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GANGSTER ECONOMY

When all that glitters is not gold

More than 20 people have been arrested since the beginning of the year over the fake gold syndicate, as warnings to unsuspecting buyers fall on deaf ears

In Summary

• The rise in the ‘lucrative’ trade was rising until a con on a royal family prompted a crackdown.

• Despite many cases of fake gold being brought before court, hardly anyone has been convicted.

Fake gold bars
Fake gold bars
Image: FILE

Not all that glitters is gold. Old as the adage may be, very few people seem to heed.

In the recent past, fake gold has flooded the market, with many victims approaching security agencies for salvation.

There had been a sudden upsurge in the supply of fake gold and currency in Nairobi, and indications are that police are swimming to the deep ends to catch the big fish.

But will the big fish be rescued back into the waters where they thrive in the illegal business?

More than 20 people have been apprehended since the beginning of the year over the fake gold syndicate. The victims are mostly foreigners and other unsuspecting Kenyans, who lose millions of shillings to the cons.

Their tears only seem to fill the illegal traders’ pockets, and their frowns, to tickle them.

 

WHY NO CONVICTIONS?

Despite many cases of fake gold being brought before court, barely anyone has been convicted. This is mostly due to poor investigations, lack of witnesses and insufficient evidence.

But for gold trade, there seems to be more.

ARRESTS

More than 20 people have been apprehended since the beginning of the year over the fake gold syndicate. The victims are mostly foreigners and other unsuspecting Kenyans, who lose millions of shillings to the cons.

 

Two months ago, flamboyant tycoon Jared Otieno and his co-accused Sikanda Saleh were acquitted of fraud charges in an alleged fake gold trade for lack of sufficient evidence to convict them.

Otieno is, however, back in court, and might face similar charges today after he was arrested by police in his newly acquired palatial home in Karen. The detectives also towed away Otieno’s two luxurious cars, a Porsche and Bentley, proof of a high-end lifestyle.

Two years ago, Otieno had been arrested by police for obtaining money by pretending to be in a position to export gold from Kenya to foreign countries.

His arrest came after several complaints to the police by four foreign nationals. He has other cases on fake gold in other courts.

According to the police, complainants are made to pay cash, which the sellers claim was used to pay government taxes and exportation expenses.

There are several other suspects, including Zaheer Jhanda, described as a person of interest in the ongoing fake gold crackdown.

 

ROYAL CONNED

Even with the arrests, Kenyans are questioning just how deep the investigations may be ploughed after several photographs were shared on social media, where Jhanda is seen hobnobbing with the high and mighty in the political and government circles.

“As a service, it is within our limits to crush any fake gold or cash syndicates that come up,” police spokesman Charles Owino said.

DCI head George Kinoti called the trade a gangster economy that will shutter the county if allowed to flourish.

“We shall dismantle the criminal enterprise, which had ballooned to a parallel gangster economy,” said Kinoti.

Last week, President Uhuru Kenyatta ordered a crackdown on gold scammers after a Dubai royal fell victim of the illegal business.

The ruler of the United Arab Emirates, Sheikh Mohammed bin Rashid Al Maktoum, complained to the President that his gold had been seized at JKIA.

His business associate Ali Zandi, who runs a gold trading company in Dubai, had informed Sheikh Maktoum that their gold consignment worth millions of shillings from DR Congo had been detained at the Jomo Kenyatta International Airport.

This particular scam is said to have begun mid-last year, when the political operative got in touch with the Dubai-based Zandi and cut a deal for a gold consignment that was supposedly in DRC.

According to police sources, no sooner had Sheikh paid some cash on September 25 than his Kenyan contacts began spinning the stories.

When Dubai put pressure on them, they then said the consignment had been seized at JKIA, and even printed fake front pages of two leading local newspapers as proof. Eventually, two suspects were arrested and arraigned in court and charged with fraud.

 

TICKING TIME BOMB

Sally Kimani, a finance expert, said, “The rise in the ‘lucrative’ illegal trade could be on the rise, but maybe, it could have been lurking for some time, only that the police have intensified their crackdown now.”

Kimani’s views are lent credence by a government warning issued in 2017 by the then Trade minister, cautioning people of gold scammers defrauding many unsuspecting foreigners and locals. The warning, however, fell on deaf ears.

In an advert, CS Kazungu Kambi warned that the rogue dealers were issuing certificates purported to be from the government, showing that the fake gold had been tested and graded.

“The victims have been conning unsuspecting Kenyans and foreigners,” he said.

What many Kenyans have been pondering, however is, why Nairobi?

“Nairobi has been a regional commercial hub of the region, and most goods being imported or exported within East and Central Africa pass through the city,” Kimani said.

Its people are also very proactive in business, and Congo, mother of minerals in the region, sits so close to the country.

“Nairobi has for long been the conveyor belt for goods and services coming in and out of East and Central Africa,” Kimani said.

The Democratic Republic of Congo is said to sit on almost $25 trillion worth of minerals. The fake dealers make use of its proximity to Kenya to persuade foreigners that their merchandise is authentic yet affordable.

Kenya has never been a mass gold-producing country, with a few unconventional mines and riverbeds in western and northern Kenya producing very little of the valuable mineral.

According to the World Gold Council, the country had an average of just 1.76ton of gold reserves last year. Only 160kg of the metal was mined in the same period.