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Shadowy firm at the centre of $180m nuts deal

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By ALLAN OLINGO
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Last week’s announcement that Tanzania had struck a $180 million deal to sell 100,000 tonnes of its cashewnut stockpile to a Kenyan company, Indo Power Solutions, was perhaps the best news that the farmers, who had earlier surrendered their crop to the state, received in years.

Cashewnut farming has in recent years become a thorn in the farmers’ side, its market having been infiltrated by brokers bent on squeezing every cent out of the trade as they increased their margins — setting the farmers’ earnings on a downward slide.

Tanzanian President John Magufuli had waded into the affair with a directive that threw all private cashewnut buyers out of the market in favour of his government, promising the farmers better earnings for their produce.

But shortly thereafter, the Tanzanian government, which had earlier promised to process the nuts and sell the finished product at a premium to increase the farmers’ earnings, appeared to have changed tack.

It set out to find a bulk buyer for the more than 200,000 tonnes of cashewnuts it had collected from the farmers, in what looked like an international invitation for bids.

That search apparently identified the Kenyan company, Indo Power, and the deal documents were quickly prepared for signing on the sidelines of the recent East African Community summit in Arusha, Tanzania on January 30.

Hussein Mansour, the Cereals and Other Produce Board director and Indo Power’s chief executive Brian Mutembei signed the deal at a ceremony attended by Tanzania’s Minister for Justice and Constitutional Affairs Palamagamba Kabudi, Industry and Trade Minister Joseph Kakunda, Bank of Tanzania Governor Florens Luoga, and Kenya’s High Commissioner to Tanzania Dan Kazungu.

But while Tanzanian officials and farmers found relief in the fact that they had finally found a buyer at what was deemed the fairest price possible in the marketplace, across the border in Nairobi questions immediately arose over the identity of the firm at the centre of the transaction.

“Indo who?” …was the common question on many Kenyan lips on hearing that the little-known company had pulled through a $180 million deal in Arusha.

Since then, questions have continued to be asked about the multibillion-shilling deal, especially coming at a time when Kenya is in the middle of a crusade to clean up its financial services sector that has more recently been discredited by the flow of millions of suspect funds.

Official registration documents show that Indo Power is a two-year old firm based in Thika town on the outskirts of Nairobi that was not known to have transacted any deals worth more than $10 million. Its owners are virtually unknown in Kenya’s big business community and its chief executive is better known in political deal making circles.

The EastAfrican investigations, including a search at the Registrar of Companies, found that Indo Power, which was registered in October 2016, claims to have offices in Indo House’s “Ground Floor, Room 6, Kisii Road, Thika.” Its directors, Joyce Waithira Gatoho Muigai and Alice Wanjiku Gatoho, jointly own 1,000 shares with a nominal share capital of Ksh100,000 ($1,000).

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Mr Mutembei told The EastAfrican this week that the company was registered in 2008 and incorporated in 2016 and the directors are his mother and his wife.

The EastAfrican could, however, not locate Indo House in Thika.

Mr Mutembei says the firm is a commodity trader, dealing in coffee and chicken, alcohol importation and wholesale petroleum products sale.
Everything but cashewnuts.

It was not clear if the Tanzanian government had conducted due diligence on the company before inking the multimillion-dollar deal, whose proceeds are expected to be paid to the Bank of Tanzania within a week of the signing.

The presence of the Kenyan envoy at the deal signing appeared to signal Nairobi’s endorsement. Mr Kazungu defended his role in the deal, which many observers have described as curious, telling The EastAfrican that the embassy in Dar es Salaam was expected to facilitate the talks between the investor and the Tanzanian government. He, however, would not divulge details of the deal.

“We attended the signing of the deal because that was part of the economic diplomacy, which the mission is obligated to support. The fact that Tanzania is a grower should interest its neighbours and, as a mission, we are happy to see a Kenyan company clinch this deal. It is in our interest to nurture relations, including trade between the two countries. However, I cannot go into the specifics of the deal. I would advise you to reach out to Brian for that,” Mr Kazungu said.

Indo Power’s latest success comes only months after the Magufuli administration rejected the initial bid to purchase the cashewnuts. Shortly thereafter, the Tanzanian leader ordered the army to mop up the crop and truck it to depots to await sale.

In Kenya, doubts have continued to be raised about the ability of Indo Power to finance such a massive deal, with analysts pointing to the fact that the little-known firm may have merely acted as a broker for a third party.

It has not been lost on keen observers that a firm that is outward looking and active in international trade has no online presence. Official registration records also indicate that Indo Power has no bankers, no lawyers, no auditors, and no company secretary.

Mr Mutembei however reckoned that “the company has expertise in connecting Tanzania with the buyers of the produce,” a pointer to the fact that it may have merely acted as a broker.

So, who is behind it and where is the money coming from? Which banks would finance such a mega deal?

Sources in Kenya’s financial services sector expressed doubts that this deal would be financed by a Kenyan bank, given the shadowy nature of the firm.

