Kenyan President Mwai Kibaki has rejected a law which in effect would have overlooked financial crimes by public officials committed before 2003.
These include two notorious cases, the Goldenberg and Anglo Leasing scams, which diverted huge sums from the exchequer into officials' back pockets.
The bill, passed by MPs earlier this month, also stopped elected officials from having to declare their assets.
Mr Kibaki faces elections this year. He won in 2002 on an anti-graft platform.
Civil society groups and the diplomatic community had criticised the bill and had asked Mr Kibaki not to sign it.
Millstone
The BBC's Adam Mynott in the capital, Nairobi, says the MPs' vote to approve the bill two weeks ago prompted uproar. People demanded that the president not sign it, even though the clauses were approved by many of Mr Kibaki's supporters.
Politics and war on graft
The president has now sent the bill back to parliament asking for changes to clauses which would have prevented the Kenya Anti-Corruption Council (KACC) from pursuing prosecutions into the Goldenberg and Anglo Leasing scandals.
Our correspondent says corruption continues to be a millstone hanging round the neck of the Kenyan administration despite repeated promises by the country's leaders to eliminate it.
Even if the KACC retains its powers to carry out investigation before 2003, critics say it has shown no appetite to pursue senior figures in Kenya alleged to be behind large-scale corruption.
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