Economy

London court jails fraudster Ketan Somaia for 8 years

somaia

Kenya-born businessman Ketan Somaia has been jailed by a UK court for conning a wealthy investor of Sh2 billion. Photo/CENTRAL NEWS

There will be no more champagne breakfasts for Ketan Somaia who rose to wealth as a politically connected front-man in Kenya but is now a convict, locked in a jail in the United Kingdom.

The Kenya-born businessman, who styled himself a banking billionaire to get soft loans from friends and associates, has been jailed for eight years by a London court that found him guilty of fraud.

UPDATE: Read our most recent story: 'The many sins of fraudster Ketan Somaia'.

Mr Somaia, 52, defrauded a former friend and other investors of some £13.5 million (over Sh2 billion) that they had put into his struggling Dolphin Group 15 years ago.

While most chose to cut their losses, one decided to pursue the private prosecution that felled the Kenyan.

This marks the second time that Mr Somaia is going to jail having also been incarcerated for two years in Kenya from 2005 after being convicted of stealing a million sterling pounds (about Sh150 million) from the National Bank of Kenya in a deal to import 'London-look' taxis.

The London court found him guilty of fleecing investors, convicting him of nine counts of obtaining money by deception, according to a story carried by the Daily Mail online.

The court heard how he wooed his victims with luxury trips and champagne parties at his palatial home and exclusive restaurants.

“I am satisfied the money you took as loans and investments were never invested as you said they would be, but were used by you either for your own purposes or to prop up your failing companies,” said Judge Richard Hone QC.

“You were fundamentally dishonest in your dealings.”

Mr Somaia was described as persuasive, using his charm to get at clients’ cash to prop up what the court heard were failing businesses.

READ: Ketan Somaia convicted for $19.5m fraud

Judge Hone was quoted as saying that he shortened Mr Somaia’s sentence on account of his health problems. Defence lawyer James Woods QC had argued that Mr Somaia’s heart and kidney problems have reduced his survival chances to only 20 per cent in the next five years.

“But for your admitted ill health, I would have had no hesitation in passing a sentence of ten years imprisonment,” said the Judge.

“I think some allowance should be made, though in my judgment you are your own worst enemy… having failed to take medication and failed to adhere to your doctor’s advice.”

One of the tricks Mr Somaia used to get cash from his victims was to brag about his connections with the rich. For example, he boasted that he was a friend of billionaire industrialists Srichand and Gopichand Hinduja, who own the Hinduja Group. The two were named the richest men in the United Kingdom by Forbes in May this year.

Mr Somaia also claimed he owned assets worth Sh44 billion ($500 million) in banking and hotels, but the businesses were failing. Dolphin Group ran several companies, including hotels, in Kenya from the 1980s with Somaia as chairman and chief executive.

The UK judge noted that when Somaia began to borrow cash around 1999, his Dolphin Group was already in financial difficulties. His attempts to keep up appearances by borrowing were futile: It collapsed in 2001.

Mr Somaia, who told his victims “my word is my bond”, was exposed as a confidence trickster in a private prosecution launched by his victim and former friend Murli Mirchandani in 2011.

The two men first met in 1998, but then met later at a wedding in Dubai and in a series of dinners. It reached a point where Mirchandani referred to Mr Somaia as Ketanbhai — a nickname whose suffix indicates trust and brotherhood.

Soon Mr Somaia began to take loans from Mr Mirchandani, promising to make him a partner in some of the subsidiaries.

Mr Somaia owned Delphis Bank in Kenya having bought it as a remnant of the Bank of Credit and Commerce International (BCCI) that collapsed in the early 1990s.

The bank had five subsidiaries with one in Tanzania and another in Mauritius. It was revived as Oriental Commercial Bank in 2001 with Kamlesh Pattni as the single largest owner.

In Kenya, he was close to senior figures in the Kanu regime and once even snubbed summons from the parliamentary Public Accounts Committee to answer to queries on a business deal.

However, after the 2002 General Election, which swept the former President Kibaki to power, pressure to arrest him came from various sources.
He was convicted of fraud and served time at the Kamiti Maximum GK Prison alongside Pattni.

After the collapse of Delphis Bank in Tanzania in 2002, the authorities there wanted him to hand over cash he owed the bank.