London financier sues KPC over sale of Triton products
A Triton filling station. Photo/JACOB OWITI
Ghosts of the Triton Petroleum Company oil scandal continue to haunt the Kenya Pipeline Company (KPC) with the latest entry of Glencore Energy UK Limited, which is seeking Sh3 billion from the State corporation.
Glencore, one of the Triton’s financiers, is accusing KPC of unlawfully releasing 31,752 metric tonnes of petroleum products to oil marketers without their consent under the Collateral Financing Agreement (CFA).
The hearing of the case started on Tuesday before Lady Justice Murugi Mugo with Glencore’s senior managers taking the witness box to testify on the oil scandal which led to the collapse of Triton in December 2008.
Through lawyer Mr George Oraro, Glencore wants the court to order KPC to refund it $40 million, the equivalent of 31,752 tonnes of the products. KPC has denied responsibility in the entire oil scandal.
A forensic audit by PricewaterhouseCoopers (PwC) released to the Government in June 2009 confirmed, Glencore’s claim to be 31,752 tonnes and Fortis Bank of Netherlands 21.6 tonnes.
Fortis Bank shared the proceeds from the sale of Triton’s oil terminal in Mombasa with KCB and PTA Bank.
PwC said in its independent audit ordered by the government to unearth the scam that senior KPC employees in the operations and finance departments played a key role in the fraudulent release of petroleum products to Triton.
KPC was accused of acting in breach of CFA by irregularly releasing the products in its custody to Triton.
PwC says the agreement required KPC to issue acknowledgement letters to the financiers confirming it was holding stocks that they could only release to the oil marketers upon receipt of an authorisation from the financier.
“Such authorisation was not received from Glencore’s office,” said Mr Oraro while cross-examining one of the witnesses representing the company.
PwC report also cites operational lapses at KPC as the major cause of Triton’s ability to draw products that did not belong to it causing distortions that nearly brought down the entire petroleum supply chain.
PwC investigators said KPC played a major role in the scam after its officials admitted to irregular release of an estimated 96,000 tonnes of fuel products in its custody without consent of lenders.
Early this year, the fugitive Triton Petroleum Company chairman Yagnesh Devani was charged afresh with the theft of oil products worth Sh1.3 billion belonging to Fortis Bank.
A Nairobi court issued an arrest warrant after he went into self-exile when the mega-scandal was exposed two years ago.
Mr Devani is jointly charged with former KPC chief technician Benedict Mutua, and former Triton Energy Kenya Ltd employee Julius Kyalo.
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