Inside Imperial Bank grand heist: Where masterminds sank stolen Sh38 billion

Masterminds of the theft at Imperial Bank had snapped up millions of shares at the Nairobi Securities Exchange (NSE), bought high-end property in Kenya and abroad, including beach plots and apartments, and put billions of shillings in fixed-deposit accounts by the time the bank was put under receivership.

In the second part of our serialisation of the Imperial Bank heist, which started in The Standard on Saturday, we follow the money and tell you where the billions of shillings siphoned out of the bank ended up.

Business Beat has obtained a trove of files, email correspondence, minutes, copies of share certificates and investment records that paint the picture of how a staggering Sh38 billion left the bank and was ‘invested’ by a small group of people who also ran the Janmohamed multi-billion-shilling empire.

The dossier, whose contents are now with the Central Bank of Kenya (CBK) and form part of the exhibits in ongoing court cases involving the bank, came days after a forensic audit by American firm FTI Consulting.

The audit revealed how just eight members of one family that largely deals in the fish business conspired with the bank’s top managers to siphon Sh34 billion from the bank in one of the biggest such thefts to strike the financial sector.

True position

The FTI audit found that the bank’s senior management, led by its late group managing director Abdul Janmohamed, ran long-running and systemic fraud by running a hidden ‘parallel’ bank.

The ‘parallel’ books and financial statements were never disclosed to the board or reported, concealing the true position of the bank.

WE Tilley accounted for Sh34 billion of the Sh38 billion that was lost.

About Sh3.5 billion of the remaining amount was given to a company associated with the Devani and Somaia families.

The Devani name is familiar to Kenyans because of Yagnesh Devani, the proprietor of Triton Petroleum. Mr Devani fled Kenya in 2009 and a warrant of arrest was issued against him. He was later arrested in Britain, but is yet to be extradited to Kenya.

Triton, which was put under receivership in December 2008, is accused of illegally withdrawing 126.4 million litres of petroleum products valued at Sh7.6 billion from Kenya Pipeline Company between November 2007 and November 2008.

The most well-known Somaia, on the other hand, is Ketan Somaia, a Kenyan-born billionaire who was jailed in July 2014 after a London court found him guilty of fraud.

The audit additionally shows that Imperial Bank is looking to recover Sh500 million from its auditors, PKF Kenya.

Janmohamed himself amassed billions of shillings during his 23-year tenure at the bank. By the time he collapsed and died from a heart attack last year, the banker held significant investments in various industries, including sugar, power, real estate and banking.

Janmohamed had established an intricate holding structure administered out of Mauritius that owned most of his assets.

“Kenyan assets are principally held through a Kenya-registered vehicle called Janco Investments Ltd. The beneficiaries of the Trust appear to be the children of his brothers. We believe there are significant investments held offshore, as well as through nominees, particularly with Amin Manji of Minigroup, Anwar Amershi and Karim Jamal,” the audit report filed in court as part of the evidence reads.

Investment vehicle

The report alleges that these three individuals are some of the largest creditors of the bank.

It also appears that the late chief executive overruled prudential guidelines in his treatment of their loans.

“Dear Mr Jan Mohamed. I refer to our meeting prior to your travel last week. Following were to be attended: freeze interest rates on the above loan (Amin loan), move this loan from Amin’s name. Possibly is to rename to Eugunia Holdings Ltd where Amin is neither a director nor a shareholder,” a Mr Shriram Phadke wrote in March 2015.

In various correspondence, Mr Phadke comes across as Janmohamed’s confidantes, entrusted with running delicate errands for him. He has emerged as one of the main players in Janmohamed’s inner circle, and is painted as ‘The Fixer’; the person to go to in case of any problem, and the person who kept everything together.

According to the audit, Mr Manji is an advisor of the late MD’s trust, along with Nina Shah (whom the probe alleges to be among the perpetrators of the fraud, and is current head of treasury at Imperial Bank) and Salim Janmohamed (brother of the late Janmohamed and one of the advisors of his trust).

The dossier shows Manji, Ms Shah and Mr Salim as being among the closest to Janmohamed, advising him on all matters, including medical operations.

On June 15, 2011, a company was set up in Mauritius to provide an investment vehicle for Janmohamed’s billions of shillings. The company, known as Minerva Fiduciary Service (Mauritius) Limited, owns most of his properties, including shares in eight other companies through a layer of other firms.

Minerva is described as a management company that is “duly incorporated and existing under the laws of the republic of Mauritius and regulated by the Financial Services Commission”.

Its registration number is 17002/2803 and license number MC96003029. Its registered office is Suite 2004, Level 2, Alexander House, in Ebene, Mauritius.

Main players

This is where anyone looking to track down the money would start. But to make it difficult to find out the individuals behind it, another company, Awena Limited, is listed as owning Minerva.

According to records, as at September 2012, Awena held 50 shares in the Mauritius entity.

Minerva owned Abdulsultan Rehemtulla Janmohamed Trust. Janmohamed was the settlor of this trust and its advisors are Salim Janmohamed, Nina Nemchand Shah and Amin Akberali Habib Manji. The trust has four beneficiaries, all nephews and nieces of the late managing director.

Janmohamed was not married and had no children.

The trust then owns Mauritius Co 1, which is the link to Janco Investments. Janco has shares in at least 10 companies, among them Upperview Properties, City Park Properties, Sandview Properties, Butali Sugar, and Allgate. Others are Downtown Investment, Imperial Capital, Imperial Bank Kenya, Nature Stone Quarries, and Downtown Holdings.

