Economy

The many sins of Kenyan fraudster Ketan Somaia

Somaia

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

Convicted fraudster Ketan Somaia spent years on the run from angry creditors whose millions of dollars he used to prop up his troubled Dolphin Group.

His rise from obscurity as a Kenyan timber-merchant to the global stage was made possible by his political connections; first to big names in the kleptocratic Kanu regime under President Daniel arap Moi, then to Tory (Conservative Party) politicians in the United Kingdom that he met through Mark Thatcher, son to former British Prime Minister Margaret Thatcher.

The Kroll Associates report into Moi-era corruption identifies him as a bagman for Mr Hezekiah Oyugi, then a powerful permanent secretary in the Office of the President and quotes an unnamed source as saying he enriched himself as a middleman in arms sales and other government contracts.

Among his close business partners he counted controversial figures such as Goldenberg architect Kamlesh Pattni and disgraced Trust Bank boss Ajay Shah.

His cousin and business associate, Pankaj Somaia, is named in the Kroll Report as the right hand to a State House powerbroker.

The smooth-talking businessman quickly amassed a large number of legitimate businesses. By the mid-1990s, his empire stretched from Kenya and India to the United Kingdom and South Africa. It included hotels, banks, casinos, a sugar miller, a motor dealership, as well as TV, radio and print media.

But the fast-living mogul soon ran into trouble in the late 1990s.

His Bermuda-registered group, run from Dubai, collapsed in 2001 after Indian entertainment tycoon Subash Chandra of Asia TV had the Kenyan-born wheeler-dealer declared bankrupt in London. Somaia was then pursued in court on three continents for more than a decade, arrested at least twice and jailed once, even as he continued to live large and do business around the world.

His personal assistant, Arifa Parkar, had to leave his employ The Guardian newspaper once reported, “exhausted by fielding calls from unpaid creditors”, after he failed to pay her wages. He fought off the bankruptcy declaration and was even leading a deal to buy the United Kingdom’s largest Asian radio stations when his fraud conviction came down last month after a private prosecution brought by a former friend.

READ: London court jails fraudster Ketan Somaia for eight years

Here is a compilation of some of the allegations that have dogged the 52-year-old businessman, now incarcerated at London’s high-security Belmarsh prison:

  • 1990: Obtained Sh112 million (then $5 million) from the Government of Kenya to import 500 ‘London-look’ black taxi cabs but only delivered 200 secondhand vehicles. Arrested in 2004 and jailed at Kamiti Maximum Security Prison. He spent much of his sentence at the private wing of Kenyatta National Hospital until his conviction was quashed in 2005 and he was released.

  • Mid-1990s: Obtained $8 million (then Sh375 million) from the Government of Kenya to supply the Kenya Police with communications equipment, but allegedly failed to deliver. Fled to London to avoid arrest after refusing to appear before Parliament on four separate occasions to explain himself.

  • 1990s: Obtained Sh238 million (about $5 million at 1995 rates) in a deal with American hotel chain Starwood Hotels & Resorts Worldwide. Starwood sued Somaia in a London court to recover the money but faced an uphill battle trying to enforce a judgment in Kenya handing over the Somaia-controlled Block hotel properties.

  • 1997: Received around $2 million (then Sh130 million) from his Dubai-based business partner Surajit Sen and failed to repay the money. No charges brought.

  • 2001: Obtained $15 million (then Sh1.2 billion) from a businessman referred to in court as ‘Mr Bose’. Allegedly only paid back $2 million by handing over a house in Dubai that had been pledged as security. No charges yet.

  • 1999/2000: Obtained nearly $20 million (Sh1.5 billion) from Mr Murli Mirchandani, a friend, and $200,000 from Mr Dilip Shah, an in-law, as loans or investments. Somaia purported to sell stakes in Delphis Bank (Mauritius and Tanzania), the Diamond Mining Corporation of Liberia and other ventures. Paid Mr Shah a paltry $7,000 through his accountant years later. Convicted on nine counts of fraud and jailed for eight years this month after a private prosecution begun by Mr Mirchandani in 2011.

  • 2002: Arrested by Hertfordshire police for allegedly taking £500,000 (then $768,000) from a local entrepreneur. Released on bail, he fled to Kenya where he received protection as the Crown Prosecution Service unsuccessfully sought his extradition. He was arrested at a wedding in India in 2008 and extradited to the UK but the case was dropped because the money had been repaid.

Adjusted for inflation, the amounts detailed above total up to about $80 million in today's money or Sh6.9 billion.

“Securing a conviction against Mr Somaia will not undo the harm he has caused and the pain he has inflicted upon me and my family,” Mr Mirchandani said in a recent statement to the media. “But knowing that he has been brought to justice helps bring us some closure.”

Kenyans reacting to Somaia’s jailing have criticised local authorities and courts for failing to bring him to justice for most of his Moi-era crimes.