The country’s stringent financial reporting and anti-money laundering regulations would pose serious hurdles to the deal.

Mr Mutembei admitted that the money is not coming from Kenya, indicating that Indo Power had “presented a letter of credit for the total amount to the Tanzanian government as required in the agreement.”

“This LC was from international banks, and this credit line will make the purchase successful. So, the money isn’t going to be coming from Kenya’s financial system. I cannot name the banks that offered these LCs for confidentiality reasons,” he said.

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General

Sordid tale of the bank ‘that would bribe God’

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Bank of Credit and Commerce International. August 1991. [File, Standard]

“This bank would bribe God.” These words of a former employee of the disgraced Bank of Credit and Commerce International (BCCI) sum up one of the most rotten global financial institutions.
BCCI pitched itself as a top bank for the Third World, but its spectacular collapse would reveal a web of transnational corruption and a playground for dictators, drug lords and terrorists.
It was one of the largest banks cutting across 69 countries and its aftermath would cause despair to innocent depositors, including Kenyans.
BCCI, which had $20 billion (Sh2.1 trillion in today’s exchange rate) assets globally, was revealed to have lost more than its entire capital.
The bank was founded in 1972 by the crafty Pakistani banker Agha Hasan Abedi.
He was loved in his homeland for his charitable acts but would go on to break every rule known to God and man.
In 1991, the Bank of England (BoE) froze its assets, citing large-scale fraud running for several years. This would see the bank cease operations in multiple countries. The Luxembourg-based BCCI was 77 per cent owned by the Gulf Emirate of Abu Dhabi.  
BoE investigations had unearthed laundering of drugs money, terrorism financing and the bank boasted of having high-profile customers such as Panama’s former strongman Manual Noriega as customers.
The Standard, quoting “highly placed” sources reported that Abu Dhabi ruler Sheikh Zayed Sultan would act as guarantor to protect the savings of Kenyan depositors.
The bank had five branches countrywide and panic had gripped depositors on the state of their money.
Central Bank of Kenya (CBK) would then move to appoint a manager to oversee the operations of the BCCI operations in Kenya.
It sent statements assuring depositors that their money was safe.
The Standard reported that the Sheikh would be approaching the Kenyan and other regional subsidiaries of the bank to urge them to maintain operations and assure them of his personal support.
It was said that contact between CBK and Abu Dhabi was “likely.”
This came as the British Ambassador to the UAE Graham Burton implored the gulf state to help compensate Britons, and the Indian government also took similar steps.
The collapse of BCCI was, however, not expect to badly hit the Kenyan banking system. This was during the sleazy 1990s when Kenya’s banking system was badly tested. It was the era of high graft and “political banks,” where the institutions fraudulently lent to firms belonging or connected to politicians, who were sometimes also shareholders.
And even though the impact was expected to be minimal, it was projected that a significant number of depositors would transfer funds from Asian and Arab banks to other local institutions.
“Confidence in Arab banking has taken a serious knock,” the “highly placed” source told The Standard.
BCCI didn’t go down without a fight. It accused the British government of a conspiracy to bring down the Pakistani-run bank.  The Sheikh was said to be furious and would later engage in a protracted legal battle with the British.
“It looks to us like a Western plot to eliminate a successful Muslim-run Third World Bank. We know that it often acted unethically. But that is no excuse for putting it out of business, especially as the Sultan of Abu Dhabi had agreed to a restructuring plan,” said a spokesperson for British Asians.
A CBK statement signed by then-Deputy Governor Wanjohi Murithi said it was keenly monitoring affairs of the mother bank and would go to lengths to protect Kenyan depositors.
“In this respect, the CBK has sought and obtained the assurance of the branch’s management that the interests of depositors are not put at risk by the difficulties facing the parent company and that the bank will meet any withdrawal instructions by depositors in the normal course of business,” said Mr Murithi.
CBK added that it had maintained surveillance of the local branch and was satisfied with its solvency and liquidity.
This was meant to stop Kenyans from making panic withdrawals.
For instance, armed policemen would be deployed at the bank’s Nairobi branch on Koinange Street after the bank had announced it would shut its Kenyan operations.
In Britain, thousands of businesses owned by British Asians were on the verge of financial ruin following the closure of BCCI.
Their firms held almost half of the 120,000 bank accounts registered with BCCI in Britain. 
The African Development Bank was also not spared from this mess, with the bulk of its funds deposited and BCCI and stood to lose every coin.
Criminal culture
In Britain, local authorities from Scotland to the Channel Islands are said to have lost over £100 million (Sh15.2 billion in today’s exchange rate).
The biggest puzzle remained how BCCI was allowed by BoE and other monetary regulation authorities globally to reach such levels of fraudulence.
This was despite the bank being under tight watch owing to the conviction of some of its executives on narcotics laundering charges in the US.
Coast politician, the late Shariff Nassir, would claim that five primary schools in Mombasa lost nearly Sh1 million and appealed to then Education Minister George Saitoti to help recover the savings. Then BoE Governor Robin Leigh-Pemberton condemned it as so deeply immersed in fraud that rescue or recovery – at least in Britain – was out of the question.
“The culture of the bank is criminal,” he said. The bank was revealed to have targeted the Third World and had created several “institutional devices” to promote its operations in developing countries.
These included the Third World Foundation for Social and Economic Studies, a British-registered charity.
“It allowed it to cultivate high-level contacts among international statesmen,” reported The Observer, a British newspaper.
BCCI also arranged an annual Third World lecture and a Third World prize endowment fund of about $10 million (Sh1 billion in today’s exchange rate).
Winners of the annual prize had included Nelson Mandela (1985), sir Bob Geldof (1986) and Archbishop Desmond Tutu (1989).
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Monitor water pumps remotely via your phone

