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Mafia

Kenya’s Drug Barons

In April and November last year, the Australian navy seized two consignments of heroin off the coast of Kenya, totalling 787 kg and worth about USD278m. Another haul was made in July when Kenyan police found 342 kg of heroin in the tank of a ship docked at the Mombasa port, making it the biggest ever single seizure of drugs in Kenya coastal city. The three seizures roughly equalled the amount captured by 11 east African governments between 1990 and 2009, according to the U.N. Office on Drugs and Crime.

von Lorenzo Bagnoli , Lorenzo Bodrero

The hauls proved once again how Kenya and East Africa waters have become a key export route for heroin from Asia to Europe.

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Kenya’s drug routes

In December 2004 a seizure marked a turning point in Africa drugs trade. It was the biggest ever: 1.1 tonnes coming in a vessel docked at Mombasa port. Cocaine has been seized in Malindi, Mombasa (837.5 Kg) and Nairobi (304 Kg). The street value was estimated in 80 million USD. Narcotics allegedly came from Colombia through Venezuela. 

This large cocaine seizure haul involved all the big players both in politics and drug trafficking in Kenya. 

John Harun Mwau, Kenya’s Most Dangerous Drug Trafficker

Politician and businessman, John Harun Mwau, was born in Kenya in 1948 to a humble family. But by the 1990s, he was a rich man. Two decades later, he is richer still. Last year, the Mwau family was named in the 2014 ‘Wealth in Kenya’ report as one of the richest in the country.

And the US government is currently seeking to confiscate 750 millions dollars he has investied there: in 2011 Obama’s administration blacklisted him in the “Kingpin act”. 

Mwau’s vast wealth is not from honest hard work. He is Kenya’s biggest drug trafficker, and in two decades has earned hundreds of millions of dollars from illegally moving cocaine into Kenya, the United States and Europe.

Mwau began his career as a sharpshooter in the Kenyan police in his 20s. He joined the Kenyan parliament in the Kilome province in 1992 under his own brand new political party: PICK (Party of Independent Candidates of Kenya). He left his seat in 2013.

Mwau ran also for the Kenyan presidency in 1992. He lost. But then president, Daniel Arap Moi, offered him the role of head of the newly-created Kenya Anti-Corruption Authority. His job as „transparency upholder“ lasted just a few months.

After keeping a low profile for several years, he emerged again as a major importer of electronic goods from the Middle East and Europe. But troubles for Mwau started in 2004.

In December that year, Kenyan authorities seized in Nairobi, Mombasa and Malindi an astonishing 1,21 tonnes of cocaine. The African Business magazine suggests the cargo came from Venezuela and Colombia, and was destined for Ireland and the Netherlands. It was the largest drug haul ever in Kenya’s history. Shortly after, investigators raided the depot of Pepe Enterprises Ltd, a Mombasa -based company allegedly owned by John Mwau. The company has a warehouse located at the Athi River in the outskirts of Nairobi, where it is suspected that part of the narcotics shipment found its way there. The same newspaper reported that Kenya’s Criminal Investigation Department (CID) „refused to identify a prominent Nairobi hotelier being investigated over the shipment“. 

The 2012 report “Termites at Work: Transnational Organized Crime and State Erosion in Kenya“ released by the International Peace Institute (IPI), highlighted that Mwau has „also been contracted by the government over many years to operate an inland container depot at Athi River in the outskirts of Nairobi, known as the Pepe Container Freight Station“.

The report named Mwau as a violent drug dealer involved in money laundering and contract killings. „In 2008,” the report continues, “John Harun Mwau, following his appointment as assistant transport minister, appears to have been responsible for Kenya’s container transport arrangements“ and „for the Kenya Ports Authority (KPA), which controls all ports of entry and inland container terminals in Kenya“. The manager of the depot was charged for drug trafficking but was acquitted for lack of evidence”4.

“Mombasa port is like a tunnel. All illicit business happens here and it is controlled by traders supported by customs personnel and powerful people in government. Whoever controls the port controls the illicit business in Kenya“

IPI interview with Njuguna Mutonya, former bureau chief of Nation Media Group, Coast Province, August 18, 2010.

