Chapter 3: Goldenberg’s network of sleaze

Kanu party mandarins and other Moi-era power brokers met regularly at the poolside of Kamlesh Pattni’s lavish Kitisuru home. Within Nairobi’s corridors of influence, Pattni enjoyed privileges reserved for the untouchable elite. In Nairobi, he was given unusual GSU protection and enjoyed police escort.  As the Judicial Commission of Inquiry later concluded, “the VIP treatment he was receiving made it impossible to be arrested or prosecuted.” So powerful was Pattni that “he often influenced the arrest and sometimes dismissal of some government employees.”

At home, the GSU guards guarded him from prying eyes and inquisitive scrutiny. His link with intelligence chief James Kanyotu kept the spies out of his path. In both his office and at home, Pattni had a hotline linked to State House, a testament to his powerful connections. Installed in 1992 and disconnected in May 1993, as the Goldenberg scandal became public, this hotline was not merely a line of communication, but a symbol of power, influence and affluence.

Running the Goldenberg scam was a full-time job. It required a network of smugglers, forgeries, calculated deceit, and an international network of phoney companies. The players in his web were many, but as it turned out the Attorney General, Amos Wako, found no evidence to prosecute.

At the Central Bank of Kenya, the heart of Pattni’s operations, Governor Eric Kotut emerged as a key figure in orchestrating the Goldenberg scam. A man who disliked perusing voluminous documents, Kotut delegated the task to his deputy, Eliphas Riungu, and instructed him to meet with Pattni. He devised the modalities for implementing Goldenberg’s proposals of ostensibly earning a minimum of $50 million (Sh6.5 billion at current rates) a year. Not everyone bought into this racket. But the Pattni-Riungu meeting yielded an unprecedented decision. CBK would directly monitor Goldenberg’s operations, a significant departure from its standard practice of steering clear of individual bank customers. This marked the beginning of an extraordinary, if controversial, relationship.

It was at the Exchange Control Department where the first stumbling block emerged; Jecinta Mwatela, who was tasked with overseeing Goldenberg. Mwatela’s reputation for unyielding integrity quickly made her a thorn in Pattni’s side. Frustrated by her vigilance, Pattni accused her of sabotaging Goldenberg’s interests. One particularly heated confrontation in Mwatela’s office saw Pattni storm out, vowing to escalate the matter to President Moi himself. Mwatela called Pattni’s bluff.

Moments after Pattni’s dramatic exit, a visibly shaken Riungu called Mwatela. “What did you do this time?” he asked nervously. His apprehension stemmed from Mwatela’s no-nonsense stance, which was effectively thwarting Pattni’s attempts to plunder state coffers. Mwatela notified Kotut that implementing Goldenberg was becoming difficult. She was ignored as the networks got entrenched.

Within CBK, three officials, Birech Kuruna, Eliphas Riungu and Kotut relaxed rules on the identification and monitoring of proceeds of exports, which allowed Pattni to buy foreign currency in the local market, disguise it as proceeds of gold and diamond exports and get 35 per cent compensation. Shortly thereafter, Pattni requested to circumvent a rule that required him to show that the foreign currency he had was proceeds of exports. Though this was not granted on paper, he flouted it at every turn. Those who questioned were shoved aside.

As it later emerged, transactions routed through the CBK were fraught with glaring irregularities. Requests for contract amendments in the foreign department lacked clarity, and vague remittance instructions arrived without accompanying invoices. The Kenya Commercial Bank (KCB), acting as an intermediary, persistently relied on Goldenberg for critical information. The documents were deliberately vague, incomplete and forgeries. Pattni was not exporting anything.

Moreover, the many purported exports were blatantly ineligible for export compensation. More so, Pattni continued invoicing in Kenyan shillings, a clear violation of proper procedure, while their shipping documents remained unsatisfactory. Concerned by these alarming discrepancies, Mrs Mwatela sought guidance from the Exchange Controller, only to receive a half-hearted response: "Mrs Mwatela, We talked. Please bring the discrepancies to their notice and require them to cease working on incomplete information.”

To Mwatela, the Exchange Controller’s response was vague and indecisive at best. While one would have expected CBK to rescind its agreement with Goldenberg or at the very least reject all dubious claims, the note implied tacit complicity with Goldenberg’s notoriety.

Under sworn testimony, Pattni’s narrative was that these transactions were intricately tied to the 1992 General Elections. He named President Moi, his personal assistant Joshua Kulei, former Vice-President Professor George Saitoti, and an array of KANU Cabinet Ministers, Members of Parliament, as the people he consulted and was asked to bankroll KANU’s 1992 electoral campaign.  Pattni claimed he provided vehicles instead of cash, after a State House directive.

One of Pattni’s close allies was car dealer Muzahim Mohammed, before they fell out. He was found to have received “colossal amounts of money from Pattni and his associated companies.” In total, he had received close to Sh200 million from Exchange Bank, and Goldenberg International among other Pattni companies.

At other times, Pattni told the Bosire Commission, Kulei would allegedly call to convey instructions. With no questions asked, Pattni complied, facilitating a shadowy financial network that enriched key political players while undermining Kenya’s public coffers. Either Pattni had not preserved that evidence or cooked the narrative. As the Commission said, “Pattni was given to melodrama, gross exaggeration and at times outright perjury.” Whatever the case, the Commission felt that Pattni was out to fix those he fell out with and save his friends.

In fixing his enemies “Pattni did his homework very poorly. At the time he alleges to have given Mrs Mwatela money at his offices, she was immobilised following a road traffic accident during which she broke her legs” — the Commission had concluded.

