The Sack of Imperial Bank: Part 2

The heavyset man with a round face and a graying moustache fidgeted in his seat. An email notification unnerved him.

He smiled.

Continued from Part One [Link].

PART TWO: The three-pronged plunder

For a man used to getting his way, the last three years of Abdulmalek’s life must have felt completely strange.

At 6:03 pm on 5th April, 2012, someone sent an anonymous email to Central Bank, the National Police, the Ethics and Anti-Corruption Commission, the judiciary, the Financial Post, Royal Media, and about 10 others. The subject line was “Imperial Bank Frauds & Scandals.

Sent from imperialbankstaff@gmail.com, the email detailed different layers of scandals going on within the bank. The sender clearly had enough insider knowledge to know about 8 accounts that had received unsecured loans. He or she also mentioned that ‘the MD has secret funds abroad consisting of these embezzled funds.’ In one short, clearly hurriedly written email, the whistleblower suggested, without knowing, the three main layers of what had been happening at the bank for a decade: the black hole, Thailand, and the chama.

***

Nothing much happened after that email. A Central Bank employee did get in touch with the bank, asking for details on the different accounts. James Kaburu, as Imperial Bank’s CFO, downplayed the issues, keeping Abdulmalek copied in the supervisory correspondence. Then there was radio silence.

Two months later, Central Bank of Kenya published the revised prudential guidelines; this may have been coincidental but two of the guidelines directly affected Abdulmalek’s hold on Imperial Bank. One was aimed at reducing the hold principal shareholders have on banks. At least half of all the non-executive seats would have to be independent directors. Directors who didn’t own shares in the bank and had done no business with the bank for at least five years. These directors would head all critical committees, most importantly the audit and credit committees.

For the first time since 1993, the bank got new directors independent of the founding families and entities. The board hadn’t changed much in those 21 years and the founding directors seem to have had a soft spot for Abdulmalek. He had built them a bank after all and had, it seemed then, protected and grown their investment. Now there would be six new sets of eyes who didn’t see him as anything more than a Managing Director. They would, and they did, ask him more questions.

But that was a less pressing problem. The other rule that directly affected him was that bank executives and executive directors could now not own more than 5 percent of the banks they ran. If they wanted to continue serving, they had to sell part of their stake. Ever the brilliant banker, Abdulmalek transferred the entirety of his stake in the bank, 12.5 percent held under Janco Investments, to the newly created Abdulsultan R. Janmohammed Trust. The trust fund’s advisors would be his younger brother, Salim Janmohammed, and his friends, Nina Shah and Amin Manji. Its beneficiaries would be his brothers’ children. With a single stroke of genius he had beaten the system for the umpteenth time. On paper it look like he was no longer a shareholder of the bank.

All these changes began to weigh down on Abdulmalek in late 2014. He had always been on top of things, and his ability to compartmentalize and manipulate people had always saved him. Even with the hole he had been digging into the bank he built, it still seemed to be growing. It was now the 17th largest bank in the country with over 50, 000 customers. From a small hire purchase arm, Imperial Bank now employed 590 people across Kenya and Uganda.

Below this image of success, something bigger and patently illegal was happening.

***

On September 21st, just six days after Abdulmalek Janmohammed keeled over and died, his appointed successors, Naeem Shah and James Kaburu, walked into the chairman’s office with more than just whistles in their mouths, but with evidence in tow.

Naeem had succeeded Abdulmalek as the Managing Director while Kaburu, former Chief Finance Officer, became the Deputy Managing Director. As the new sheriffs in town, they had two choices. They could continue the ruse Abdulmalek had started or they could plead with the board to save them from themselves. They chose the latter.

photo_2016-02-11_22-33-48

One of the explosive things Naeem Shah handed to the board was a treasure trove of handwritten chits. The chits, dating back to as early as 2002, had instructions to move money from and across various accounts. To get his message across, Abdulmalek would use his Montblanc pens to write instructions to his minions. He must have felt smart, knowing the paper would not create as serious a trail as an email would. But Naeem wasn’t throwing them away. Instead, he secretly filed them, knowing that one day the ruse would run its course. If it did, he would have clear evidence that he hadn’t moved the money on his own volition. It was a trail, and a bloody one.

