Besieged shareholders of the collapsed Imperial Bank have linked relatives of fugitive businessman Yagnesh Devani and fraudster Ketan Somaia to the multibillion-shilling loot at the mid-tier lender.
Devani was behind the Sh7.6 billion Triton Oil scandal while Somaia, who is serving an eight-year jail term in England for fraud, was a big-time “looter” in the Moi era.
Court filings by some of the bank’s shareholders give a blow-by-blow account of how Raj Devani, a relative of Yagnesh Devani, and Somaia’s relative Pankaj Somaia benefited from the more than Sh45 billion alleged fraud at IBL.
In an explosive affidavit, shareholders of IBL state that the beneficiaries of the massive and long-running fraud scheme included Jade Petroleum Ltd owned by Raj, and Metro Petroleum Ltd controlled by Pankaj. They join WE Tilley (a controversial fish processing company), Jade Petroleum Ltd, and Adra International Limited and entities allied to the bank’s former managing director Abdulmalek Janmohamed.
The firms have been linked to the looting said to have started in earnest around 2002.
It is alleged that the late Janmohamed used to pay them off (Pankaj Somaia and Raj Devani) through Jade and Adra International, and its subsidiary, Metro Petroleum.
Yagnesh fled the country in 2009 to India and then the UK after the scandal in which Triton was allowed by the Kenya Pipeline Company to collect oil valued at Sh7.6 billion, and sell it on a bank’s behalf without its consent, creating a fuel shortage.
Somaia was sentenced by Justice Richard Hone of the Central Criminal Court of England and Wales, commonly known as the Old Bailey in July 2014, for fleecing a former friend and investors out of £13.5 million (about Sh1.75 billion) that they had put into his struggling Dolphin Group 15 years earlier.
The documents filed in court by Anwar Hajee, a non-executive director of IBL, and nominated representative of Abdulmal Investments, also a shareholder, allege that staff of the Central Bank of Kenya “were aware of and facilitated the concealment” of the fraudulent conduct.
Hajee says after the death of Janmohamed, they discovered that in collusion with third parties, the former MD made several fraudulent and irregular disbursements from the bank that benefited the Devani and Somaia families, among other entities.
The court document states that deposits that were made by the bank’s customers, and which were supposed to be generating income for the bank, were being fraudulently transferred to accounts under the name of WE Tilley Muthaiga Ltd.
The disbursements were effected on the instructions of the former MD, in cahoots with some senior staff of IBL, after which they would be withdrawn or transferred to the concerned parties.
Hajee says to conceal the transactions, Janmohamed and his accomplices would use a software which ensured the illegal accounts were not reflected in the financial statements of the bank, thereby understating its true financial position.
“We have now established that the CBK colluded with AJ (Abdulmalek Janmohamed) and other senior officers of the bank, including James Kaburu (former chief finance officer) and Naeem Shah (former head of credit) by providing the board with entirely false financial data together with regulatory reports which the CBK deliberately doctored, in order to ensure that IBL’s non-executive directors and the shareholders would remain in the dark about the fraud,” he says.
Hajee says since the death of Janmohamed, it has become evident that he and certain other members of IBL’s senior management team as well as CBK officials, had been engaged in a long-running and systematic fraud.
This included the concealment of unapproved, over-limit and non-performing loans from the bank’s books and from the board.
The shareholders have established that for many years, the CBK’s officials deliberately flouted, breached and acted in disregard to the law in the supervisory process.
“A reasonable regulator in the shoes of the CBK should have brought to light the wrongdoing at the highest level of IBL’s management. CBK did not do this,” reads his affidavit.
The shareholders have also established that year-on-year, a pattern emerges of the CBK officials changing the content of those final reports to ensure that loans which had not been approved by the board did not appear in the CBK’s inspection reports.
The CBK officials also made sure that non-performing loans were not correctly reclassified and provided for in IBL’s accounts, and overdraft lending, beyond the set limit, was approved, and not brought to the board’s attention.
“What I have stated has been entirely driven by the CBK’s desire to protect itself and to keep it hidden from public view,” Hajee says.