(Bloomberg) -- A Kenyan inquiry into dam construction projects worth $650 million has placed Treasury Secretary Henry Rotich at the center of a power struggle, with critics demanding he resign.

The investigation not only threatens to hamper President Uhuru Kenyatta’s $25 billion plan to expand infrastructure and boost the East African nation’s economy, but also unity in the ruling Jubilee party. The race to succeed Kenyatta when his term ends in 2022 has pitted allies of his deputy, William Ruto, against those who are opposed to him contesting for the presidency.

While the role played by Rotich, a 50-year-old Harvard-trained economist, puts him at the center of the case, it’s the location of the projects that’s brewing a political storm. Senate Majority Leader Kipchumba Murkomen said ruling party and opposition rivals are using investigators to focus on projects in the area where Ruto, who he is allied to, comes from, in an attempt to derail his presidential ambitions.

One rival that Murkomen refers to is former Prime Minister Raila Odinga, who reconciled with Kenyatta after a disputed election last year. Together, the two pledged to fight graft. Ruto’s allies have accused Odinga of using the rapprochement to undermine the deputy president while sowing seeds of division in the ruling party.

“Until the succession battle to replace Kenyatta as president is over, anti-corruption efforts will remain highly politicized,” said Nic Cheeseman, a professor of democracy at the University of Birmingham in the U.K. “Ruto’s enemies will use corruption allegations as the way to legitimize their efforts to end his presidential ambitions.”

How the probe is concluded will demonstrate Kenyatta’s commitment to eradicating corruption that he’s previously described as a threat to national security. Kenya loses as much as one third of its annual budget to corruption, according to the government’s anti-graft agencies.

The public prosecutor on March 8 ordered that graft investigations into six projects to construct dams be accelerated and pledged that any ensuing prosecutions won’t be affected by politics. That includes the planned Kimwarer and Arror dams in the Rift Valley. The Directorate of Criminal Investigations questioned Rotich this month about his role in authorizing advance payments to contractors.

Political Divisions

Murkomen said on Citizen TV that while he backs the fight against graft, it should apply across the country and not focus on one region. Most of the dam projects under review are located in the area where Murkomen and Ruto come from.

“The questioning of Secretary Rotich seems to have more to do with the power struggle at the top of government, with the Kenyatta-Odinga alliance up against Ruto and his allies, than with any genuine commitment to fighting corruption,” Jacques Nel, an economist at NKC African Economics, said. “While we have seen many scandals and charges laid, there have been no notable convictions of powerful politicians.”

Kenyatta and Ruto were on opposite sides of a disputed 2007 election that triggered ethnic fighting in which more than 1,000 people died. Kenyatta, an ethnic Kikuyu and Ruto, a Kalenjin, were charged at the International Criminal Court in cases that collapsed for lack of evidence for their role in post-election violence. They then agreed to run together in the two subsequent elections.

Kenyan politics have for the last five decades largely been dominated by the families of Kenyatta, Odinga and former President Daniel Arap Moi. Even when Moi’s former deputy, Mwai Kibaki, become president in 2002, Odinga’s support was crucial. A Ruto presidency will be seen as a more distant breakaway of power from the three families.

Advance Payments

Contractors of the two projects for which Rotich was questioned were allegedly paid 21 billion shillings ($209 million) in advance, Director of Public Prosecutions Noordin Haji said in a statement. Preliminary findings suggest “breaches of the law,” he said.

“All projects whether domestic or externally funded are implemented in strict adherence to the law and in accordance with the commercial and financing agreements,” Rotich said in a statement. “If there were any breaches, the ongoing investigations will capture them.”

Rotich has refused to heed calls to resign by lawmakers including Samuel Atandi, a member of the finance and national planning parliamentary committee, telling Sunday Nation newspaper that they weren’t necessary. He and his lawyer didn’t answer their phones when called for comment.

Kenyatta’s pledge to develop transport links, affordable housing, expand domestic manufacturing and improve healthcare is hinged on a properly functioning Treasury, according to Dismas Mokua, a Nairobi-based independent political analyst. Rotich is leading the country’s negotiations with the International Monetary Fund for a loan.

Because of the sensitivity of Rotich’s ministry, it’s hard to “run the national treasury and run around having meetings with the directorate of criminal investigations at the same time,” Mokua said.

--With assistance from Adelaide Changole.

To contact the reporters on this story: Eric Ombok in Nairobi at eombok@bloomberg.net;David Herbling in Nairobi at dherbling@bloomberg.net

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net, David Malingha, Rene Vollgraaff

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