation’s policies, legal environment, and economy to benefit their private interests. State capture can also arise from the more subtle close alignment of interests between specific business and political elites through family ties, friendship, and the intertwined ownership of economic assets.

According to Dr. Abby Innes, a professor of political economics at the London School of Economics, the whole policy-making structure of the state becomes commodified – something that politicians are willing to sell.

During the 2022 election campaigns, the then Deputy President William Ruto made it clear that his government would deal with state capture should he form the next government. Having won the August 9 polls, all eyes are now on the Ruto administration. Details on how the government plans to deal with state capture are still scanty. It is, however, expected that the formation of the commission on inquiry will shed more light on the powers, functions, and objectives of the public inquiry.

Impact of state capture

According to Transparency International, state capture can seriously affect economic development, regulatory quality, the provision of public services, quality of education and health services, infrastructure decisions, and even the environment and public health.

The Case of South Africa

In 2018, the President of South Africa appointed a Commission of Inquiry to investigate allegations of state capture, corruption, and fraud in the public sector, including state organs. The appointment followed allegations concerning the relationship between two families – the Zumas, centred on the former president, and the Guptas.

The Guptas owned a portfolio of companies that enjoyed lucrative contracts with South African government departments and state-owned conglomerates. They also employed several Zuma family members – including the president’s son, Duduzane – in senior positions.

According to testimony heard at the inquiry, public officials responsible for various state bodies say the Guptas directly instructed them to take decisions that would advance the brothers’ business interests.

The allegations eventually brought the Zuma presidency to a premature end and prompted the Guptas to leave South Africa. They also damaged the reputation of various illustrious firms that had done business with the Guptas. Ethical lapses were highlighted at international firms such as KPMG, McKinsey, Bain & Co, and London’s public relations agency Bell Potinger, leading to reputational harm to their brands.

Potential risks to businesses and individuals

A public inquiry into state capture in Kenya is likely to make findings and recommendations that would pose certain risks to businesses with relations with the public sector. 

Once done with its work, it is anticipated that the commission would make recommendations that would likely spell policy shifts and regulatory changes, especially in public procurement.

There is a  risk of reputational damage to businesses and individuals that would be adversely mentioned in the inquiry report. Further, the public inquiry may recommend investigating and prosecuting individuals in the private and public sectors.

There is also the risk of termination of ongoing contracts with the public sector and blacklisting of entities that are implicated in the inquiry report.

New market entrants may face heightened scrutiny and stringent compliance requirements, particularly for firms that seek to conduct business with the public sector.

Conclusion

The best way to establish if state capture has occurred is through a fair method that does not degenerate into a witch-hunt. A quasi-judicial commission of inquiry, which would follow the rules of our court system, is the ideal way to investigate state capture so that suspects can defend themselves, call witnesses and rebut whatever allegations are levelled against them.

However, there is a risk that any such process ends up being used to settle political scores rather than to address the root causes of state capture.

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