But the toughest blows to Mwau’s jaw were yet to come. Prior to 2007, Mwau was under investigation with two other suspects for having allegedly provided large sums of money to the election coffers of the PNU (Party of National Unity), headed by Mwai Kibaki, at that time the Kenyan president.

Mwau resigned from his trade assistant minister post in December 2010 after Internal Security minister, George Saitoti, informed the Parliament that MPs Ali Hassan Joho, William Kabogo, John Harun Mwau and Gideon Mbuvi, and Mombasa tycoon Ali Punjani were being investigated for alleged drug trafficking.

According to local press reports, Mwau’s resignation came one month after U.S. ambassador for Kenya, Michael Ranneberger, handed over a detailed confidential report made by American anti-narcotics agencies. All U.S. assets in which Mwau held more than 50% shares were frozen. The U.S. Treasury Department believes Mwau used overseas tournaments and his status to start moving narcotics. In the same period, Mwau visited Colombia quite often: according to top sources, Mwau set up his links with drug traffickers at that time.

The accusations thrown in the Parliament by former minister Saitoti were based on a joint investigation run by US law enforcement and Kenyan government. Strongest allegations moved the investigation at the beginning, less concrete in the later evidence. 

The confirmation is John Harun Mwau’s investigation: in February the “Interim report on drug trafficking investigations” by Kenyan police concluded: “No evidence has so far been found to link him to drug trafficking”.

In 2012 the main accuser, professor George Saitoti, died in an helicopter crash on the outskirts of Nairobi: Al Shabaab militias and drug traffickers are the main suspects for the disaster. Investigations have not yet found anyone guilty.

In 2011, the United States sanctioned Mwau under the Kingpin Act, and is currently working to seize $750m of his investments there. 

Adam Szubin, the Director of the Office of Foreign Assets Control (Ofac) in the US Department of Treasury, told journalists: „We view [Mwau] as among the more powerful and active narcotics traffickers in the region.“”It’s not a quick or short process. We built a case slowly and carefully to ensure that it is soundly built“.

“The US never apologises for killing its enemies, real or imagined.” Mwau said in 2011. “They will violate other nations’ airspace and eliminate their targets. The task of justification is left to themselves“. Mwau also claimed that he had every reason to believe that the move by the US government to designate him as a significant foreign narcotics drug trafficker was tailored to make him an easy target for elimination.

In January 2014, the National Authority for Campaign Against Alcohol and Drug Abuse in Kenya (NACADA), invited by John Harun Mwau to say whether they had any evidence linking him with the drug trade, cleared the former politician of any involvement in drug trafficking. But, as reported in the Daily Nation piece on the subject, “Nacada is a State agency and chairmen of such institutions do not have the powers to clear individuals of any past or present allegations“.

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Politics and Drugs: The Johos Brothers

A report issued in 2010 by the U.S. Embassy in Kenya and cited in Parliament by then Internal Security Minister George Saitoti says that MPs Joho, William Kabogo, John Harun Mwau, Gideon Mbuvi and Mombasa tycoon Ali Punjani, are among the most dangerous drug traffickers in the country. The document is also signed by then U.S. ambassador Michael Ranneberger.

The report describes how Abubakar Joho and his brother Ali Hassan are in charge of a multi-million euro trafficking empire.

Abubarak is the first one of the two to enter the drug trade. In the early ‘90s he begins working in a clearing and forwarding company and later finds a new position in the vehicles business. Once he finds out the owner of the company had died during the Rwanda genocide he decides to take over and starts diverting vehicles destined to Rwanda into the Kenyan market. But vehicles soon become less lucrative. 

His guts tell him to move on to more profitable business, the one flourishing in and around the port of Mombasa. Here he finds employment in a company that clears container from ships to the quay, and vice-versa. According to the U.S. report, Abubakar Joho „was the clearing agent for containers that held one ton of cocaine in 2004“. 

