Ketan Somaia convicted in Sh1.9b fraud case

Ketan Somaia, the man at the centre of one of Kenya’s biggest financial crimes, the Goldenberg scandal, was last Friday convicted of nine counts of obtaining money transfers by deception at London’s Old Bailey criminal courts.

The 52-year-old former Kenya resident who moved to the UK, was convicted by a 12-man jury and now faces many years behind bars in a UK prison when he is convicted on June 23.

The court in London heard how Somaia treated wealthy UK investors to luxury trips, generous gifts and fabulous parties before fleecing at least three of them about Sh1.9 billion.  This is following one of the biggest private prosecutions in London lodged by a wealthy friend-turned-pursuer.

Somaia   gave the impression of being a successful businessman... smooth, charming, impressive and persuasive. He posed as a friend of the billionaire Hinduja brothers and claimed to own assets worth Sh42.5billion ($500million) in banking and hotels.

The crimes took place between 1999 and 2000 when Somaia was President and Chief Executive of the Dolphin Group of Companies. Jurors heard that Somaia passed for a very wealthy businessman with business operations in Dubai and Africa as well as an interest in the Delphis Bank, Mauritius. 

The prosecution argued he used his wealth and status within the Indian community to persuade Mr Murli Mirchandani (the primary complainant) to make payments of Sh1.6 billion ($19.5 million) after promising him high returns.  Mirchandani — who claims to be worth more than Sh10 billion ($120million) — pursued Somaia in the civil court before finally launching a private prosecution. But even after his arrest Somaia, continued to live a luxurious lifestyle, dining at five-star hotels in Mayfair and the exclusive East India Men’s Club, and sending his teenage daughter to a finishing school in Switzerland.

Dubbed ‘King Con’, Somaia,  who made his fortune in hotels, banking and media, is said to have wooed his victims with luxury trips on private Learjets, champagne parties, extravagant dinners and expenses paid trips to Dubai, Kenya and South Africa.

He owned an office in Mayfair and a palatial home in the exclusive north London suburb of Hadley Wood — favoured by Arsenal and Spurs footballers.

Mirchandani said he was persuaded by Somaia to hand over millions of dollars in a series of ten business transactions and loans.

“14 years ago, I was a self-made businessman with a thriving business to hand over to my children.  When I met Somaia, I trusted him implicitly.  He seemed to me to be a very successful and wealthy businessman and I thought that I could benefit from doing business with him.  I now bitterly regret my misplaced trust,” Mr Mirchandan said in statement after the ruling. Mirchandani received regular interest payments but never saw the loans returned or the paperwork confirming his investments.

Distant relative

 But when Mirchandani failed to give him more money, Somaia conned Dilip Shah, the husband of one of his distant relatives, out of £120,000  (Sh18 million), jurors heard. “He has stolen $19.5 million  (Sh 1.6 billion) from me which has caused considerable harm to my business.  His actions have undermined my trust in people and had a detrimental effect on my health.  I have spent the last 14 years trying to rebuild my businesses at the same time as trying to hold Mr Somaia to account for his actions,” Mirchandan said. He was represented by William Boyce QC and Rachna Gokani of Peters & Peters law firm.

Somaia conned a third man, Surajit Sen, out of around two million dollars  (Sh170 million) in 1997. He also owed $15million  (Sh2.4 billion) to another businessman, referred to as ‘Mr Bose’, by April 2001.

He claimed he had repaid Mr Bose around $5million (Sh420 million) but later admitted that this was mostly from a $3.5million  (Sh294 million) mansion in Dubai which he had signed over as security for the loan.

Somaia was acquitted of two counts of obtaining money by deception from Mr Mirchandani amounting to $3.5m (Sh294 million)  and will be sentenced during the week commencing June 23, 2014 once his medical report is finalised. The ruling now opens a fresh window into the dark past of one of Kenya’s most controversial businessmen, who has been linked to more than five scandals. The jurors were told that Mr Somaia the impression of being a ‘successful multi-millionaire’ leading a “lavish jet-setting lifestyle.”

Extremely generous

But in reality, they heard, he was a ‘confidence trickster on a grand scale and “almost shameless in his exploitation” of his victims. Jurors were told that Somaia had a ‘propensity to carry out deceptions of this kind in order to obtain large sums of money from the businessmen who accepted at face value his so-called personal guarantees.”

“He gave the impression of being a successful businessman... smooth, charming, impressive and persuasive. He was extremely generous and he threw fabulous parties,” prosecutor William Boyce QC argued. He invited Mr Mirchandani to dinners at Annabel’s nightclub in London and offered expenses paid trips to South Africa and Dubai. Somaia flaunted his lavish home in Hadley Wood, north London, to further win the confidence of his prey.

It is alleged that Mr Somaia began defrauding Mr Mirchandani by asking him for a short term loan of Sh73.5million ($865,000) to buy shares in Delphis Bank, Mauritius, guaranteeing repayment in four months.

Two days later he convinced Mr Mirchandani to hand over $7.5 million  (Sh630 million) to buy a 10 per cent stake in the bank, it is claimed.

In July Mr Mirchandani transferred another $2.5 million  (Sh210 million) to buy a stake in another company which Somaia claimed would double in value within three years.

The following month he thought he was paying $2.775 million (Sh223 million) for a 50 per cent interest in the Diamond Mining Corporation of Liberia, which Somaia claimed would treble in value within nine months.

In his defence, Mr Somaia argued they were legitimate loans and said he never broke his agreements.