Billionaire Rai set free as bank CEO in Mumias lease saga grilled

Sugar and cement billionaire Jaswant Rai. [Boniface Okendo, Standard] On the day, abductors set billionaire Jaswant Singh Rai free President William Ruto waded into the matter wondering who the businessman is to have a chokehold on the sugar industry. The President who was addressing crowds in Western Kenya promised to break sugar cartels with the name of Rai being dropped in abandon. Monday, the businessman maintained his silence as a bank executive to the Mumias Sugar Company lease battles was grilled. He remained coy about his ordeal in the hands of the abductors who released him on Sunday night. Rai was seized along Wood Avenue on Friday by armed men who blocked his car before bundling him in their getaway vehicle. Confinement A source said Rai had intimated to one of his lawyers that he was held in confinement not far from where he was abducted at around 5.42pm. "He says where he was held hostage is not more than a kilometre from where he was abducted," said the source. However, lawyer Kioko Kilukumi said he is yet to get instructions from Rai regarding the abduction believed to have been carried out by police officers. The senior lawyer told The Standard that he is giving his client time before any action is taken. Sources within the DCI said the Directorate was not involved in any investigation touching on the abducted man. "We are not involved in such an operation," said a senior DCI officer adding a new twist to the unveiling of the mystery. Rai and some creditors are opposed to Mumias Sugar Company's lease to Uganda-based sugar firm, Sarrai Group which is owned by his brother Sarbjit Singh Rai. Hours after the Kabras Sugar chairman was released, Victoria Commercial Bank (VCB) Chief Executive Officer Yogesh Pattni spent the better part of Monday at the Directorate of Criminal Investigations (DCI) headquarters for alleged questioning. It is unclear what Pattni was being questioned about and why the DCI 'picked' him from his Two-Rivers Mall office. His lawyers stated that the CEO was still waiting for sleuths at the boardroom by around 4 pm, adding that Pattni still had active orders from the Commercial Court at Milimani barring the DCI from questioning him about Mumias Sugar Company Limited deal between the bank and Dubai based Vartox Resources INC. "We are here at the headquarters but they are asking us a few questions and that is it. They have just taken him for questioning. I am yet to find out if the grilling is in connection with the Rai (Jaswant Singh) thing," lawyer Gibson Kimani told The Standard. The DCI had filed a case seeking a warrant to investigate Victoria Bank in June this year. The application filed before the Milimani magistrate's court indicated that detective's interest with the lender revolved around alleged money laundering as well as conspiracy to defraud, and fraud in relation to tax. They said that the probe had been reported to the Treasury Cabinet Secretary Njuguna Ndung'u. Inspector Isaac Ogutu from DCI told the court that preliminary investigations had shown that unnamed people had conspired to defraud Mumias Sugar Company with the aim of sabotaging its revival and operation. The investigator also alleged that the transactions could be fictitious and that they took place in actual books of accounts of the bank. The DCI on June 23, 2023, obtained orders allowing them to probe the bank accounts belonging to Vartox Resources Inc. (Vartox Resources Kenya Limited) from January 1, 2019. The accounts of interest, according to court documents are shillings and dollars. However, Pattni moved to the Commercial court arguing that the DCI was conducting a sham probe since the accounts listed in the order of the lower court do not belong to Vartox. In his affidavit filed in court, Pattni said that he honoured the invite by the DCI and appeared before its investigators on June 21. "During the interview session, the DCI informed me that they were investigating unspecified fraud against Mumias together with evasion of unspecified taxes and unspecified money laundering allegations," said Pattni. He said that they did not get any details about the probe or explanation on how the bank had broken the law. Pattni said that he needed to get approvals from the bank's board in order to supply DCI with the transaction information for the two accounts. Further, he said that on June 30, the bank received a court order compelling them to avail books of bank accounts, certified copies of bank account opening documents, and outward remittance documents from January 1, 2019. According to court documents, Ogutu in his affidavit also claimed that Victoria Bank bought rights and benefits in Mumias Sugar Company Limited from a company called Propraco, which had allegedly lent the sugar company USD 35 million. According to Ogutu, Victoria Bank later sold the benefits to Vartox Resources Inc. (Vartox Resources Kenya Limited). He said that Vartox, which allegedly gave the USD 35 million loan, is not registered in Kenya. However, Pattni said DCI never attached any document in their application before court. "The application did not annex any documentary exhibits to support the allegation of conspiracy to defraud, tax allegations, or money laundering. The application did not provide specific details of Vartox and Victoria Bank defrauded Mumias," said Pattni According to the Victoria Bank CEO, DCI did not reveal how the sought information on the bank accounts would aid their investigation or give particulars on how the bank financed a criminal activity. He said that the application by DCI to access the financial information of the accounts belonging to Vartox was a gross abuse of the process since they had no evidence. "The investigation is an attempt by the DCI to criminalize standard commercial and civil transactions in order to intimidate, threaten and harass the applicants (Victoria Bank and Vartox) and give advantage to certain undisclosed parties in Mumias insolvency proceedings," said Pattni. He accused DCI of deliberately concocting facts adding that the claim that the claim that the bank purchased shares in Mumias is false. "I am aware that the only thing purchased by Victoria from Proparco is the debt it advanced to Mumias for the construction of the co-generation plant many years ago and well before Mumias became subject to insolvency proceedings," he says. Propraco is a French government-leading institution that has been lending to Kenyan and African companies for years. He described the allegation that Proparco fraudulently assigned Mumias's debt to Victoria as an absurdity adding that none of the contracting parties has lodged a complaint. "Assignment of debt is a commonplace occurrence in business and investment setting." He questioned the interest of Treasury CS in the matter, adding that the ministry was making absurd allegations against certain specific creditors of Mumias. Pattni insisted that the bank has not received a single cent from Mumias while it owned the debt. "To allege fraud against Proparco is tantamount to alleging fraud against the French government." Pattni alleged that the DCI investigation is motivated by undisclosed third parties whose motive is to abuse the criminal justice system in the frustration of the applications that they have lost in these proceedings. Fight for justice He said unnamed people behind the woes facing the bank are as a result of certain creditors using DCI with the hope that they will be subjected to threats of incarceration with the aim of making Vartox give up its fight hence handing the third parties a free hand to deal freely with Mumias company assets and make it abandon its fight for justice. "Any party with any grievance relation to Mumias assets and affairs ought to raise the matter with this honourable court instead of attempting to criminalize a non-existent dispute over creditors' debts," said Pattni. In support of Pattni, Vartoz Resources signatory Amal Kokkandathil Joseph said the account numbers that DCI wanted to investigate do not belong to Vartox. Joseph denied Vartox's involvement in money laundering and tax fraud in regard to adopting Mumias debts. "For money laundering to exist, the subject funds have to be subject of crime," he said. Joseph said that tax fraud should be investigated by the Kenya Revenue Authority (KRA), not DCI who he accused of abusing the criminal justice system. He denied that Vartox had any shares in Mumias, saying that what they have in the company is money owed to them that they got from Proparco. "Proparco lent monies to Mumias and was, to the best of my knowledge, never a shareholder in Mumias," he said. He said that since they acquired Mumias debts in 2021, the company has not repaid a single cent. Billionaire Rai had also moved to court, arguing that DCI officers illegally took him from Jomo Kenyatta International Airport over the same issue on July 15, 2023. According to Rai, it is not a crime to assign debts of an insolvent company. "The DCI officers have not explained how the assignment of debts of an insolvent company is a criminal activity and how either I and the first applicant (West Kenya) are guilty of any criminal offence in relation to the assignment of Mumias debts," argued Rai.

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