How Justice Mutava let Pattni off the hook

You don’t get to know the goings-on in the Judiciary until you read the report of the judicial tribunal that investigated the conduct of Justice Joseph Mbalu Mutava — and which recommended his removal from office recently.

How the Judiciary, or rather Justice Mutava, allowed the architect of the Goldenberg scandal Kamlesh Pattni to get off the hook, and to peacefully live among us, had been the untold story for quite some time.

Also, it was the tail-end of a saga that dates back to 1992 when the then 25-year-old Kisumu trader took advantage of the government’s export compensation programme and pulled off one of Kenya’s biggest thefts from public coffers.

When the judicial inquiry recommended his removal from office, its conclusion was that Justice Mutava was not “an innocent bystander” in the circus that saw Pattni off the Sh5.6 billion hook.

Before it came to an end in 1995, the Goldenberg scandal had cost taxpayers more than $600 million — and is still the single largest fraud in Kenya’s history.

Interestingly, the Goldenberg scandal, 21 years after it became public, has been part of judicial circus and so far nobody is in jail over it.

Some of those who were facing trial have since died including former Treasury Permanent Secretary, Dr Karuga Koinange, former Special Branch head James Kanyotu, and former Central Bank of Kenya Deputy Governor Eliphaz Riungu.

Before we come to Justice Mutava, a brief look at Goldenberg International and how it came into the scene to take advantage of an export compensation scheme would help.

Initially, the export compensation scheme had been put in place with good intentions or, as Saint Bernard of Clairvaux, once said: “The road to hell is paved with good intentions.”

It was supposed to lure businessmen into earning the country some hard currency after bilateral donors followed cue from the International Monetary Fund, and the World Bank and denied the President Daniel Moi regime crucial funding.

After studying Finance minister George Saitoti’s Export Compensation Scheme, Pattni had seen a loophole.

All that was required from a precious mineral exporter was paperwork.

If, in the paper, you said you exported gold worth Sh100 million, the government would pay you Sh20 million or 20 per cent of the remitted currency.

And so, Pattni would buy as much foreign currency as he could from the local market, complete his paperwork and get compensated.

SUCCESSFUL DECEIT
All that an exporter required was an official stamp on the export forms and confirmation that all the foreign exchange relating to the exports had been received and sold to the CBK.

Pattni’s plot was simple. He would register a company, bring in Mr James Kanyotu as his director, and purport to export gold, silver, diamonds, precious and semi-precious stones.

He would then buy foreign currency locally, deposit in another account at First American Bank, and seek export compensation from the Treasury.

It is now known that Pattni never exported anything but, through paperwork and with the help of government officials, he managed to get more than he bargained for initially.

When some officials from Central Bank and the First American Bank started questioning Pattni’s transactions, he decided to register his own bank — Exchange Bank — in August 1991 with a proposed capital of Sh40 million, which was deposited with Transnational Bank Ltd, owned by the Moi family.

As money poured into his coffers, Pattni sought and was given a monopoly to export gold and diamonds on the promise that he would earn the country $50 million.

And instead of the legal 20 per cent compensation, his company was granted 35 per cent, which was concealed in the budget as “customs refund”.

That is how the corruption network was put in place.

Some of the money was sent overseas and deposited in Pattni’s Exchange Bank nostrum accounts and later transferred back, earning 35 per cent compensation.

Finally, Goldenberg breached all the exchange control regulations and the agreement it had signed with CBK and Pattni used his connections to get his compensation paid after the claim was processed by the Customs and Excise Department.

Finally, and amidst lots of pressure from within and without, Pattni and the Goldenberg architects were finally arrested and charged in 1993.

This only opened a civil and criminal circus that was played out in the court rooms over the years until 2003 when President Kibaki appointed the Bosire Commission of Inquiry to investigate the scam.

The Bosire Commission rendered its report in August 2006 and described Pattni as a “thief” and called for his prosecution.

As a result, the State lodged criminal case No 518 in 2006, Republic vs Kamlesh Mansukhlal Damji Pattni and others over the stealing of Sh5.6 billion.

There was also a civil case of Sh2.1 billion arising from the tussle over Grand Regency (now Laico Regency) between CBK and Pattni’s Uhuru Highway Development Company.

MUTAVA'S ENTRANCE
Worried that the noose was tightening on him, Pattni wrote to Attorney-General Amos Wako requesting to enter a plea agreement and had been told to provide a full disclosure.

But with the new Constitution and the prosecution aspect removed from Wako’s office, the Director of Public Prosecutions rejected Pattni’s proposal.

That was January, 27, 2012 and the stage was now set to finally hear the case.

It was this time that Pattni sought leave to quash the DPP’s direction.

The other order was to prohibit the chief magistrate from hearing or proceeding with Pattni’s case and to further prohibit the Attorney-General, DPP, the Commissioner of Police and chief magistrate from “arresting, charging, prosecuting, suing or commencing proceedings” against Pattni or his associated companies including Goldenberg in relation to the Goldenberg affair.

At first it looked like a long shot. But it wasn’t. It was a well calculated move.

The matter was filed some four days before the High Court judges broke for their August vacation and there was no certificate of urgency as is the practice.

This would be filed on August 10 by Pattni’s long-time lawyer Bernard Kalove along with an application that the matter should be heard during the vacation.

