Confusion surrounds recent disclosures to an American regulator of what appears to be a €1.06 billion (Sh139 billion) loan agreement between Kenya and a Belarus company after the National Treasury denied knowledge of such a deal.
Treasury Cabinet Secretary Ukur Yatani, in response to Sunday Nation enquiries following the revelation by Business Daily on Thursday, disowned the contract with Kallo Inc of Canada and Techno-Investment Module of Belarus.
This is despite what appears to be the contract having been filed and displayed on the website of the US Securities Exchange Commission (SEC), one of the world’s most respected regulators.
Mr Yatani said he had written to SEC “bringing to its attention an unsigned contract purported to have been drawn between Kenya, Kallo Inc and Techno-Investment Module Ltd and seeking withdrawal of the same from the website and undertake necessary investigation on the circumstance leading to filing of unauthenticated document”.
The Sunday Nation could not independently confirm such a complaint as SEC had not responded to our questions by the time of going to press.
The contract, as well as two company reports – annual and quarterly – by Kallo Inc, all filed with SEC, contradict Mr Yatani’s position. The consequences of making false filings to SEC are dire. They include bans and hefty fines.
Filing with SEC is a regulatory requirement. Misrepresentation or omission of information about securities is considered a serious offence.
It has also emerged that Mr Sergey Pokusaev, the Russian behind the Belarusian Company, and who is named as a signatory in the deal, has been mentioned in several dubious, vulture-fund type financing contracts in several African countries.
His name has cropped up in the “State Capture” investigations in South Africa. Mr Pokusaev has also been involved in controversial loan deals in Lesotho, Malawi, Zimbabwe, Guinea and Ghana.
On March 18, based on regulatory filings in the US, the Business Daily reported that Treasury had signed a Sh139 billion loan deal with Kallo Inc and Techno-Investment Module “to fund Kallo’s projects implemented in the Republic of Kenya by the Ministry of Health”.
Techno-Investment Module was to provide financing for a project labelled Kallo Integrated Delivery System (KIDS).
The contract was filed with SEC by Kallo Inc. Apart from the contract, Kallo’s annual report makes references to the Kenyan deal.
“On June 26, 2020, the Cabinet Secretary of...Health and...National Treasury and Planning of the Republic of Kenya entered into a project contract with Kallo Inc and a loan contract with Techno-Investment Module Ltd, now with its registered office in Spain for implementing KIDS in the Republic of Kenya to strengthen their national health care infrastructure and build a robust, sustainable health care ecosystem,” the report says.
The report given to the US regulator also shows that between June and December 2020, Kallo Inc and Techno-Investment Module had signed similar contracts with Eswatini, Ethiopia, Mozambique and Eritrea.
“The document at SEC website is an unsigned contract purportedly drawn between the government, Kallo Inc and Techno-Investment Module Ltd. The unsigned contract cannot be authenticated by Treasury as it is not a party to the drafting, discussion or filing at SEC,” Mr Yatani said.
He added that he does not know anything about the companies he is said to have signed the deal with.
Mr Pokusaev, the Russian named as a signatory in the supposed multibillion-shilling deal, is a controversial figure.
He has been named as a key person in the “State Capture” commission of inquiry looking into how a few influential individuals, mostly foreign businessmen, took control of South Africa during the Jacob Zuma presidency. The Russian , through one of his companies – Grissag AG – in 2015 negotiated deals to help raise R15billion (Sh111 billion) to clear South African Airways (SAA) debts.
His partner in the SAA deal, Pieter Van der Merwe, testified at the judicial commission.
The Lesotho Ministry of Finance cancelled the sovereign guarantees it had provided to three companies for loans from organisations associated with Mr Pokusaev.
Mr Pokusaev was to provide loans of up to $150 million (Sh16 billion) to rescue a Zimbabwean investment bank in 2014 but the deal did not materialise and the bank was placed under receivership.
Mr Pokusaev was using another of his companies, Horizon Capital Consortium, in the Zimbabwe case.
In the SEC filings disowned by Mr Yatani, Techno-Investment Module that is linked to Mr Pokusaev was to provide Sh139 billion.
However, the company has almost no online presence apart from the SEC filings.
Mr Peter Wanyama, a lawyer who has handled a range of transactions for many years, says while confusion over the SEC filings is being looked into, African countries should generally be cautious.
“There is an extremely sophisticated cartel running firms in eastern Europe and kleptocracies in Asia that specialises in conning countries, especially in Africa. They are remnants of vulture funds that wreaked havoc in the 1990s and 2000s,’ Mr Wanyama said.
“They arrange dubious sovereign financing with the intention of conning governments. They will publish in respected journals that they have financed country ‘A’ with the intention of conning country ‘B’. The Covid-19 pandemic provided a perfect opportunity for ‘healthcare support’ financing deals.”
“The National Treasury is neither aware nor has it dealt with a Mr Sergey Pokusaev or company called Grissag on any matter,” the minister said.
A month before the said contract with the National Treasury was signed, a confidential source has told the Sunday Nation , an almost similar agreement was being discussed with a regional bloc of counties.
A Kenyan church minister and an American “international facilitator” were the intermediaries for a “relief donation of €500 million (Sh65 billion) to help the county governments in the fight against Covid-19 and in cushioning the people of Kenya and the economy from the negative economic and financial effects of the pandemic”.
The money was to be disbursed to counties in equal instalments over 10 months from May 2020 from a bank in Bangkok, Thailand to a major Kenyan financial institution.
Interestingly though, while the billions of shillings were billed as donations and a “no cost, risk, liability or debt”, the regional bloc of counties would have been required to pay the church minister and the international facilitator a commission of 12 per cent of the monthly disbursements “not later than 24 hours following receipt of the donation”.
The contract fell apart when some of the lawyers involved, at a meeting in an exclusive centre on Kiambu Road, raised the red flag as the National Treasury was not involved in the arrangement of such a magnitude.
In addition, questions were raised on why the “donors” based in the United States would wire the money from Thailand.
By this time, an agreement had been prepared and only needed signatures to be finalised.
Eventually, the “donors” disappeared. A month later, based on SEC filings, the Kallo Inc and Techno-Investment Module/National Treasury loan deal, which Mr Yatani has disowned, was signed.
