CID director Ndegwa Muhoro: The source of gold remains a mystery. FILE
What you need to know:
CID director Ndegwa Muhoro told Parliament that the source of gold that Skyhawk International Limited and Ushindi Exports Limited have been exporting through JKIA “remains a mystery.”
The CID boss said the Kenya Revenue Authority (KRA) was pursuing the two companies for non-payment of Sh2.8 billion in taxes.
Mr Muhoro told Parliament that the taxes are in lieu of money that came into the country through JKIA but was not banked.
The Criminal Investigations Department (CID) wants suspended commissioner of Mines Moses Masibo prosecuted for facilitating trade in gold suspected to be part of a wider money laundering and terrorism financing ring.
CID director Ndegwa Muhoro has told Parliament that the source of gold that Skyhawk International Limited and Ushindi Exports Limited have been exporting through Jomo Kenyatta International Airport (JKIA) “remains a mystery.”
“The source of the gold remains a mystery for the reason that the Commissioner of Mines and Geology allowed the dealers not to keep records of their suppliers,” reads a confidential brief that Mr Muhoro made to the House committee on Environment and Natural Resources two weeks ago.
Destruction of the gold export records is one of the many leads investigators of last week’s fire at the Jomo Kenyatta International Airport are following.
The sister companies operating under the chairmanship of Mr Pattni Naginchandra Jivanlal and whose dealings are subject to parliamentary and police investigations exported 1.8 tonnes of gold worth Sh6.9 billion between January and May this year.
Mr Pattni Naginchandra Jivanlal is not related to Mr Kamlesh Pattni, the Goldenberg architect, although the former appeared as a State witness before the Bosire Commission that inquired into the scandal in 2004. He also has no links with Nagin Pattni, the jeweller who operates businesses in Nairobi.
The CID wants Mr Masibo be prosecuted for writing a letter that exempted the two private firms from declaring the sources and suppliers of their gold.
The document indicates that the country, through two licensed gold miners — Karebe Gold Mining Limited and Kilimapesa Gold Ltd — produced 536 kilogrammes of the precious metal between January and June raising questions over its s sourcing.
The CID said 17 gold export entries and declaration forms obtained from JKIA in respect of exports by the two companies indicate that a total of 536,742.4gms (536Kg) was exported between February and May 2013.
“The 17 gold export files indicate that the two companies declared a total of $25,530,000 equivalent to Sh2,185,812,740 [worth] of gold exports,” the brief states.
The ongoing investigations have so far established that the two companies exported gold worth Sh37.6 billion beginning 2005 to date.
“Scrutiny of the two companies’ bank accounts reflect small amounts in dollars ($10,000) being credited in their dollar accounts,” the report says.
“The investigations team could not rule out the possibility of this large quantity of cash in dollars being used in funding terrorism, purchasing or smuggling of arms or money laundering since there was no evidence gathered to confirm how the declared money in US dollars was disposed of by gold exporters,” Mr Muhoro added in the confidential document presented to the committee that held its meeting in camera.
The CID boss said the Kenya Revenue Authority (KRA) was pursuing the two companies for non-payment of Sh2.8 billion in taxes.
Mr Muhoro told Parliament that the taxes are in lieu of money that came into the country through JKIA but was not banked.
Police said directors had claimed that they needed to ship in the money in hard cash because they were paying some of their suppliers in dollars.
Central Bank of Kenya regulations require commercial banks to report any transactions exceeding $10,000.
“Directors of the two companies (whose statements were recorded) alleged that they were buying gold from authorised Kenyan agents as well as from artisanal miners and collectors spread all over the country from places such as Migori, Siaya, Bondo, Turkana, Lodwar, Moyale and Logorien,” the preliminary report says.
CID detectives took issue with two letters Mr Masibo and a former commissioner of mines Collins Owayo wrote exempting the two gold exporters from revealing their sources of gold as well as the identity of suppliers.
“The directives issued by the current and former commissioners of mines and geology under letters dated January 6, 2012 and April 3, 1997 respectively, which contravened the provisions of Section 11 of the Trading in Unwrought Precious Metals Act Cap 309 laws of Kenya, have created a situation that makes it difficult to trace the source or origin of gold handled/traded in the country,” Mr Muhoro said.
The said section of the law states that “a licensed dealer, banker and a person who receives or deposits for safe keeping or dispatch unwrought precious metal, shall keep true and correct register in English of all unwrought precious metal deposited with or received or dispatched or otherwise disposed of by him, and shall within 24 hours after every transaction, indicate the date, names of parties to the transaction, the nature and weight of the material transacted and the price received or paid.”
Mr Muhoro said investigations had revealed that Mr Nagin Pattni [Jivanlal], who chairs the two companies, had in December 2011 approached Mr Masibo, the suspended Commissioner of Mines and Geology, with a request to waive the requirement that they comply with Section 11 of the Trading in Unwrought Precious Metals Act cap 390.
Mr Pattni had claimed that the provision of maintaining the register of all suppliers of gold was posing a challenge in the case of artisanal miners who did not want to disclose their names for fear of being arrested since such miners were not licensed and were considered illegal.
Mr Masibo allowed them to continue buying such gold from artisanal miners even when they declined to give their personal details provided that they kept a record of the quantities that they supplied and the date as modalities of formalising the artisanal miners was being worked on.
“The chairman Mr Nagin Pattni [Jivanlal] stated that they buy some of the gold from gold merchants from neighbouring countries like Congolese, Tanzanians and Ugandans whom they pay in cash,” the report says.
The confidential document highlighting the status of the ongoing investigations by a team of seven CID detectives shows that the gold exports were sold to non-licensed dealers mainly in the United Arabs Emirates.
“No evidence was available of companies which import the gold from Kenya to the UAE, however, the exporters claimed they dispose of the gold in the open market,” Mr Muhoro said.
Last year, Congolese President Joseph Kabila visited Nairobi seeking Kenyan government assistance to trace Sh9 billion worth of gold that was allegedly stolen from his country. The lead investigator in the investigations into the 2.5-ton Congo gold was mysteriously killed in Nairobi’s South C estate.
The parliamentary committee is investigating gold exports by the two companies and the reasons they transit $40 million through JKIA every month instead of banking.
The investigations began following a statement sought by Fafi MP Bare Shill in Parliament. Mr Shill has since indicated to the committee that he was no longer interested in pursuing the matter.
The Finance, Trade and Planning committee that Speaker Justin Muturi asked to investigate the matter jointly with the Environment committee has since dropped the investigations.
But a week before Mr Muhoro was summoned to shed light on the matter, Ugunja MP Opiyo Wandai, who is a member of the Environment committee, said it was important for the team to get to the bottom of the matter, warning it had the potential to damage the reputation of the members.
“A lobby group has already claimed that members were compromised into dropping the investigations,” said Mr Wandai.
Committee chairperson Amina Abdaala said she would approach the Speaker about the possibility of tabling the report in the House without the input of the Finance, Trade and Planning as well as Mr Shill’s testimony.
“I undertake to see the Speaker to find out how we will proceed to table a report whose initiator has since indicated unwillingness to proceed with the matter and in which our sister committee has failed to take an interest,” said Ms Abdalla.
On Tuesday, the committee resolved to summon Mining secretary Najib Balala over the matter. Mr Balala will also be required to explain his recent decision to suspend Mr Masibo.