The influence of Abubakar on Ali Hassan is the one typical of an elder brother towards his younger. According to the American document, it was Abubakar who insisted and convinced Ali Hassan to enter politics. And so he does. 

A young Ali Hassan Joho runs and wins the 2007 elections as a representative of the Mombasa region in the national parliament. Shortly after, the report suggests, his career in the drug trade begins. 

The report reads that the political campaign that grants him the regional political seat was founded by Swaleh Kandereni, Billy Mahandi and Swaleh Ahmed who are all arrested in Mombasa under drug trafficking charges in 2010. According to the American document, Kandereni allegedly was a major supplier to dealers in the coastal town of Malindi. Another of Joho’s influencial campaigner „was suspected narcotics trafficker Ali Punjabi“, the report reads.

It is since 2010 that the Kenyan Anti Narcotics Unit suspects Ali Hassan Joho to be involved in the narcotics trade. The report fails in providing more details on such claim. Due to Joho’s „political position and financial resources it is unclear what [Kenyan] police intended to do with evidence“, the report ends.

Ali Hassan Joho is elected as governor of the Mombasa county on March 4, 2013. 

Together the brothers own Prima Bins & Pest Control, an import-export company in charge of waste management and rat- killing, based in Mama Ngina Drive, Mombasa. It is through their company that the pair move drugs across Kenya. U.S. officials also identify Israeli company Amiran Kenya Ltd, owned by Israeli businessman Andy, as a crucial actor in the criminal network.

Andy appears closely connected with a Mombasa-based man, nicknamed Adamo, one of Joho’s trusted operators. The American report insists that both Mwau and Johos have own companies based at the Kilindi port, in Mombasa, where the cargo seized in December 2004 was heading: “Some of the cocaine [from the 2004 haul] had been stored at the Pepe Container Freight Station CFS, a facility owned by Mr Harun Mwau”.

Ali Hassan Joho also appears as a close acquaintance to Mary Wambui, activist and among the fiercest promoters of former president Kibaki’s political campaign. Wambui, after being Kibaki’s personal counsellor, took his parliamentary seat in 2013. According to the U.S. report, Wambui met often with Hassan and promoted his candidacy for a seat in the regional parliament of Kisauni in 2007. 

From Netherlands with Love, the Akashas

Sitting on the throne of drug barons in Kenya is the Akasha family. The world came to know their name when the forefather of the family Ibrahim Akasha brought to court in 1996, charged on drug trafficking. Ibrahim Akasha is a Swiss-based billionaire, the value of whose estate was estimated at USD 100 million, and who owns property in Amsterdam, the Middle East and Asia. Following Ibrahim’s reign, in 1998 it was his brother’s turn: the allegation was for a heroin possession worth  USD 140.000. In his absentia, Ibrahim Akasha hired a Yugoslavian conduit to ship his consignment to Europe. This new agent was linked up to an international syndicate based in Amsterdam: at the top of the Dutch gang was Sam Klepper, a notorious drug trafficker born in the Netherlands. Akasha’s inside men in Amsterdam were the Barsoums brother, Mounir and Magdi.

For a couple of years the new collaboration between the Dutch and the Kenyan gangs ran smoothly. The equilibrium cracked in 1999 when the payment for a drug consignment failed: the event sparkled an internal feud then ended when the Akasha abducted the Dutch gang’s Yugoslavian agent from which they managed to cash in USD 211.000.

Sam Klepper had it in 2000, while Ibrahim Akasha was shot dead while walking hand-in-hand with his wife in Bloedstraat [Blood Street], Amsterdam. It is likely that Mounir Barsoum pulled the trigger. Some days before Ibrahima Akasha had received a phone call from Magdi Barsoum inviting him to Amsterdam. He had obtained the Dutch visa in Spring 2000, just in time to avoid to be caught by the police who found 4.7 tons of heroin worth Sh940 million in the up-market Nyali Estate, Mombasa, the Akasha’s home. Kenyan state was preparing to seize all the family assets. In the end, all the operation was a failure: they didn’t succeed in breaking the Akasha’s empire. 