***

The Black Hole

Sometime in 2001, either Abdulmalek or Nina Shah moved KShs. 400 million from the bank’s coffers to the account of a fish processing company called WE Tilley (Muthaiga) Ltd. That single transaction started a chain of events that only ended with Abdulmalek’s heartbeat, almost fourteen years later.

By the time it was over, WE Tilley, a relatively small fish processing company, had received KES 15 billion through its accounts at Diamond Trust Bank (DTB) and Fidelity Bank. The amount had accumulated interest, totaling KES 34 billion. But the black hole of Imperial Bank’s monies was and still is sketchy. It doesn’t make sense that such a small business would need capital injections of KES 80 million on average, on a daily basis. On a single day in May 2015, the company moved Shs. 4 billion into their account at DTB. It was from different sources, making the sack of Imperial Bank part of something much bigger.

But who is W.E. Tilley?

WE Tilley

 

***

The same year the first transaction of Ksh. 400 million happened, an account holder at another young bank, Charterhouse Bank, received USD 25 million from Liechtenstein. It was a suspicious transaction because the account holder, Crucial Properties, ran a minor eatery in Nairobi and had nothing to justify receiving such a vast amount of money. The investigators and the man who presented himself as the director of the company, Humphrey Kariuki, then claimed the money had actually come from the tax haven of Jersey. Or New Jersey in the United States, depending on who was telling the story. It was for ‘development’, Kariuki claimed.

Still, the transaction triggered an international investigation and Central Bank froze the account. The entire thing went to court and after a series of ridiculous mishaps, such as not agreeing on where the money had come from, the court lifted the freeze order. In less than 12 hours, all the money was gone.?Three years later, a suspicious fire at Charterhouse Bank headquarters burnt down all the records prior to April 2004, wiping out the trail of such unexplained transactions that had taken place at the bank.

When Charterhouse Bank was eventually closed in 2006 on suspicions of money laundering, a key account that was investigated was W.E. Tilley. The relatively small family business had received 5.89 billion in its accounts while its books showed it had only made sales of Shs. 1.35 billion. The revelation in Parliament, by Shadow Finance minister Billow Kerrow, also mentioned a few other fish companies, including Primecatch, Mara Fish Packers and Victoria Fish Packers, all of whom would reappear nine years later in the Imperial Bank scandal.

There was most likely a connection bigger than W.E. Tilley between Charterhouse and Imperial Bank, as Abdulmalek’s plunder of the latter was then just picking up steam. From the WikiLeaks on investigations into Charterhouse, W.E. Tilley seemed to be a conduit for money as opposed to a final destination. Where the money was headed remains a mystery.

***

W.E. Tilley was registered on March 21st, 1969 and was initially involved in the meat business. At some point, the company focused exclusively on processing and shipping the Nile Perch fish. At the start of the sack of Imperial Bank, the fish processing company was headed by the Jessa don, Aziz Ali Haiderali Jessa. After he died on 17th August, 2005, at Prince Ally Hospital in Mumbai, his wife, Nargis, and brother Zulkafir became the administrators of his vast estate. 99 percent of WE Tilley went to Aziz’s son Nashir Jessa, with the other stake being held by other members of the larger Jessa family. The connection with Abdulmalek continued under the new regime within W.E. Tilley, and even thrived in subsequent years.

The relationship between Abdulmalek Janmohammed and the original patriarch of the Jessa family, Aziz Jessa, most likely began through the former’s proactive search for relationships with aging dons. W.E. Tilley bought trucks at Simba Corp where Abdulmalek had set up the hire purchase department that became Imperial Bank. Once in this relationship, Abdulmalek found a conduit for his money, and escalated it after that single transaction in 2001.

Even now, no one knows for sure why W.E Tilley needed, or did with, all that money. At Charterhouse, the discrepancies suggested money laundering. The 2001 transaction had triggered an investigation into the bank, eventually showing that the Charterhouse’s 20, 000 accounts were, in fact, owned by not more than 200 people. The bank moved and hid money for people, and helped businesses evade taxes. This must have been going on for many years as the 2001 transaction only became public information after the FBI started investigating the account. WE Tilley’s role was one of the major ones, as the money it had moved through its accounts at Charterhouse did not tally with their receipt books.

