The «red cooperative» Cmc under investigation for bribery in Kenya. Investigators are scrutinizing the contract signed in the days of Matteo Renzi
- The scandal breaks out in Nairobi. The investigations affect also four ministers of theGovernment of Uhuru Kenyatta. In the middle of this scandal there are three dams, for atotal value of €800 million. Two of them are built in joint venture with Itinera (Gaviogroup). The Directorate of Criminal Investigations (Dci) is examining a bank account in Westland, looking for bribes. The construction company replies to our journal: «Ourcontracting and financial procedures adhere to the highest international standards. Particularly, our loans are secured by SACE».
- All the troubles of the cooperative that hired the brother of Maria Elena Boschi. The 1.2billion litigation with Anas, the request of an arrangement with creditors in December 2018, the Secret Service headquarters still to be completed.
In the special are two articles
There's a new investigation coming from Africa. This time it relates to an Italian construction giant, Cmc of Ravenna, rocked by major scandals in Kenya. International corruption is the alleged offence. The Directorate of Criminal Investigations (DCI) is incharge of the inquiry, together with other investigating bodies both inside and outside the African country. Cmc is under indictment. This historical «red cooperative» is also threatened with bankruptcy if Anas [the management entity of the Italian motorways] does not unlock a number of construction sites. Cmc is in the middle of a litigation with Anas involving the gigantic amount of €1.2 billion. Also for this reason, the company requested to be admitted to the so-called «arrangement with creditors» procedure. In addition major problems are coming from Kenya where CMC is suspected of having paid bribes to win the bids related to three dams. We should not forget that Italy is a key commercial partner of Kenya. In 2018, our export to this country amounted to €180 million.But let's start from the beginning.
A contract in Kenya was obtained by Cmc in 2014. Othertwo were signed in 2015, on occasion of a visit to Nairobi of our former Prime Minister Matteo Renzi, who was photographed together with President Uhuru Kenyatta wearing a bullet proof vest. The total value of these contracts is more than €800 million. Cmc haestablished a joint venture with another company called Itinera (Gavio group). Their workis part of a wider project to redesign the water distribution in Kenya, which was one of the electoral promises of Mr Kenyatta himself. According to the Kenyan media, the construction has started for the Itare dam only, while the other two – Arror and Kimwarer – are stalled.The investigation started because of an alleged bribe, the amount of which was not clarified by the investigators. It would be part of the sum of Kes 4.9 billion (about €44 million) deposited in a bank of Westland, the Nairobi neighbourhood where the expats live and the international companies have their offices. After the first checks, the official investigation was launched at mid-February. It involves also four Kenyan ministers: Simon Chelugui (Secretary for Water), Henry Rotich (Secretary for national treasury), Najib Balala (Secretary for Tourism) and Mwangi Kiunjuri (Secretary for Agriculture).In addition to Cmc, Dci has summoned other 106 companies. This could be the major misappropriation of public funds ever experienced by Kenya.
For its part, Cmc has deniedt he Kenyan media reports, which wrote that the company went bankrupt and it is ready to leave the country. In a press release, CMC declared that it has already received the first instalment for the Itare dam, amounting to Kes 7.8 billion (€69 million). It added that «due to its difficult financial situation in Italy, it was forced to interrupt the work awaiting the rest of the payment, not yet received up to now». In another press release, Cmc said also that «it continues to be fully committed to completing the Itare Dam Project ahead of or within the contracted time frame and its contractual entitlements». As regards the alleged international corruption, the company of Ravenna stated that «it adheres to the highest international standards and Sace (Export Credit Agency, Italian Government-owned entity) is providing insurance cover and financial support». Our journal has learned that the financing was provided by the Italian bank Intesa San Paolo. Meanwhile, a few weeks ago Mr Noordin Haji visited Italy. After serving as Advocate General, Mr Haji joined the National intelligence service.
Over time, he rose through the ranks to become Deputy Director in charge of Economic Crimes at Nis. In March 2018, he was appointed Director of public prosecutions. This role is independent from any other State authority. The Dpp has just to report once a year to the Parliament on its activities of national importance. Today the Dpp key priority is indeed the fight against corruption. In this respect, Mr Haji wants to establish bilateral agreements with other Nations,including Italy, as several Italian companies are active in the areas of Nairobi and Malindi.The trip to Italy of Mr Haji has attracted a considerable interest in Kenya, as during his visitthe DPP would have found some clues about the role of the Treasury Secretary in the Cmc affair. Mr Rotich would be associated with Rita Ricciardi, Chairman of the Italy-Kenya Trade Association.The overall situation looks very complex. The Kenyans authorities themselves releasedcontradictory statements on the amount of money involved in the Cmc scandal. The deputy president William Ruto said that the investigation is related to KES 7.1 billion, 4.9 of whichwere paid for the Kimwarer dam and 3.2 for the Arror dam, even if their construction is stopped. The Secretary for Water, Mr Chelugui, declared that the amount is three times higher than that, and distanced himself from the project, saying that he was decided by the Ministry of Regional Cooperation. In reality the 2015 negotiation with Cmc was managedby the Ministry of Treasury… In short, there is a great deal of confusion under the sky. Thereason is eminently political, as the opposition wants to use this case to discredit PresidentKenyatta, who looks increasingly isolated and criticised.
From the Secret Service headquarters to the brother of Maria Elena Boschi: the history of a difficult year
Cmc of Ravenna is one of the most ancient Italian cooperatives, which has always been veryclose to the left-wing parties. Founded in 1901 by 35 builders of Ravenna, it has been aconstruction leader in Italy for more than one century. Its closure would compromise thefuture of our entire country, as the most strategic infrastructures are in its hands. Even thenew headquarters of the Italian Secret Service, to be built in a square of Rome, is managedby this cooperative. The building was being delivered two years ago, while now its completion is expected at the end of 2019. Cmc has today 7,000 employees throughout theworld. 400 of them are based at the Ravenna headquarters.In 2018, more than 70% of the Cmc sales were generated by foreign markets. The companyis active in 40 countries across 4 continents, and boast and order book of more than €4.5billion.
Nevertheless, the financial situation in Italy is highly deteriorated, with a hugedecrease in value of production and liquid assets. Liquidity represents the major problem of Cmc. How to solve this problem if Anas, the management body of the Italian motorways,is not paying its invoices?Cmc has several pending litigations with Anas. The most important one is related to a Sicilian motorway and amounts to €600 million. Several meetings took place in the recentpast, and it seems that an arrangement can be found. However, the situation remains verycritical. At the end of last year, Cmc was expecting €137 million revenues, but in reality it achieved €52 million only.
Thus, it was unable to meet its obligations, including thepayment of the interests in favour of the owners of the bond loan issued on November 16, 2017, the total amount of which was €575 million. As a consequence, the company received several cease and desist letters from its creditors, and entered insolvency proceedings. According with «Il Sole 24 ore » newspaper, the final arrangement should imply the dismissal of several assets. Now the company has to present a plan within 60 days. When Matteo Renzi was at the helm of the Government, the interest of several Ministers of his cabinet for Cmc has provoked much controversy, especially when the brother of Minister Boschi was hired by the Ravenna cooperative. Even the former treasurer of theDemocratic Party, Francesco Bonifazi, made a lot of efforts to save Cmc. Clearly they were not effective enough.
