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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.
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).
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.
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.
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.
“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.
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.
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.
As part of aggressive campaigns for his presidential bid, the DP, who views the former Prime Minister as his main challenger in the 2022 polls, will begin his tour in Migori and Kisumu in the third week of July, and thereafter Homa Bay and Siaya in the last week.
The DP has rolled out a ground operation that includes United Democratic Alliance (UDA) party and aspirants’ regional forums, regional economic forums, allowing affiliate political parties to sprout without the demand that they merge with UDA and assembling a wide array of professionals to front his presidential bid.
In a politically changed environment unlike the one in 2017 when he was an influential voice in government and the chief campaigner, DP Ruto now finds himself technically being the head of the opposition after the acrimonious fall-out with the President.
The relationship has worsened further after President Kenyatta’s truce with the ODM leader, his main challenger in the 2017 disputed presidential vote, thus alienating the DP further.
His allies say he’s building the infrastructure that will help him win decisively in the first round in next year’s presidential election.
Leading the preparations for the DP’s Nyanza tour is Mr Odinga’s former aide, management consultant and strategist Eliud Owalo, who is also the convener of the Luo-Nyanza Economic Caucus.
Yesterday, he said the DP will start his Nyanza tour in mid-July for what he termed an intensive grassroots tour aimed at campaigning for his presidential bid.
“The leader of the Hustler movement, Deputy President William Ruto, will make an intensive grassroots tour of the four Luo-Nyanza counties within the second half of the month of July.
In the two-legged tour, he will first visit Migori and Kisumu counties in the third week of July 2021 followed closely by a tour of Homa Bay and Siaya in the fourth week of July 2021,” read a statement sent to newsroom, which Mr Owalo signed.
Apart from the meet the people tour, the DP is expected to attend church services as well as continue with his economic empowerment programmes for youth and women groups.
The DP is expected to use the tour in his political opponent’s backyard to popularise his bottom-up economic model.
The region has always voted overwhelmingly for the ODM chief in the past elections.
“We want the Luo Nyanza region to lay its stake in any future governance dispensation on the basis of a responsive and feasible development agenda for our people as opposed to positions that individual members of the community will be holding in that government,” Mr Owalo said.
The DP started courting the region last year when Kapseret MP Oscar Sudi hosted more than 100 youths from Nyanza under the umbrella of “Nyanza Youth Movement for Ruto 2022” led by Mr Stephen Midenyo aka Mada and 2013 Rangwe Parliamentary candidate Everest Okambo.
A year ago, as part of a broader plot targeting the region, Mr Sudi and his Kiharu counterpart Ndindi Nyoro made a discreet visit to Bondo and Kisumu counties in what they described as “private functions” but which had a strong political inclination.
A week ago, Migori governor Okoth Obado, who is viewed as a rebel in the region, was hosted by Mr David Ruto, the DP’s brother.
The plan, Mr Sudi says, is to target the youth, women’s groups and the church to reach out to the Nyanza populace and lure a significant number of voters to join DP Ruto’s bandwagon.
“We’re reaching out to the whole country because the hustler movement is not confined to a certain region,” Keiyo South MP Daniel Rono told the Nation.
A meeting convened by Mr Owalo at a Nairobi hotel in mid-May had many former foot soldiers of Mr Odinga attending. They include those who decamped after losing ODM nominations in 2013 and 2017 elections, among them former Kisumu Governor Jack Ranguma, former Rongo MP Dalmas Otieno and former Rangwe MP Martin Ogindo.
Also in attendance was Citizen’s Convention Party (CCP) leader Grace Akumu.
UDA Secretary-General Veronica Maina told the Nation that in their recruitment drive, Nyanza is not left out. The party’s clerks, she said, are stationed in the region.
Mr Odinga’s troops led by Suba South MP John Mbadi have been on record saying that such meetings won’t bear fruits for the DP.
Mr Mbadi said the DP needs to understand why people of Nyanza associate with ODM and believe in Mr Odinga. The DP is also said to be making inroads in Mr Odinga’s other support bases of Western and Coast.