Calls Mount To Investigate EADB Over Alleged Massive Corruption and Cartelism As EALA Says The Bank No Longer Serves Its Purpose In The Region

Regional lender faces explosive allegations of governance failure, with lawmakers promising thorough probe into claims of ‘mafia-style’ operations

DAR ES SALAAM – The East African Development Bank (EADB) faces mounting pressure for investigation after explosive allegations of systemic corruption and governance failures were presented to the East African Legislative Assembly (EALA), with lawmakers expressing shock at claims the 50-year-old institution operates like a “mafia-style cartel.”

Peter Odhiambo, a Nairobi-based activist representing the Justice Alliance, on Friday appeared before EALA’s oversight committee with damning testimony alleging that the regional lender has been captured by private interests, straying far from its mandate to foster development across East Africa.

“This bank, whose vision was to foster development in our region, has become captive to a few people and will remain so unless EALA rises to the occasion,” Odhiambo warned the assembly in what observers described as one of the most serious challenges to the institution since its establishment.

Board Members ‘Write Off Own Loans’

Central to Odhiambo’s petition are allegations of a fundamentally broken governance system that has allowed board members to overstay their legal terms while allegedly benefiting personally from the institution they are meant to oversee.

“Some private sector board members have been in office for the last 18 years when ordinarily they should serve two terms of three years each. They probably currently own the bank because some of them have borrowed money from the bank, and then met as a board to write off those loans,” Odhiambo told the stunned committee.

The activist further alleged that certain individuals have served on advisory and board positions for over four decades without replacement, creating what he described as an entrenched system resistant to accountability and transparency.

Millions in Legal Fees, Zero Dividends

Perhaps the most financially damaging allegation centers on the bank’s expenditure patterns, which Odhiambo claims demonstrate a fundamental misuse of resources meant for regional development.

East African Development Bank (EADB) office.

Between 2016 and 2024, the bank paid USD 4.4 million in legal fees but declared zero dividends to its shareholders — the citizens of East Africa, while board members allegedly pocket USD 3,000 per sitting.

“Apart from board members who are paid USD 3,000 per sitting, there are lawyers who are also on the gravy train,” Odhiambo told the committee, calling for a forensic audit of the bank’s legal expenditures.

The revelation that shareholders — the governments and citizens of Kenya, Uganda, Tanzania, and Rwanda, along with private investors — have received no returns while legal costs soared has raised serious questions about the bank’s financial management and priorities.

False Diplomatic Immunity Claims

Adding to the governance concerns, Odhiambo alleged that senior EADB officials have attempted to shield themselves from criminal accountability by making false claims of diplomatic immunity.

He argued that the bank has used these immunity claims to block criminal cases, despite clarification from Kenya’s Ministry of Foreign Affairs that EADB does not enjoy blanket protections under the Vienna Conventions.

This allegation takes on particular significance given recent legal troubles facing the institution, including the issuance of an arrest warrant for Isaac Nyongesa Okwara, EADB’s Chief Security Officer, who was charged with supplying false information to Kenya’s Directorate of Criminal Investigations.

EALA Promises Thorough Investigation

The petition drew strong reactions from EALA members, with several lawmakers expressing alarm at the scale and nature of the allegations presented.

South Sudan’s representative, Gai Deng, told the committee: “We are very shocked by this petition. The details that you have presented are so vast and I think it will require for us to do justice.”

The committee, chaired by Kenyan legislator Kennedy Musyoka Kalonzo and supported by Abdullahi Makawe, pledged to examine the petition thoroughly and determine appropriate action.

The promises of investigation come at a critical time for regional financial institutions, as development banks across Africa face increased scrutiny over governance and effectiveness in delivering on their mandates.

Regional Development at Stake

Established in 1967, EADB was created to promote economic development and regional integration through development financing and advisory services across East Africa.

The bank is jointly owned by the governments of Kenya, Uganda, Tanzania, and Rwanda, with additional shares held by private investors.

The institution has historically played a crucial role in financing infrastructure projects, supporting private sector development, and fostering trade within the East African Community. However, critics have long questioned its transparency and effectiveness in recent years.

The allegations come as East African countries increasingly rely on development finance to support post-pandemic economic recovery and infrastructure development.

Any loss of confidence in EADB’s governance could have broader implications for regional development financing.

Calls for Accountability Mount

Beyond the EALA petition, the allegations have sparked broader calls for accountability and reform within regional institutions.

Civil society groups across East Africa have increasingly raised concerns about transparency and governance in institutions meant to serve citizens’ interests.

The timing of the petition is particularly significant as East African governments face mounting debt burdens and increased scrutiny over the effectiveness of development spending.

Citizens and civil society groups are demanding greater accountability from institutions that operate with public resources.

For EADB, founded on the principle of fostering regional development and integration, the allegations represent a fundamental challenge to its credibility and mandate.

The bank’s response to the investigation and any reforms that may follow could determine its role in East Africa’s development future.

As EALA begins its investigation, the regional parliament faces the challenge of balancing thoroughness with the need to maintain confidence in critical regional institutions.

The outcome could set important precedents for accountability and governance across East African Community institutions.

The investigation is expected to examine not only the specific allegations raised by Odhiambo but also the broader governance structures and oversight mechanisms that have allowed the alleged problems to persist.