For a feud that stopped, a new one started: this time Klepper’s gang was fighting against a Yugoslavian gang led by the famous drug dealer Streten „Jotcha“ Jocic which joined the syndicate. Yugoslavs pushed for executing Ibrahim Akashah. The feud kept leaving fresh blood on the turf: in October 2000 Keller was killed, followed by the Barsoums brothers in 2002 and 2004. 

Since the ‘90s, drug dealing has always been a trademark for Akashas. According to Kenyan intelligence, The Netherlands was the final destination of the huge haul of 1,2 tons of cocaine cargo seized in 2004. They suspected that the Akashas were the men behind it. The US Drug Enforcement Agency „had spent years infiltrating Akasha and alleges that the gang is part of a heroin supply chain that stretches from the poppy fields of Afghanistan through east Africa to the cities of Europe and the United States“, wrote Drazen Jorgic in a Special report by Reuters. „In documents filed in a court in the Southern District of New York on November 10th, 2015, the U.S. prosecutors alleged that the Akasha organisation was responsible for the „production and distribution“ of large quantities of narcotics in Kenya, Africa and beyond“, continues the report.

The family today is composed as follows:

  • Baktash Akasha Abdallah — considered by intelligence sources as the new boss.
  • Ibrahim Akasha Abdallah — younger, he follows Baktash
  • Nichu Akasha Nichu — runs a garage in Parklands area, in Nairobi

In November 2014, the U.S. government requested the extradition of Baktash Akasha Abdallah, Ibrahim Akasha Abdallah because of what the DEA stated about their trafficking, delivered to The US. 

In a report, Baktash is described as the leader of an organised crime and drug trafficking network and his bother Ibrahim, a chief lieutenant in Baktash’s alleged drug trafficking activities.

Four suspected top drug traffickers in Kenya awaiting extradition to the United States were freed on bail Monday, amid concerns of east Africa’s growing importance as a smuggling hub.

The four — two Kenyans, an Indian and a Pakistani — were arrested last month with 98 packets of suspected heroin, with the US issuing an Interpol “red notice” for their capture and request for their extradition

Standard Digital, November 12th 2014

In March 2015 Baktash paid a 30 million shillings (USD 325.000) bail to be freed. According to US court documents and to Akashas’ lawyer, the DEA sting started in March last year.

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Mafia in Africa

Kenya’s Safe Haven

“Do you honestly know anyone who has never evaded taxes?” asks Mario Mele, Italian businessman and fugitive, from a table at the busy Pata Pata Cafe in Malindi, Kenya.

von Lorenzo Bagnoli , Lorenzo Bodrero

Mele is the cafe’s renowned manager and, from dawn to sunset, available chairs are rare in his joint. A Premier League football game plays of the cafe’s TV, but Mele ignores it. As customers flow into the Pata Pata Cafe, he manages to greet them with a quick smile, before returning to the videocamera with a worried expression.

Mele flew to Kenya in early 2012 where he started doing what he does best. He opened the Pata Pata, a welcoming cafe in the city center of Malindi, a tiny outpost for Italian tourists and businessmen on the south coast of Kenya. Malindi is a strange town for Kenya. Italian is its second language caused by the incredible numbers of expats who, since the 1970s, have moved here, looking for a fresh start or to invest in the tourism industry. Other come to just spend the winter in warmer climes, often with the company of a local, young girl.

The Pata Pata Beach Club in Malindi, Kenya

The Pata Pata disco club (today Wip the club) in Agrustos, Italy.

IRPI

But Mele is no ordinary expat. In his native land, the Gallura region of Sardinia, which itself welcomes thousands of Italian and foreign tourists every summer, there is a trial awaiting him. He is charged with fraudulent bankruptcy for 17 millions euros.

It is a high fall from grace for this entrepreneur, a man who owned many of Sardinia’s premier night-spots, which provided expensive champagne and exclusivity to Italy’s wealthy VIPs.

“I have no intention to go back“, Mele tells IRPI reporters.