The Commission uncovered that Pattni’s close ties to President Moi, Professor Saitoti, and numerous KANU stalwarts positioned him as a key financier of their political machinery. He had a Steadfast account where all the payments to politicians were drawn. The list of beneficiaries from that account read like a who-is-who within Kanu. This network of influence and patronage ensured that Pattni’s largesse became an indispensable lifeline for KANU’s ambitions.

Among those who benefitted from Pattni’s financial support were lobby groups such as Operation-Moi-Wins of Evans Ondieki and Cyrus Jirongo’s Youth for Kanu. Ondieki openly acknowledged receiving funds from Pattni, asserting that these contributions were made on KANU’s behalf. Thus, Pattni was entangled with the ruling party, a role that went beyond mere financial transactions, serving as a critical link in KANU’s strategy to consolidate power during the turbulent 1992 elections.

Pattni’s tentacles were global. He had ten bank accounts in London that he used to purchase shares, bonds, stocks and other securities. Little is known of the assets acquired abroad using these funds, which he had been squirreled from Kenya.

Certain officers at the Central Bank of Kenya (CBK) who dared to question the legitimacy of financial transactions linked to his entities found themselves at the receiving end of threats and victimisation.

Pattni was always ahead of CBK. The stoppage of the pre-export scheme necessitated the commencement of cheque kiting as Goldenberg lost the source of cheap finance. Cheque kiting was a stop-gap measure while looking for an alternative source of funding. To do so,  Pattni took control of Pan African Bank Ltd in March 1993 and his employee, Nadir Akrami, became managing director of the bank. It was here they came up with the cheque kiting scheme – a cheque fraud that involves using non-existent funds in a bank account to cover a bad cheque. In March 1993, the local and international media exposed the Goldenberg scandal. But Officials within Treasury made the new Finance Minister Musalia Mudavadi deny the existence of such a scandal and the existence of “political banks” as alleged by the UK media. It was his first goof at the Treasury.

Come April 1993, a CBK employee David Munyekei contacted two Ford-Kenya MPs, Paul Muite and Peter Anyang Nyongó and gave them documents illustrating how Central Bank was continuing to aid Goldenberg to fleece the public coffers through export finance and pre-shipment schemes. There was a national uproar as the matter became public.

In July 1993, Kotut stepped down as CBK Governor, paving the way for his successor, Mr. Micah Cheserem. He promptly unearthed a staggering fraud linked to the infamous $210 million scandal. Alarmed, Cheserem demanded detailed explanations from all parties involved, Pattni, Goldenberg International, and Exchange Bank. Pattni acknowledged Exchange Bank’s staggering indebtedness of nearly Sh10 billion.

The web of deceit surrounding the Goldenberg scandal unraveled further as cartels pressured new CBK Governor Cheserem, claiming the government owed Goldenberg International a staggering Sh2.1 billion in export compensation. Dissatisfied with the findings of a PriceWaterhouseCoopers report commissioned by his predecessor, Cheserem took matters into his own hands, commissioning an independent investigation led by the meticulous A.K. Wabuti. The report laid bare the intricate and fraudulent machinations orchestrated by Kamlesh Pattni’s companies.

The tide began to turn only after Cheserem orchestrated the withdrawal of Pattni’s GSU protection, clearing the path for his eventual arrest. Intriguingly, Cheserem was the brother-in-law of Joshua Kulei, a former prison warden turned political kingpin in President Moi’s inner circle—a connection that added an intriguing layer to the drama.

Critics, however, contend that Pattni’s arrest was nothing more than a façade aimed at placating an exasperated donor community. Frustrated by Kenya's stagnation on economic reforms, international donors had halted aid, citing the Goldenberg scandal as a principal roadblock. The IMF, in its August 1997 mission, underscored the enormity of the debacle, amplifying calls for accountability.

Yet, the veneer of progress cracked in July 1998, when the government released a damningly inconclusive report signed by Finance Minister Simon Nyachae and Solicitor General Justice A. Ringera. Based heavily on police investigations and a legal opinion from the Attorney General’s office, the report astonishingly concluded that there was insufficient evidence to pursue convictions. This verdict not only cemented Pattni’s reputation as a figure of impunity but showed the deeply entrenched corruption that shielded him from justice.

What unfolded was a masterclass in obfuscation, where justice remained elusive, and the Goldenberg affair loomed as a stark reminder of a nation ensnared by systemic graft. It was in the courtrooms that Pattni tired his pursuers with myriad injunctions securing temporary orders that effectively froze any meaningful action.

For Pattni, he filed suits not in pursuit of justice but as a strategic ploy to obstruct the recovery of the Goldenberg loot. There were a litany of civil suits filed under certificates of urgency, and which sought preventive or enabling injunctions. Once the desired orders were obtained, the suits would languish in legal limbo.

Not a single case involving Pattni or his companies, whether tax-related or civil, ever reached a conclusive judgment. The pattern was clear: Pattni had no interest in resolving Goldenberg-related cases, relying instead on procedural stalling to keep the legal machinery perpetually gridlocked. His co-accused withered in courts, and some died while still on trial. Finally, he found a judge, Joseph Mutava to set him free. Reason: the case had delayed for many years and Pattni had suffered injustice.

Tomorrow: Life after Goldenberg: From Tripoli to Zimbabwe

In case you missed chapter 1 of the series entitled Inside Pattni’s wild world of sleaze, check it out, then you can also read chapter two, which is entitled Power, greed and how Pattni captured Treasury