Although Justice Mutava was the vacation duty judge in the Commercial and Admiralty division, the case found its way to him — even though it was a Judicial Review application.

He also had no authority to hear the case as Justice Florence Muchemi was the vacation duty Judge.

But Justice Mutava granted the right to seek judicial review without hearing the other side. As a result, a judicial review was filed on August 28, 2012.

Mid-September, Pattni’s lawyer requested the Deputy Registrar that the matter be mentioned before Justice Mutava “for directions” since it was “part-heard” by him.

In another letter, Mr Kalove said there “is some clarification required by all parties ... in respect to the orders issued by the Hon Judge”.

It was a misrepresentation and Mr Kalove admitted later that this was an “oversight”.

The idea was to have Justice Mutava hear the matter and the Deputy Registrar of the Judicial Review Division, where the file was, naively allowed for its removal. It was delivered to Justice Mutava, ostensibly for mention — although Justice Muchemi was the vacation duty judge for the Judicial Review Division.

Although Justice Mutava claimed he had been asked by Justice Korir to handle matters of Judicial Review Division, that was not the case since Korir was not the duty judge.

As it emerged later — and the tribunal said as much — it was Pattni’s lawyer, Mr Kalove, who “schemed to have the matter placed before the judge (Mutava)” and later have the matter placed before him after the vacation.

MUTAVA'S ORDER
That is how the matter was listed for hearing on September 24, 2012 disguised as Civil Case CC 305/012 and rather than identify Pattni by his name, it was listed as K. Damji v Attorney-General.

This, again, was a deliberate move to disguise the nature of the suit and to conceal Pattni’s identity as the applicant.

Interestingly, the Judge did not raise concern why a file that was not from his division was brought to him or why it was written K. Damji.

As he would say later, there was nothing special with the name Pattni – although he saw the disguised manner in which it was listed.

On the day of the hearing, lawyer Kalove and lawyer James Warui, representing the DPP, appeared before Justice Mutava and agreed that the matter be determined on the basis of written submissions.

The Judge agreed and was also not bothered that this was a matter from another division.

Also, the “clarification” that was to be sought from him was never raised and that other parties to the suit were not present. He fixed the matter for hearing before himself.

At that time, the International Centre for Policy and Conflict led by Ndungu Wainaina sought an order in the Judicial Review Division seeking to restrain the AG and DPP from withdrawing Pattni’s case unless he paid Sh5.8 billion.

But by that time, Justice Mutava had granted an order staying all proceedings relating to Pattni and the Goldenberg affair.

Thus, Mr Wainaina’s ICPC could not be heard but was allowed in later as an interested party.

A protest by ICPC lawyers that the matter should be heard in the Judicial Review Division failed and Justice Mutava reserved his judgment to December 2012.

By this time, he had already been transferred to the High Court in Kericho.

In a judgment delivered on his behalf on March 23, 2013 by Justice Havelock, Justice Mutava allowed Pattni’s judicial review to the extent that he allowed the AG and DPP from continuing to prosecute Pattni and his companies.

The judge then started taking submissions from Pattni’s lawyers and sought for the file to be taken to Kericho for him to write the judgment.

The file was put in a cabinet in his former chambers, from where he collected it and took it to Kericho.

Although the Judicial Service Commission had directed that this particular file be kept under safe custody, Justice Mutava, “eager to clear his pending work from Nairobi”, went with the file and wrote a judgment that stopped any further prosecution of Pattni.

“These entire actions amount to either wanton impunity or extreme naivety,” the tribunal concluded.

“The facts point to a clear determination on the part of the judge to deal with the matter irrespective of the damage that action could cause.”

GUILTY
In his ruling, Justice Mutava said that Bosire’s report and conclusion that “Pattni (was) a perjurer, a forger, a fraudster and a thief … impaired the applicant’s presumption of innocence”.

He noted that his right to fair trial had been infringed and that that made any further prosecution to be unconstitutional.

Justice Mutava knew that his ruling would elicit criticism.

“The discharge of a judge’s constitutional mandate is never easy. It is not meant for the faint-hearted.

"Any reaction arising from a decision made by a judge should be seen as one of the many vagaries of the calling, as long as the judge’s appreciation of the law and facts, his analysis and conclusions and, above all, the judge’s conscience, remain sanctified. I am, therefore, comfortable and well prepared for any such reaction.”

That reaction came. And the tribunal has found him guilty of mishandling that case – or as the tribunal said – he was not an innocent bystander.
***
Last week’s article on freedom fighter Paul Ngei elicited a lot of interest from readers – with one Mark Muli calling me a “mad man”.

I also had a discussion with Ngei’s eldest son, Masaku, who accused me of practising “pulp journalism”.

Another one said: I find this Kamau guy’s approach biased towards tribal bigotry.

A Mr Paul Katuse said I should “be ashamed of myself … What we read in your column was a continuation of some community’s arrogant sense of entitlement through belittling others! I find your column to be very biased. Your tribal vitriol is in excess this weekend.”

Jackson Mutie challenged me “to rewrite history and (indicate that) Ngei had not been jailed. We all know power corrupts. Ngei changed after colonisers left. That is beside the point".

"What was the purpose of your story? Was it to educate, motivate, encourage or to show disrespect?

"I challenge you to a fist fight. You are as unwise as you say Ngei was when he appointed his wife as personal secretary. Your coffee stories were good. I am disappointed.”

[email protected] @johnkamau1