Andrea Schirra, a magistrate in the prosecutor office of Nuoro, led a year-long investigation into the bankrupcies of companies owned by Mele and his associates, Gian Pietro Porcheddu and Ivan Deidda. Mele’s companies — RISEA and EDO — went bankrupt in 2011. „We believe they were all bankrupted intentionally, in this way it was easier to make all the profits disappear“, said police officer Alberto Cambedda to La Nuova Sardegna newspaper in 2012.

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A video capture of Mario Mele

Mele is now at large in Kenya. He refused to answer magistrate Schirra’s questions, but he did agree to answer IRPI’s.

“My lawyer is taking care of things at home. I can’t just go back to stand a trial and do nothing“, he says. „What will I live off while I’m there waiting, huh?“

What brings reporters to the table at Pata Pata, however, is something only partially touched on by the Fiscal Guard’s investigation.

During the fiscal check on companies owned by Mele and his business partners, police found a trace leading straight to a mafia clan from Sicily, the D’Agosta.

The Sicilian Mafia, also known as Cosa Nostra, is a criminal organization originating in Sicily, Italy. It is made up of criminal groups engaging in a wide range of illegal activities, from racketeering to drug trafficking. They share a common code of conduct and often count on local, national and even international support at a political level to evade justice.

In 1989, Salvatore Incardona was a small entrepreneur in Vittoria, a tiny city in the south-east corner of Sicily. He owned a stall in the local market, and everyone in town knew his name. 

He was well-liked, but different. 

The other stall-owners in the food and vegetables market paid protection money to the local mafia clan, the powerful family of Carbonaro. But Cardona refusedto pay the pizzo [extortion]. He wanted his business to run clean without filling mafia’s pockets, and invited his colleagues unite with him and do the same.

That sort of disobedience the Mafia cannot let pass. at 5:45am on the morning of June 9, a hit squad waited outside his house. As Cardona got in his car to leave for work, men unload in his directions, riddling his body and vehicle with bullets. He left behind a wife and a 25 years old son.

A few years later, the city of Vittoria and the surrounding province of Ragusa (see image) see the rise of a new mafia clan, the D’Agosta, led by Francesco D’Agosta. Francesco is the father of five children, a renown local politician with crucial connections with the underworld and local public officials. Above all he is a man with dark ambitions. He sets up his own crime syndicate and, after a period of fruitful collaboration with the clan of the Carbonaro, he decides to change sides and to challenge the powerful clan for the control of the Ragusa territory.

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Click the image to interact with the infographic

Local media report years of killings and of bloodshed streets. The feud is on and it leaves countless bodies behind. Operation „Mammasantissima“ — a slang word that mafia members use to call a boss – puts an end to the war in May 1998 when police arrest 28 people, most of which belonging to the D’Agosta clan, including the five sons of Francesco.

It is the end of the D’Agosta clan. A few months later, in September 1998, a street in the city of Vittoria is named after Salvatore Incardona, nine years after his murder.

With the operation „Mammasantissima“ the names of twin brothers Gianfranco and Carmelo D’Agosta begin to appear on police reports with increasing frequency. To the extent that a few years later, Gianfranco is sentenced for the crimes of mafia association and drug trafficking. The war lost against the clan of Carbonaro must have been a good enough reason for D’Agosta’s offsprings to leave Sicily for good and to export their illegal activities in other regions of Italy.

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The D’Agosta clan has always operated in Sicily and Milan, were the clan laundered money in posh pubs.

Bars and cafes were a special D’Agostas interest too. In July 2012, judge from the Milan Law Court Anna Maria Zamagni gave the go ahead for the seizure of the Samarani Cafe, a classy bar in the luxurious center of Milan, formerly owned by the mother of the two brothers. The judge believed she was a simple proxy. The same measure was also taken against the Babilonia Cafe and Il Faro di Molarotto, respectively a bar and a hotel located in Olbia, Sardinia. The entire seizure totalled € 5 million in assets. The criminal records and the individual income tax returns of the D’Agostas, believed to be too low to afford managing bars and hotels — raised sufficient suspicion for the Italian anti-mafia police to freeze their properties.

