Kenya’s probe into Sh6.09 billion transactions that saw the Treasury purchase Telkom Kenya shares from Jamhuri Holdings Limited (JHL) hit a dead end after investigators were denied access to accounts beyond Mauritius.
The investigating authorities have now disclosed how the lack of a framework for exchanging financial intelligence beyond the Indian Ocean tax haven thwarted the probe into the money trail.
Kenya’s financial intelligence unit, the Financial Reporting Centre, says investigators could not get access to the movement of money past Mauritius to ascertain the exact beneficiaries from the transaction due to gaps in international partnerships in the sharing of details of such transactions.
FRC director general Saitoti Maika says “We ran into hurdles when we were following up the Telkom deal” because the money moved from Kenya to Mauritius and then to Jersey Island where Helios is registered.
From Jersey, Mr Maika says the money found its way to Cayman Island and eventually landed in Luxembourg — one of the world’s smallest countries, measuring the size of Kenya’s Migori County (2,586 square kilometres).
“We could only access the information up to Mauritius because we have a memorandum of understanding with them. When it went to Jersey, Cayman Island and beyond, we were being reminded that we are not members of Egmont Group and could not therefore be given information,” said Mr Maika.
“This is actually part of the reason why the whole investigation stalled because no one could give us information on who exactly received that money from Mauritius.”
Egmont Group is an international organisation that facilitates prompt sharing of financial intelligence between intelligence units of different countries to investigate and prevent money laundering and terrorist financing.
The transaction, which was completed days before President Uhuru Kenyatta left office, attracted the scrutiny of Parliament and offices of Controller of Budget and Auditor-General as well as investigative bodies such as the FRC but all failed to unravel the thread of the money.
Now the FRC has revealed how investigators battled to keep up with the flow of the money once the Treasury on August 5, 2022, withdrew Sh6.09 billion from the government’s main accounts and wired it to Jamhuri Holdings Ltd, a Mauritius-based subsidiary of Helios, in a transaction that lacked parliamentary approval.
Parliament had raised fears that the transaction, which saw Kenya buy back 60 percent stake in Telkom from Helios, could have been a scheme to eventually wire the money into the pockets of well-connected people in government.
Auditor-General Nancy Gathungu last December reported running into a dead end, too. She said requests to visit Mauritius and the United Kingdom, where the registered offices of the company that sold off the Telkom stake are domiciled, were “either declined or not responded to,” denying her the opportunity to know if taxpayers got value for money.
A recent report tabled in Parliament by the office of the Auditor-General showed Kenya’s shareholding in Telkom was unchanged at 31.61 million shares with a nominal value of Sh712.3 million at the end of June last year, just as it was in 2022 before the Sh6.19 billion transaction. This has deepened the mystery of the deal.
Now FRC hopes to revive investigations into the deal. FRC in 2019 applied to join the Egmont Group and its application was approved on February 1, 2024, giving Kenya the opportunity to start receiving and sharing financial intelligence reports with more than 170 countries across the world.
Mr Maika says the FRC will now revive the probe into the Telkom Kenya deal, riding on the Egmont membership. Mauritius has been a member since July 2003 while Cayman Islands joined in June 2001. Luxembourg has been a member since 1995 when Egmont Group was started.
“Joining this group will help us to open this probe and attempt to find out who received what. Any country now that is a member of Egmont Group will be able to provide information on request. We suspect that after Mauritius the money moved to three or four other countries and possibly got back to Kenya. The file is ready,” said Mr Maika.
Kenya’s entry into the Egmont club now brings to four the number of East African Community countries that are members. Tanzania has been a member since June 2014 while Uganda and Congo joined in September 2018 and July 2019 respectively.
The membership of these countries alongside Kenya means they are all now obligated to securely exchange expertise and financial intelligence information relating to any transaction suspected to be promoting money laundering, terrorist financing or associated predicate crimes, including bribery, corruption, extortion, fraud, theft and counterfeiting.
The Treasury in October last year announced that Infrastructure Corporation of Africa LLC (ICA), a little-known firm registered in the United Arab Emirates (UAE), would take the 60 percent stake that was in the hands of Helios. The Cabinet rescinded the 2022 decision that saw the Treasury pay Helios Sh6.09 billion to exit Telkom Kenya.
It instead directed the London-based private equity fund to refund the government the amount and then directly sell the stake to the UAE firm.
The Treasury said the UAE firm will inject capital into Telkom to fund critical infrastructure and the overall upgrade of the company’s capabilities and also settle some of the outstanding liabilities.
FRC exists primarily to receive and review confidential data that banks and other reporting institutions submit on suspected financial criminals and potentially illicit transactions, then pass those findings on to law enforcement and other relevant agencies such as the Directorate of Criminal Investigations.
It is the only entity in Kenya that is empowered to access such records without a court order but its intelligence cannot be used in a court of law.