These are Janco’s holdings as at the end of last year, which is when the forensic audit was done.

Janco’s registered office is along Nairobi’s Bunyala Road.

“Janco has investments in diversified areas like real estate, financial institutions and various food industries. The promoter of Janco is an accomplished banker and has experience in building and growing businesses,” the company says in its profile.

The directors of the company are listed as Janmohamed and his brother Salim.

To set up some of these companies, Janmohamed would turn to Imperial Bank for funding. For instance, in November, the bank loaned Allgate Sh1.875 million, and in August 2014, one of the Mauritian entities approached the bank for funding facilities.

In one of the emails in the dossier, Phadke writes to Imperial’s head of credit, Naeem Shah (who was appointed acting MD, but has since been suspended) requesting funding.

“Dear Mr Naeem. Enclosed is the banking facilities request letter for a new Mauritian entity. Original will reach you today with co [sic] basic documents,” the email dated August 7, 2014 reads.

The company was requesting a loan of $1 million (Sh102.6 million at current exchange rates) and an overdraft facility of up to half a million euros (Sh55.4 million).

Janmohamed also owned shares in his name in several companies, including Cherry Sugar Investments, another entity incorporated in Mauritius. His family also controls Mundika Sugar Company, a Kenyan firm situated along Brookside Drive in Nairobi.

“Previous directors of Mundika were corporate entities. The current directors are Mr A Janmohamed of Janco and Mr Atul Premchand Khetshi Shah. Mr Atul is a well accomplished consultant in the region and has a wide range of reputable corporates on his client list,” the documents giving short company profiles of the firms found to be main players in the saga read in part.

Private businesses

Janmohamed also owned several apartments in Riverside, Nairobi, as well as in Dubai and Mozambique. He also has fixed-deposit accounts at Imperial Bank and I&M Bank.

The architect of the bank scandal also invested in Asaachi Solar Power, also in Mauritius, and holds an undisclosed number of shares in Old Mutual, a plot on Links road another apartment in Parklands and at the Golden Jubilee project in Nairobi. He also has two beach plots in Zanzibar.

Janmohamed had about five individuals he trusted to run his private businesses, advice on investments, and open companies and receive loans from Imperial to fund these enterprises.

They also bought shares in Uchumi, Kenya Power and Mumias Sugar through Faida Investment Bank. But the shares have since lost value, which has seen the firm book heavy losses.

The stock market business was carried out through a company known as Goodwill Nairobi. The firm would, for instance, sell stock in Kenya Power and buy Uchumi shares. These shares would be pledged to Imperial Bank.

By May 2012, the company had 3.1 million shares in Kenya Power valued at about Sh154 million. It also had 10 million shares in Uchumi and another 8 million shares in Mumias valued at Sh320 million and Sh106 million, respectively.

Their records show that they had lost about Sh190 million in this stock portfolio by May 26, 2012. The losses continued growing, and by February 2013, the company had lost Sh208 million.

When losses in Uchumi shares became too much, they decided to buy a 23-acre piece of land in Kajiado.

“In line with what is discussed in the meeting between Amin, Karim Jamal and yourself (to minimise losses on Uchumi shares), Mr Amin is negotiating property in Kajiado area,” Phadke told Janmohamed in an email dated September 13, 2012.

“To secure the property, instead of paying cash deposit, we are proposing to issue a bank guarantee, the value of the gtee [guarantee] is about Sh11 million.”

A bank guarantee is a promise from a bank that if a certain borrower defaults on a loan, the bank will cover the loss.

Joint venture

To ensure all went smoothly, a letter requesting the bank guarantee was written and sent to Janmohamed with instructions that he should print it on Imperial Bank’s letterhead.

Manji is named as the borrower of the banking facility.

The bank agreed to pay Manji Sh11.3 million within 10 days after the land was transferred to him.

Two months later, Janmohamed wired another $30,000 (Sh3 million) to Phadke. The subject of the email confirming the receipt of funds was “Asachi”.

But despite managing billions of shillings, Janmohamed’s inner circle of investors bickered over small amounts of money. For instance, they argued over who would pay Sh2,285 in water bills accumulated in one of the apartments at Golden Jubilee Apartments.

Another fight ensued in 2013 over six apartment units owned by Janmohamed and other investors in Loresho Springs. In email exchanges, one of the agents who bought the houses on their behalf expresses his dissatisfaction at being blocked from reaching Janmohamed.

He says when he called Janmohamed to discuss the fallout, the MD would hang up on him.

The apartments — which at the time were being rented out at Sh65,000 per month each, and were occupied by employees of the United Nations other non-governmental organisations — were to be sold at about Sh13 million. A fight broke out after it took too long to sell the units.

“The Loresho Spring project was supposed to be of short duration, 3 to 4 months at best because if you recall, you had indicated at the onset that you already had a buyer (Majid) for two apartments at Sh11.65 million and the rest will be sold within a few months at Sh12.5 million each .... Unfortunately none of that materialised, Majid disappeared without a trace and other investors were not interested,” one of the emails from someone called Taz to the rest of the partners in the joint venture reads in part.

The investors and agents eventually fell out and reported each other to the Criminal Investigations Department.

The saga continues in the third instalment of this unfolding scandal.

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