Champagne seems to be one of the links between Mele’s companies and the D’Agosta clan. Both would purchase the luxurious wine from the same company, I AM DIAMOND. Located in Rome, I AM DIAMOND sells champagne both in Italy and throughout Europe. Contacting the company’s legal representative, Simone Cavallo, for commenting has proven unsuccessful and when asked about the nature of the Rome-based enterprise, investigators shrugged their shoulders: They are fiscal police. They investigated Mele’s and D’Agosta’s companies’ revenues and that is all

During the investigation police found a copy of an € 80.000 check at D’Agosta’s house, issued to I AM DIAMOND Srl by the Lugano (Switzerland) branch of UBS bank. With thousands owed, I AM DIAMOND legal representative, Simone Cavallo, called Gianfranco D’Agosta to help him collect the credits, according to Cavallo’s testimony to investigators. By scrutinizing thousands of company documents, investigators believe that the only company entitled to issue a check to I AM DIAMOND was RISEA, therefore Mele.

“Ridiculous is the statement [by Simone Cavallo, ed.] according to which Gianfranco D’Agosta would have acted as mediator for I AM DIAMOND in order to collect the credit due by RISEA, as [D’Agosta, ed.] declared he barely knew the legal representative [of I AM DIAMOND, ed.]“.

Guardia di Finanza report, page 77

In order and to understand whether Mele and his associate Porcheddu own any assets or bank account in Switzerland, the prosecutors issued a „request for information“ to Italy’s neighbouring country. The outcome is still pending.

“I have met D’Agosta once, maybe twice,” Mele says in response to journalists’ questions. “I barely knew him.“ Italy’s fiscal police suggests that D’Agosta, Mele and Porcheddu might have formed a criminal association for the management of nightclubs in Sardinia. According to police records, champagne was not the only reason why these questionable parties came together.

Besides the recovery of the € 80.000 check found at Gianfranco D’Agosta’s house, police say the two had a common interest in a club called Le Burlesque, where strippers and cross-dressers regularly take the stage to entertain patrons. According to prosecutors, the directors of the club’s management company were previously employed by RISEA Srl and Il FARO DI MOLAROTTO, owned by Mele and D’Agosta, respectively.

And there is more. A 2012 police report claims that Mele purchased audio and video equipment through RISEA for installation at Le Burlesque. „It is likely that the club [Le Burlesque] is managed by Mele and D’Agosta through the use of proxy figures“, the police report states.

As admitted by the prosecutor office of Nuoro, the investigation on Mele was focused strictly on the huge tax evasion. A confidential source in the Nuoro fiscal police told us that their main interest was the dubious and fictitious movement of payments within the network of companies led by Mele and his associate Porcheddu.

Sardinia, Milan, Sicily, Kenya and Switzerland. A line connects these dots, but the details remain unclear, hidden behind financial secrecy. The „request for information“ letter sent by the prosecutor office to Switzerland’s Minister of Justice may yet illuminate many dark corners. The Swiss Bank knows the real issuer and receiver behind that 80.000 € check. According to the prosecutors, it is likely that all the bankruptcies of Mele’s and Porcheddu’s companies aimed to evade creditors in a safe bank account far from the Italian Revenue.

Doubtless, the prosecutors asked the Swiss for the answers to such questions. And so the prosecutor’s office can only hope for cooperation. But the chances of success are low.

While prosecutors await an answer from Switzerland to untangle the mystery, Mele stays safe in Kenya as the trial against him and his former associates starts at the end of April 2015. His new customers seem happy and plentiful. One can only wonder if the Kenyan revenue service is receiving from Mele the full taxes that he owes from his new venture in Africa.

Joined by-line by Lorenzo Bagnoli and Lorenzo Bodrero

All texts are edited by Craig Shaw (Centre for Investigative Journalism)

This project is produced by journalism centres IRPI, ANCIR, CORRECTIV with QUATTROGATTI and made possible by IDR Grant and Journalismfund.

