UK finally arrests Devani over Sh7.6b oil scam

By JUDY OGUTU

"We have met our end of the deal and the ball is now in your court," is the message the UK is sending Attorney General Amos Wako, after arresting fugitive businessman Yagnesh Devani, who is wanted in Kenya over the Sh7.6 billion Triton Petroleum scam.

In return for arresting Devani, the UK expects Wako to speed up extradition of Nambale MP Chrysanthus Barnabas Okemo and Samuel Gichuru, the former managing director of Kenya Power and Lighting Company (KPLC) to the British territory of Jersey on charges of laundering proceeds of corruption.

The arrest of Devani appears to have ended a largely futile two-year effort by the Kenya Government to arrest the man alleged to have masterminded the Triton oil scam, which also unearthed serious weaknesses in the country’s oil import Open Tender System (OTS).

The scandal broke in January 2009, but the offence was committed in 2008. By the time it became public, Devani could not be traced.

The District Judge at the City of Westminster Court, London, has remanded Devani in custody, and will fix a date for his extradition hearing.

Fled country

The head of communication at the British High Commission in Kenya, Mr John Bradshaw confirmed the events to The Standard, but could not give further details immediately.

"We confirm Devani was arrested this morning in UK, London. I do not have a lot of details, but the moment we get them we will relay it to you. The arrest was in relation to a request of extradition from Kenya Government," said Bradshaw.

News of the Triton oil saga hit the headlines in 2009 following allegations that fuel worth close to Sh8 billion had disappeared. That was when Devani came to the limelight.

Devani is said to have fled the country following the mega oil scandal, and the Kenyan government sought help from Interpol (International Police) to track him down. The wealthy businessman was then charged in absentia.

When the Sh7.6 billion charges were preferred against the oil trader, the State applied for and obtained a warrant of arrest against him.

Devani’s photograph and details are on Interpol’s website. The Kenya Anti-Corruption Commission (KACC) filed the charges against him.

His co-accused are Mahindra Pathak, Julius Kilonzo, Collins Otieno, and Benedict Mutua. They are charged with conspiracy, stealing, failing to prevent a felony and fraudulent disposition of mortgaged goods.

It is alleged that between July 28 and August 1, 2008 at Kenya Commercial Bank, with intent to defraud, they discounted Triton Petroleum company invoices amounting to over Sh960 million.

Four witnesses, including Energy Minister, Kiraitu Murungi, have testified before Nairobi Magistrate Lucy Nyambura in the Triton case, which is set for hearing on June 22.

The deal between KPC and Triton, dating back to 2004, generated one of the biggest financial scandals in the country. Forensic audits showed it exposed KCB and PTA Bank to huge risks after a massive oil import worth billions of shillings financed by both banks through letters of credit (L/Cs) vanished into thin air from the Kipevu Oil Storage Facility in Mombasa, owned by Kenya Pipeline Company (KPC).

The oil was being held at the facility in trust for financiers and marketers. The paper trail, according to the KACC charge file, showed the oil was secretly sold to several oil marketers in the country.

Triton had won the tender to import oil under the OTS

Both KCB and PTA Bank were unaware of the others’ involvement in the cunningly executed collateral financing by Triton that amounted to some form of cheque kiting, where the oil firm borrowed from Peter to pay Paul.

Defraud

As the scandal ballooned, it also threatened to damage Kenya Pipeline Company’s standing with both local and international banks. It broke as BP Africa was close to selling its stake in Shell BP to Triton, scuttling the deal.

Devani and his co-accused are alleged to have take advantage of the OTS introduced in 2003 to allow even non-major oil marketers to import the country’s monthly oil requirements.

It allowed the small players to negotiate the kind of financing from banks required to import the huge quantities of oil the country needs.

Devani is charged alongside other officials Mahindra Pathak, Julius Kyalo Kilonzo, Collin Otieno and the company itself.

They are accused of jointly disposing off 13 million cubic metres of diesel worth Sh32 million without consent of Emirates National Oil Corporation (Singapore). Others accused are former KPC officials Peter Mecha, Benedict Mutua and Phanuel Silvano.

They are charged with conspiring to defraud several petroleum companies purporting that Triton had diesel ready for sale at KPC storage facility in Kipevu.

As at last week (May 11) a United Kingdom-based oil firm was pursuing Kenya Pipeline Company (KPC) over oil valued at Sh3 billion allegedly released from the Corporations Kipevu Oil Storage Facility (KOSF) two years ago.

Glencore Energy UK limited says that over 31,700 tonnes of its gasoil was released from the facility without its authority, and wants a declaration that it is entitled to the same quantity of gasoil out of the total stocks held by KPC.

Alternatively it wants the court to order KPC to give immediate delivery of the gasoil in question or it pays the value of the oil that now stands at over Sh3.2 billion.

In canvassing its case, the UK based firm jetted in two witnesses from London.

Devani’s arrest comes days after the Attorney General (AG), Mr Amos Wako received extradition requests for Okemo and Gichuru.

British Minister for Africa and the United Nations in the Foreign and Commonwealth office, Mr Timothy Le Cocq made the requests to the AG when they met on Monday.

Wako announced he had begun the process that might lead to the extradition of the two to the island of Jersey to stand trial for allegedly laundering Sh900 million acquired through corruption.

Early this week, Wako confirmed that the UK Government had agreed to Kenya’s request for the arrest of Mr Yagnesh Devani, the suspected architect of the Sh7.6 billion Triton Oil scandal, and issued warrant of arrest against the fugitive.

"The court in UK has agreed with us through our request and a warrant against him (Devani) issued," Wako was quoted saying.

Warrant of arrest

He said other than Devani, Kenya has also made a similar request to the UK for the arrest of televangelist Gilbert Deya to stand trial in Kenya for child trafficking.

The warrant of arrests against Okemo and Gichuru were issued by the Chief Justice of Jersey, an island within the jurisdiction of UK, after the two were accused of "concealing of transferring the proceeds of crime amounting to Sh900 million," between 1986 and 2002.

Apart from Kenya, Interpol sent a red notice for the two in Tanzania, South Africa and the United Arab Emirates.

An Interpol Red Notice alerts police that the individuals are wanted by national jurisdictions (or International Criminal Tribunals, where appropriate) with a view to their arrest and extradition.

The charges they face carry a maximum penalty of possible (imprisonment) of 14 years, but the two are presumed innocent until proven guilty in a fair trial.

Gichuru is alleged to have accepted bribes from foreign businesses that had contract with KPLC, and hidden the money in Jersey.

The fraud was achieved by asking foreign contractors to pay bribes into bank accounts in Jersey of a company called Windward Trading Ltd.