Goldenberg ghost haunting Kenya Government

18 years after it began, the Goldenberg scandal continues to torment Kenya’s government as its web of deceit ensures that more leaders fall prey to the stench of easy money.

Kamlesh Pattni addressing the press.

Earlier this month, the man seen as the face of Goldenberg – Mr Kamlesh Pattni – gave up the five-star Grand Regency Hotel. Mr Pattni said that as a reformed Christian, he no longer wished to contest the hotel’s ownership with the government.

The Grand Regency, at one time among the top hotels in the world, was claimed by the Central Bank of Kenya which alleges that Mr Pattni built the hotel using funds borrowed from the Central Bank by a commercial bank that defaulted and later collapsed. Since both Mr Pattni and the government claimed ownership of the hotel for these reasons, the facility has been under receivership for most of its business life until Mr Pattni’s decision to relinquish ownership of the hotel.

Critics say that Mr Pattni gave up the Grand Regency in order to allow the government to sell it to a group of Libyan investors allied to President Mwai Kibaki. In exchange, Mr Pattni would be granted amnesty for corruption cases related to Goldenberg. The Attorney General and the Kenya Anti Corruption Commission have been criticized for the apparent deal which could potentially mean that Goldenberg cases against Mr Pattni’s co-accused will have to be dropped as well. This week, the Attorney General, Mr Amos Wako, said he had not been consulted over the Grand Regency ownership transfer.

At the same time, civil society groups say that since the Grand Regency now belongs to the government, then its sale is subject to relevant laws on the privatisation of public assets.

Goldenberg refers to a series of monumental financial scandal involving hundreds of billions of shillings in the early 1990s. Initially, it began with the payments of export compensation (government subsidies) to Goldenberg International which processed gold and diamonds. The firm, according to testimony during the Goldenberg Commission of Inquiry (2004 – 2005) was co-owned by Pattni, former President Daniel arap Moi and the chief of intelligence at the time, the late James Kanyottu.

Between 1990 and 1994, Goldenberg grew into a monster that encapsulated banks, building societies, land development companies, the customs department, political parties, the music industry and the media. In short, the Goldenberg monster infiltrated every aspect of Kenyan life. All political and corporate leaders were singed by its flames in one way or another. Goldenberg money so corrupted the political system during the 1992 General Elections that a new currency note was launched to deal with unprecedented inflation in its aftermath.

In its wake, Goldenberg caused the collapse of dozens of banks precipitating a banking crisis. The careers of civil servants who helped expose Goldenberg were ruined. One of them died last year, jobless and broken. Journalists who exposed the story disappeared into oblivion. Chief executives of companies doing business with Goldenberg either fled into exile or died quietly. Companies and parcels of prime real estate in Nairobi changed hands so often that it became difficult to know what belonged to whom, further adding to the confusion that existed at the time.

Neither the state nor the opposition were spared. With the possible exception of President Kibaki and Prime Minister Raila Odinga, most of Kenya’s political leaders benefited financially from Goldenberg money. Minister for Internal Security, Prof George Saitoti was Finance Minister at the time. Deputy Prime Minister Musalia Mudavadi was appointed to the Finance Ministry in 1993 while payments to Goldenberg continued. William Ruto commanded a KANU youth wing that is widely believed to have received Goldenberg money. Kalonzo Musyoka was a minister in the Moi government while this was happening.

Raila’s father, the late Jaramogi Oginga Odinga, confessed in 1993 that his political party received Goldenberg money. Meanwhile, Paul Muite’s political career suffered a fatal blow when it emerged that he had been given Shs20 million by Pattni. Now, it seems that Kibaki has managed to dirty himself in the muck of Goldenberg.

The 2004 Commission of Inquiry into Goldenberg concluded that Mr Pattni was the “Chief Architect” of Goldenberg. The Commission has since been accused of ignoring evidence in order to protect powerful personalities such as ex-President Moi and his cronies.

In 1990, Mr Pattni was in his early 20s. He is a descendant of Indian laborers brought to Kenya by the British in the early 20^th century. Those who knew Mr Pattni said that his family wasn’t particularly rich or influential. It is said that Mr Pattni was a freelance import-export clerk soliciting business at the port of Mombasa before he somehow found himself making deals with Kenya’s top leadership. According to evidence presented before the Goldenberg Inquiry, Mr Pattni formed Goldenberg International with Moi and Kanyottu for the purpose of making money from gold and diamonds smuggled from the Congo (at the time called Zaire).

Inspite of this, the Commission of the Inquiry as well as the Kenyan media still insist on Mr Pattni as being the sole originator of the Goldenberg scheme. Mr Pattni himself always asks this, “How could a young man get into the Central Bank of Kenya and walk away with millions? I did not point a gun at anyone’s head. If any money was lost, you should be blaming the Central Bank and the government.”