By Richard Lough and Humphrey Malalo
NAIROBI (Reuters) - A Kenyan government minister pleaded not guilty to a dozen counts of abuse of office on Tuesday, hours after resigning to allow for an investigation into a scam involving imports of untaxed vehicles.
Industrialisation Minister Henry Kosgey was released on bail by Nairobi's high court.
In addition to the corruption charges, Kosgey was named by the International Criminal Court last month as one of six suspected masterminds behind Kenya's deadly post election violence in 2007/08.
His resignation, the second high profile cabinet minister to quit in three months, was a sign that the fight against endemic corruption in east Africa's largest economy is intensifying.
Prosecutors told the court heaving with reporters and other cabinet ministers, that the 12 charges carry a maximum of 10 years in jail, if convicted.
The Kenya Anti-Corruption Commission (KACC) alleged that Kosgey granted exemptions for the importation of more than a hundred cars older than the eight-year legal limit and waived taxes for them. He has denied wrongdoing.
"I wish to state that my actions in this matter are above reproach. I have committed no wrongs," Kosgey, the chairman of Prime Minister Raila Odinga's Orange Democratic Movement (ODM) party, told a news conference before his court appearance.
"It is also important to note that no money was lost by the government in connection with these exemptions. It is not a case of misappropriation," he said.
Political observers said the rising number of ministerial scalps could force President Mwai Kibaki to reshuffle his fragile coalition government.
Former Foreign Minister Moses Wetangula, a close ally of Kibaki, stepped down under pressure from parliament in October over allegations of corruption in the purchase of land for Kenyan embassies abroad.
Higher Education Minister William Ruto was also suspended in October after the high court ruled he should stand trial for fraud over a land deal. Ruto, also from ODM, is another official on the ICC list of suspects in the post-election upheaval.
"SURGERY ON BOTH SIDES"
The ODM's parliamentary chief whip, Jakoyo Midiwo, said his party had been unfairly targeted by the commission.
"We will not accept KACC being used to fight political wars. We want to see surgery on both sides," Midiwo told reporters.
The KACC said in October it was investigating four cabinet ministers -- likely to have included Kosgey -- and political analysts said the reinvigorated anti-corruption battle was shaking the foundations of the coalition government.
"There is a lot of pressure for a reshuffle," said Mwalimu Mati, head of the anti-corruption watchdog Mars Group Kenya.
Mati said there were signs of a growing political will to tackle the vice which the KACC says costs east Africa's largest economy an estimated 30-40 percent of gross domestic product.
Weak laws have hampered the KACC's anti-corruption battle, analysts say, but Kenya's new constitution will give it the power to arrest and prosecute suspects.
"Parliament needs to fast track the Ethics and Anti-graft law ... to make KACC fully independent. This has been the main issue that has handicapped KACC," said Teresa Omondi, deputy director of Transparency International Kenya.
No Kenyan minister has ever been convicted of corruption, a pervasive problem in east Africa's biggest economy.
(Additional reporting by Beatrice Gachenge; Editing by Giles Elgood)