Tracking and monitoring motor vehicles is not new to Kenyans. Competition to install affordable tracking devices is fierce but essential for fleet managers who receive reports online and track vehicles from the comfort of their desk.

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Agricultural Development Corporation Chief Accountant Gerald Karuga on the Spot Over Fraud –

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Gerald Karuga, the acting chief accountant at the Agricultural Development Corporation (ADC), is on the spot over fraud in land dealings.

ADC was established in 1965 through an Act of Parliament Cap 346 to facilitate the land transfer programme from European settlers to locals after Kenya gained independence.

Karuga is under fire for allegedly aiding a former powerful permanent secretary in the KANU era Benjamin Kipkulei to deprive ADC beneficiaries of their land in Naivasha.

Kahawa Tungu understands that the aggrieved parties continue to protest the injustice and are now asking the Ethics and Anti-corruption Commission (EACC) and the Directorate of Criminal Investigations (DCI) to probe Karuga.

A source who spoke to Weekly Citizen publication revealed that Managing Director Mohammed Dulle is also involved in the mess at ADC.

Read: Ministry of Agriculture Apologizes After Sending Out Tweets Portraying the President in bad light

Dulle is accused of sidelining a section of staffers in the parastatal.

The sources at ADC intimated that Karuga has been placed strategically at ADC to safeguard interests of many people who acquired the corporations’ land as “donations” from former President Daniel Arap Moi.

Despite working at ADC for many years Karuga has never been transferred, a trend that has raised eyebrows.

“Karuga has worked here for more than 30 years and unlike other senior officers in other parastatals who are transferred after promotion or moved to different ministries, for him, he has stuck here for all these years and we highly suspect that he is aiding people who were dished out with big chunks of land belonging to the corporation in different parts of the country,” said the source.

In the case of Karuga safeguarding Kipkulei’s interests, workers at the parastatals and the victims who claim to have lost their land in Naivasha revealed that during the Moi regime some senior officials used dubious means to register people as beneficiaries of land without their knowledge and later on colluded with rogue land officials at the Ministry of Lands to acquire title deeds in their names instead of those of the benefactors.

Read Also: Galana Kulalu Irrigation Scheme To Undergo Viability Test Before Being Privatised

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“We have information that Karuga has benefitted much from Kipkulei through helping him and this can be proved by the fact that since the matter of the Naivasha land began, he has been seen changing and buying high-end vehicles that many people of his rank in government can’t afford to buy or maintain,” the source added.

“He is even building a big apartment for rent in Ruiru town.”

The wealthy officer is valued at over Sh1.5 billion in prime properties and real estate.

Last month, more than 100 squatters caused scenes in Naivasha after raiding a private firm owned by Kipkulei.

The squatters, who claimed to have lived on the land for more than 40 years, were protesting take over of the land by a private developer who had allegedly bought the land from the former PS.

They pulled down a three-kilometre fence that the private developed had erected.

The squatters claimed that the former PS had not informed them that he had sold the land and that the developer was spraying harmful chemicals on the grass affecting their livestock and homes built on a section of the land.

Read Also: DP Ruto Wants NCPB And Other Agricultural Bodies Merged For Efficiency

Naivasha Deputy County Commissioner Kisilu Mutua later issued a statement warning the squatters against encroaching on Kipkuleir’s land.

“They are illegally invading private land. We shall not allow the rule of the jungle to take root,” warned Mutua.

Meanwhile, a parliamentary committee recently demanded to know identities of 10 faceless people who grabbed 30,350 acres of land belonging to the parastatal, exposing the rot at the corporation.

ADC Chairman Nick Salat, who doubles up as the KANU party Secretary-General, denied knowledge of the individuals and has asked DCI to probe the matter.

Email your news TIPS to [email protected] or WhatsApp +254708677607. You can also find us on Telegram through www.t.me/kahawatungu

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William Ruto eyes Raila Odinga Nyanza backyard

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Deputy President William Ruto will next month take his ‘hustler nation’ campaigns to his main rival, ODM leader Raila Odinga’s Nyanza backyard, in an escalation of the 2022 General Election competition.

Acrimonious fall-out

Development agenda

Won’t bear fruit

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