Politicians and senior civil servants topped the list of individuals and institutions that are following with interest the possible return of Yagnesh Devani — the runaway businessman at the centre of the multi-billion Shilling Triton oil scandal.
Mr Devani, who was arrested last week and is awaiting commencement of extradition proceedings in a UK court, is alleged to have masterminded Kenya’s biggest oil sector scam ever, estimated to have cost financiers and oil marketers Sh7.6 billion in 2008.
His flight out of the country as Kenya sunk into a petroleum crisis in December 2008 left a cloud of dust in its wake that has seen more than a half a dozen senior banking and petroleum industry officials lose their jobs beside a chain of lawsuits that those who lost money in the scam have filed against him and the Kenya Pipeline Company (KPC).
Legal experts said that apart from facilitating the full hearing of the suits pending in court, Mr Devani’s return could become a study in how influence works in the grey area between the State and private business — often with disastrous results.
“There must be a good measure of discomfort among the political and civil service elite without who Mr Devani could never have pulled off the big oil deals,” said Gad Awuonda, a Nairobi lawyer.
At the peak of his fame as one of Kenya’s most politically connected businessmen, Mr Devani wined and dined with Cabinet minister, permanent secretaries and heads of State corporations – who may be dragged into whatever battles he chooses to fight upon arriving in Nairobi.
It is through these high level connections that his firm, Triton, with less than three per cent share of Kenya’s petroleum market, managed to keep large amounts of oil for speculative purposes at the government-owned Kipevu storage facilities.
Petroleum industry regulations require oil marketers to store oil in the tanks based on their marketshare.
Though Kenyan and UK officials yesterday said no dates had been set for the hearing of the extradition proceedings for Mr Devani, petroleum industry insiders talked of rising levels of discomfort in the industry over the possibility of Mr Devani’s return.
Kenya Pipeline Company (KPC), the oil distributor that is facing nearly Sh8 billion in potential liabilities arising from the operations his Triton firm, senior officials at the parastatal and at KCB who lost their jobs in the wake of the Triton scam are among those said to be watching the Devani extradition saga with interest.
Mr Devani is facing criminal charges of stealing Sh1 billion worth of petroleum from the KCB Group and his Triton firm is at the centre of a number of suits filed against alleged irregular evacuation of oil from KPC custody worth about Sh8 billion.
The arrest of Mr Devani in exchange for a possible extradition of former Finance minister Chris Okemo and former Kenya Power and Lighting Company CEO Samuel Gichuru over money laundering in Jersey island has sent shockwaves in high political places.
Defraud oil marketers
The list of former KPC employees who may have an interest in Mr Devani’s return includes former operations manager Peter Mecha, technician Benedict Mutua and Phanuel Silvano who were fired and charged with conspiring to defraud oil marketers by pretending that Triton had oil to sell.
KPC itself has had to fight off an arbitration ruling in favour of Kobil for allowing Triton to illegally hog the ullage (storage space) at Kipevu Oil Storage Facility (KOSF), a charge that the oil marketers consistently made since 2004 and vehemently denied by KPC.
Kobil obtained damages amounting to Sh4.5 billion after it was determined that Triton’s irregular operations had cost it business opportunities and increased its costs.
The oil marketer is however expected to strike a deal that will enable it to use the KOSF facility for free for a specified period of time in return for its huge claims against KPC.
Mr Celestine Kilinda, the KPC managing director Monday said the firm had appealed against the arbitration but was emphatic that whatever outcome the settlement will not involve cash payment.
“I don’t think his extradition is going to affect us much unless there’s payment for the damages,” he said while declining to comment on the on-going case with a British firm.
The Triton saga left in its wake a wave of litigations that may benefit from Mr Devani’s extradition even as the State countered claims that it was preparing to let the businessman off the hook in exchange for the sale of his assets.
Mr Keriako Tobiko, the Director of Public Prosecutions, dismissed as baseless reports that Mr Devani — like Goldenberg architect Kamlesh Pattni — plans to enter into an agreement with the government to sell his assets in exchange for freedom from the Triton scam charges.
Last Friday, reports indicated that a deed of settlement had been prepared by KCB and PTA Bank on March 9, 2009 to drop the only criminal case against Mr Devani in return for his assets.
“We have not received such request,” Mr Tobiko said when asked about the possibility of entering such a deal.
UK-based Glencore Energy Ltd, one of Triton’s financiers, is in court seeking Sh3 billion from KPC for unlawful release of 31,752 metric tonnes of petroleum without its consent as provided for under the Collateral Financing Agreement (CFA).
Glencore wants the court to order KPC to refund it $40 million, an equivalent of 31,752 tonnes of products that was illegally released to Triton. KPC has denied the claims.
In the KCB case, Mr Devani was charged in absentia on January 14, 2009 for stealing more than $12 million belonging to the bank between July 31 and August 1, 2008 at the bank’s Moi Avenue branch. The businessman is alleged to have committed the crime together with Triton and KCB officials William Mundia, Collins Otieno, Mahendra Pathak, Julius Kilonzo, Job Kangogo, Samson Waka, Patrick Ngare, Peter Muthungu.
Mr Devani faces another count of stealing by servant more than $19 million he allegedly received on behalf of Kenya Pipeline Company (KPC).
The government has described as “criminal fraud” the KPC and Triton oil saga that saw the oil marketer collapse with at least Sh7.6 billion belonging to financiers.
Oil marketers are said to have lost billions worth of oil consignments that never reached them.
Despite being on the run reportedly in India and the UK — and even featuring on the Interpol website as a fugitive — Mr Devani moved to the High Court last year seeking orders to quash his arrest. A judge has ordered his lawyer, Mr Kioko Kilukumi, to serve the suit papers to the Kenya Anti-Corruption Commission and KCB.
The businessman had sought the help of the constitutional court in setting aside the arrest summons issued by chief magistrate Gilbert Mutembei.