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EIB criticised for not investigating collapsed Kenyan construction firm

It has been accused of failing to act on ‘blatant fraud and corruption’


Pete Carvill

Non-Governmental Organisations (NGO) Counter Balance and The Corner House have levelled accusations at the European Investment Bank (EIB) over claims it did not properly investigate allegation of fraud at a Kenyan construction company.

The accusations centre around construction firm Spencon, which has since been declared bankrupt. The two NGOs allege that a cache of data showing bribery and misuse of funds by British directors at the Kenyan firm has been ignored by the EIB.

In tweets about the case, Counter Balance said that the EIB ‘failed to act on blatant fraud and corruption within a multi-million euro investment it made in a private equity fund’.

It wrote: “Executives appointed by ECP Africa Fund II waved through suspicious payments by Spencon – a construction company which the fund took over after receiving €38m from the EIB. Suspicious Spencon payments include $4m to two companies for ‘debt recovery’.”

The NGO goes on to make a series of claims around complicity within the alleged fraud.

It added: “The EIB said it would investigate the ECP investment. But it did not interview Spencon’s directors or obtain documents despite having the right to do so. Instead, it remained silent for years before closing the case without explanation in 2020.”

It then called on the EIB to reopen its investigation into the firm.

Counter Balance gave more background on its website. It wrote: “The EIB invested in the ECP Africa Fund II (ECP Africa), a fund managed by American private equity fund Emerging Capital Partners. ECP Africa in turn invested in Kenyan construction company Spencon before seizing control of the company in 2014. The fund appointed two managers to run the company who were subsequently suspected of fraud and bribery, and appointed ECP Africa executives to Spencon’s Board of Directors. Spencon went bankrupt in 2016.”

The firm, according to the BBC, was one of the largest construction firms in East Africa, once employing up to 5,000 staff.

Back in 2020, the BBC wrote about the ‘two highly-paid British bosses’ Andrew Ross and Steven Haswell who were, it said, ‘were in Nairobi on a rescue mission: to save the struggling Kenyan construction giant Spencon’.

It added: “But Ross and Haswell did not succeed in saving Spencon. According to thousands of leaked company emails, messages, and documents obtained by Africa Eye, the two British bosses appear to have engaged in a pattern of highly questionable business practices as they tried to turn the company around. They now stand accused of allegedly working with a convicted criminal to defraud banks of millions of dollars, of implicitly threatening to sell out business partners to notorious Kenyan gangsters, and of making potentially illegal cash payments.”