With Naeem’s treasure trove of chits, its now possible to explain some of the money WE Tilley had in its accounts. From at least 2002, from the physical evidence, Abdulmalek Janmohammed had his executives move large sums of money to WE Tilley’s accounts. The reason for the money remains unexplained, and since Abdulmalek himself started an entirely independent thread to enrich himself, still doesn’t make sense.

Panic set in after Abdulmalek died and the Imperial Bank scandal was exposed. W.E Tilley quickly sent out an official promise to pay back the bank KES 10 billion, half of it in assets. Central Bank ignored the confession, choosing to recover only half of that. They instead wanted the surviving shareholders to raise Shs. 20 billion in cash, and an equivalent amount in security. W.E Tilley would, again, survive. Imperial Bank’s shareholders then moved to court.

***

The Bangkok X-Files

The second layer in the sack of Imperial Bank seems to have started in Thailand. Two names stand out in this, Pankaj Somaia and Raj Devani. After a few trips to Thailand together Abdulmalek JanMohammed started paying them off through two companies, Jade Petroleum and Adra International and a subsidiary, Metro Petroleum.

Pankaj Somaia and Raj Devani are related to two of Kenyas most infamous fraudsters. Raj’s uncle, Yagnesh Devani, escaped from Kenya after the Triton Scandal in 2009. Raj has himself been involved in a number of controversies. In May 2014, for example, he went unhinged during an aerial game flight on a helicopter and started attacking the back seat. He claimed his children had been kidnapped and stashed in the cargo hold. Once the chopper crash landed in the bushes of the Maasai Mara, he went on a rampage, causing damage worth Shs. 15 million to the aircraft before he was finally restrained.

Image Source: The Star

Image Source: The Star

Like his uncle Yagnesh, Raj is involved in the oil business through Jade Petroleum which sells fuel to Rwanda and Congo. He is also a director at Adra International Limited, which formed an important core of the second layer of the fraud. Jade Petroleum was incorporated in 2003. The company, together with its sister company, Metro, received Shs. 3.5 Billion from Imperial Bank and was also audited by the bank’s auditors, PKF.

This layer also involved a man called Pankaj Somaia, also a director at Jade Petroleum. The Somaia name was tarnished by the scandals of their most infamous son, Ketan ‘King Con’ Somaia, who is currently serving time in the UK. While Ketans empire began its slow but sure road to collapse, his cousin, Pankaj Somaia, was named in the Kroll Report as one of the wheeler-dealers of State House. Moi and his cronies would regularly use Kenyan Asians as frontmen to hide the monies they were looting from the public coffers.

The Somaia link brings to mind another scandal, of a bank called Delphis Bank that Ketan Somaia bought in 1991. One of Delphis bank’s scandals was moving money for Exchange Bank, owned by yet another of Kenya’s infamous sons, Kamlesh Pattni. Delphis Bank was Goldenberg’s banker during the height of the fraud. Ketan eventually sold Delphis Bank as his financial troubles escalated. The bank became what we now know as Oriental Commercial Bank. From Delphis, Abdulmalek had gotten a confidante, Nina Shah.

Abdulmalek, ever the diligent banker, kept meticulous records of his disbursements to his friends, although not the reasons for making them. The accounts with Pankaj and Raj show some interesting transactions. They made the Imperial Bank MD pay for their upkeep with supermarket shopping, their staff payrolls and even their DSTV bills. An email received by the bank in October 2014 had a list of creditors that Adra wanted Imperial Bank to pay. The list had all the costs of its Nairobi and Mombasa offices including rent, water, stationery, alarm services, internet, air conditioning, fuel, garage, a bank loan, and credit cards.

adra list

One email conversation from 2012 shows curt demands from Rajs accountant to an Imperial Bank executive. The discussion centers around cashflow. Ahmed, the accountant, wants Kshs 10 million in USD and Kenya Shillings and gives Vishvesh deadlines for making the submissions. In April 2015, five months before Abdulmalek died, Adra International sent its payroll to Imperial Bank to sort out. Raj Devani’s salary was the highest at KES 12 million while the lowest paid employee earned KES 11, 440. The payroll included statutory payments and even a 3, 000 bob remittance to the Higher Education Loans Board.

The most interesting conversation happened in 2012 and centered around a 74 million mortgage that Adra International had taken from Prime Bank for a house in Runda. Raj Devani was behind on 4 payments totaling KES 11 million. It had also attracted costs of over 3 million for legal and debt recovery. Abdulmalek approved the bank transfers from Imperial Bank’s coffers that stopped the auction.

