Costly blunders that keep fugitive Devani holed up in Britain

The British government early this month notified Nairobi of its readiness to facilitate the return of Mr Devani after what it said was a solution of a “legal matter” that prevented his deportation. But he appealed the decision and now stays put in the UK.

In addition to this new challenge on the decade-long saga, Britain’s bureaucratic extradition laws, which allow a suspect to exhaust all available appeals before being deported on the request of another country, continue to enable Mr Devani to avoid facing justice in Kenya.

According to evidence seen by the Sunday Nation, so desperate is the State to have him tried on Kenyan soil that the Kenya Prisons Service told UK that Mr Devani would have preferential treatment at Kamiti Maximum Security Prison, with his own cell and washroom so as to match global standards.

“I would be very grateful if arrangements could be made as soon as possible to give effect to Mr Devani’s extradition,” Julian Gibbs, UK’s Head of Extradition wrote to Nairobi two weeks ago.

Extradition procedure

According to UK’s extradition procedure, the country that has requested a deportation must do so within 28 days.

There is, however, a window that allows the suspect to appeal even after such an order has been given, something Mr Devani has availed himself of.

But as Mr Devani lives what may be the last of his nine lives in the extradition saga, court filings and documents seen by the Sunday Nation show how the scandal was executed, its players and attempts made to assist the businessman to escape justice.

Mr Devani left Kenya in December 2008 for India to attend an annual religious pilgrimage never to come back. So connected was he that an assistant minister at that time flew to India to help the businessman and his creditors negotiate a deal that would have criminal proceedings against the Triton CEO withdrawn.

Mid-2008, as Kenya was trying to recover from the economic upheavals caused by the 2007/8 post-election violence, the world suddenly plunged into an economic recession. The Triton saga began with a nationwide fuel supply crisis spiralling from a global shortage.

The global financial crisis coincided a steep rise in the price of crude that had begun in 2000. Although world oil prices had been climbing gradually due to increased demand from developing countries, a number of factors conspired to create a sharp increase from 2004. 

Cartel of 16 nations

The Organisation of the Petroleum Exporting Countries (Opec), a cartel of 16 nations with the greatest oil reserves which produces 60 per cent of the total petroleum traded internationally, had failed to match an unprecedented surge in the global demand.

Non-OPEC countries also reduced supply due to internal issues. Venezuela in 2006 cut off sales to oil marketer Exxon Mobil due to legal wrangles. Iraq ceased export due to the US leading to war that caused the toppling of President Saddam Hussein.

In the UK, a majority of Scottish petroleum workers suddenly quit on April 27, leading to closure of the North Forties pipeline which is used to evacuate about half of the United Kingdom’s North Sea oil production.

At the same time, Mexico, which was the world’s 10th largest oil producer, was faced with a decline in production at its Cantrell oilfield.

These challenges which were facing the biggest producers of petroleum concurrently contributed to a rapid acceleration in the global price of oil shooting it to $147 (Sh16,200) in current exchange rate) per barrel by mid-2008. This was three times the current price of $52 (Sh5,727) per barrel in the global oil market.

Kenya, a non-oil producing country, suddenly faced a severe shortage. Filling stations found themselves without fuel as prices shot through the roof.

Political connections

Mr Devani, then a 43-year-old tycoon with good political connections, saw an opportunity to make a killing. So connected was he that he had for several years supplied petroleum products to the utility Kenya Power.

Earlier, when the government introduced an Open Tender System (OTS) in early 2000 to enable indigenous oil companies access crude oil at a fair price, his company Triton was among those that clinched the tender.

The OTS, which is still being applied to date by the government, allows oil marketing companies to access petroleum products at the same price from the international market.

This is done through monthly tenders and entails sourcing of petroleum products without any prior contracts. Smaller companies then purchase petroleum products from those licensed to participate in the OTS.

With proceeds rolling from such lucrative tenders, the Devani family grew its business empire acquiring dozens of property and companies. This portfolio only came out to the open in 2017 after family members started fighting in court over its ownership, 10 years after Devani went to Britain.

The portfolio includes Shimmers Boutique Limited, Simkan Investments Group, Shimmers Group Limited, Shimmers Investments Limited, Sasha Holdings Limited, Jade Petroleum and Adra International.

Lucrative tender

Yagnesh Devani began Triton in 2000 just in time for the launch of the OTS petroleum importation model. In winning the tender, Triton was allowed to buy petroleum products from the international market and sell to local companies.

Despite winning such a lucrative tender, Triton had no money of its own. It also did not have petroleum storage facilities yet it was supposed to supply fuel to local companies. The only thing it had was an image and connections.

To clear this hurdle, Triton entered into an agreement with Kenya Pipeline Company (KPC to be allowed to use KPC’s facilities in Mombasa to receive, store, transport and deliver petroleum products that it imported. This agreement was known as Transport and Storage Agreement (TSA).

For seven years, the TSA worked well. It was suddenly replaced by another one in 2007, just a few months before the global oil crisis and when prices began shooting up.

“In order to keep track of Triton’s stock held by KPC, KPC was obliged to issue Triton with daily stock product entitlement reports, daily stock adjustment reports and a weekly shipping schedule,” said one of the clauses of the TSA between KPC and Triton.

“In its turn Triton was to notify KPC by Tuesday noon of each week its delivery requirements for the following four weeks, giving details of the grade of petroleum product needed and the delivery point.”

But, without its own money to finance such a huge tender, Triton entered into agreements with a number of banks, including KCB, and international lenders like Fortis. With KCB, Triton entered into an Invoice Discounting Facility (IDF).

Discounted invoices

IDFs allow business owners to leverage the value of their sales by accessing working capital as they wait for payments for invoices. Once a company sends out an invoice to a customer, a proportion of the total amount of the invoice becomes available from the banks, thus providing an invaluable source of working capital.

With a huge demand for petroleum products, Triton entered into similar credit arrangements with other banks. It also worked out ways of abusing the agreements it had made with these banks leading to a nationwide petroleum shortage and colossal losses to the lenders.

For example, on August 1, 2008, Triton discounted four invoices whose total value was $12,231,873 (Sh1.35 billion) when no oil had been sold.

As KCB was trying to find out what had happened, Dutch Lender Fortis was also investigating fraud of a different nature courtesy of Triton. 

“On July 14, 2008, Triton instructed Fortis to issue a letter of credit in favour of Chevron to finance the importation of Automotive Gas Oil (AGO) aboard the vessel ‘Chem Marigold’,” say documents filed in court in the UK.

“On the same day Triton instructed KPC to release the product only on instructions from Fortis.”.

But once the AGO was offloaded in Mombasa, Triton conspired with government officials to sell it to third parties without the authorisation of the lender. Fortis is believed to have lost at least 12,623 tonnes.

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