No one but the three knew for sure what Somaia and Devani had on Abdulmalek. The most likely thing was video evidence of one of their trips to Thailand, showing the Imperial Bank MD in an act of debauchery. Whatever it was must have been scandalous or serious enough because Abdulmalek sustained his friends and their businesses for a few years.

***

The Chama

The soft-spoken banking executive with a sly smile eventually got in on his own fraud. Perhaps the initial motivation was to find ways of returning the money to the bank. Or it was simply the start of the scandal, as he sought to build himself and his family an empire of their own. Now in his 40s and heading a bank of which he only owned 12.5 percent, he must have sought to rekindle his Midas touch of the early 1990s.

At the heart of this layer was The Accountant, a shrewd man known as Shriram Phadke. The only thing known about him, despite his critical role in the raid on Imperial Bank, is that he worked, or still works, for Mini Group Limited. Mini Group, established in 1983, is a consortium of companies whose most popular brands include Supa Loaf and the Butali Sugar Mills Ltd. It owns businesses in trading, construction, real estate, financing and food processing.

The Accountant filled this role because his boss, the business magnate Amin Manji, was Abdulmalek’s childhood friend and business partner. From their email conversations, Amin comes off as Abdulmalek’s opposite, at least in personality. Hes more expressive, sometimes saying more than he should. At one time, he copies Nina and Abdulmalek into a conversation he was having on whether to undergo a 3D liposuction. Still, conversations with his acquaintances portray a modest, successful self-made man who has built a business empire across several sectors. Despite his being introverted, its clear Abdulmalek respected his friend and, over time, loaned him money too.

amin

After the Imperial Bank saga exploded, Amin Manji emerged as one of the most important cogs in the wheel that dug a hole into depositor’s savings at the bank. He was crucial in most deals, and carried out extensive transactions on the Nairobi Securities Exchange (NSE) on behalf of the group through their stock portfolio vehicle, Goodwill Nairobi. His bank account at Imperial Bank did nothing but trade in the stock exchange, and the day after Abdulmalek died, he quickly organized a meeting with Nina Shah.

One of the most interesting, and most blatantly illegal, uses of Abdulmalek’s position as The Banker was a transaction that took place in September 2012. The group had been hemorrhaging money at the stocks so they came up with a plan. In an email from The Accountant sent at 4:25 on September 13th, 2012, the plan is to buy a property for Amin Manji in Kajiado. Instead of paying cash, The Accountant drew a bank undertaking and sent it to The Banker. The undertaking was to offer Amin security for the purchase instead of paying a cash deposit. Shriram drafted the letter and sent it, even marked with areas for “On Imperial Bank Letterhead.” All Abdulmalek had to do, and did, was to place the letterhead, print, and sign.

Another cog in the wheel was a man called Karim Jamal. Little is known about KJ, as the cabal knew him, but that he was once one of the most successful stockbrokers in Kenya. When he invested, he went big, often biting more than he could afford. He eventually lost a fortune as stocks of key listed companies such as Uchumi tanked, losing with it his assets as his creditors came calling. From the email conversations where The Accountant asks, rather incessantly, for details on transactions on the stock exchange, its clear KJ’s role was peripheral. The others didn’t trust him because they knew he was shifty. He needed money so he could trade, but he would sometimes ignore The Accountants emails for days despite the large amounts of money at stake.

The Accountant

The Accountant

In another email, Shriram asks Imperial Bank to transfer some money from one account to another, held under the name Richardson and David. Little was known about Richardson and David until October 2015, the month after Abdulmalek died, when the company filed a case challenging the decision to close down another bank, Dubai Bank. Dubai Bank was also closed for running a parallel banking system. Richardson and David held an account with Shs. 142 million at the bank, and is still fighting its liquidation. Even more interesting is that it was The Accountant who was handling monetary transactions for the engineering and supplies company.

***

While he was alive, Abdulmalek Janmohammed built a bank and then dug himself a hole big enough to destroy his life’s work. But he was gone now.

In the 3rd and final part, how everything that could go wrong, went wrong.

Read Part 3.

Owaahh, 2016.

One story is good,

till Another is told.