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Mafia in Africa

Charter House Bank: A Money Laundering Machine

von Lorenzo Bagnoli , Lorenzo Bodrero

The first alarm went off in 2001 when a request by the Central Bank of Kenya (CBK) to the Charter House Bank (CHB) asking for full details about a US$20 million transaction was ignored.

The second alarm came in 2004, after an internal auditor at CHB blew the whistle over alleged malpractices.

A third and final one occurred in 2006. The shadow finance minister, Billow Kerrow, presented documents alleging blatant and widespread tax evasion by a net of companies over a period of six years.

Welcome to what it is believed to be Kenya’s largest tax evasion and money laundering scam, said to be worth about US$1.5 billion.

Few are the certainties that surrounds the Charter House Bank scandal. One is that „anyone who probed the operations of CHB has been either moved off the case or has fled the country“, said one of the key-whistleblowers, Titus Mwirigi, to BBC in 2006.

One man who suffered such a fate was Peter Odhiambo, a Kenyan auditor who too blew the whistle on CHB. He was forced to request asylum in the U.S. because, according to a diplomatic cable released by Wikileaks, „the people implicated in the scandal are dangerous and appear to have bought influence in the Kenyan government.“

As internal auditor, Odhiambo had free access to the bank’s transaction documents. According to the cable sent from the American embassy, in 2004 he collected information on 85 accounts held at the bank through which, he claimed, a tax evasion scam worth US$ 573 million was perpetrated.

There is even room for some old fashioned dirty tricks. In September 2004, a fire at the CHB offices supposedly burnt to ashes a huge number of documents related to financial transactions prior to April 2004. Future audit bodies would cite the fire — as well as the unwillingness to cooperate by the bank staff — as the reason why the bank’s transfer details were not available.

The companies that Odhiambo identified as being involved in tax evasion and money laundering were associated with Nakumatt Holdings: Nakumatt Supermarkets, Tusker Mattresses, Kingsway Tyres, Creative Innovations and Village Market. A Central Bank of Kenya report went further and added the John Harun Group, Triton Petroleum, law firm Kariuki Muigua & Co. and Pepe Enterprises Ltd were also linked to the Nakumatt Holdings, stating that „they are undoubtedly involved in significant tax evasion if not other economic crimes“.

Nakumatt owns over 50 supermarket stores in Rwanda, Uganda and Tanzania and is the largest supermarket chain in Kenya. Its story began in 1978, when it was launched by Manganlal Shah. Shah is an Indian businessman who emigrated to Kenya in 1947. He started running a clothing shop near Embakasi, named Vimal Fancy Store after his first-born child, Vimal.

He moved to Nakuru town in 1952, and 20 years later he was bankrupt. In Nakuru, he started working as clerk for Nakuru Mattress, a big retail shop. His sons Vimal and Atul opened a corner shop in the same neighbourhood. In a couple of years they earned enough to buy Nakuru Mattress, changing its name to Nakumatt. The average annual turnover of the company is 45 billion KSH (€450 mln) and the company assets are valued at 11 billion KSH (€110m).

nakumatt-logo.jpg

The ownership is divided into the Atul Shah family (92,3%) and Hotnet Limited (7,7%). Numerous sources report that one of the wealthiest and most influential businessman in Kenya holds part of the shares at Hotnet.

Meet John Harun Mwau, former cop and politician, entrepreneur and, last but not least, according to the U.S. Foreign Narcotics Kingpin Designation Act, one of world’s most dangerous „Drug kingpins“.

“Charter House was supposed to be Mwau’s bank to launder money“, said John Githongo, Kenyan journalist and former Transparency International board member, during a phone interview. Githongo’s voice is not alone. A U.S. embassy cable released by Wikileaks details similar testimony from Peter Odhiambo, former internal auditor at Charter House. The U.S. outpost in Kenya also believed former Kenya MP William Kabogo holds shares in Hotnet.

Whistleblower Peter Odhiambo told the U.S. embassy that despite the fact that „south Asian Kenyans are listed as the owners, some of them were proxy holders of shares actually owned by the two MPs [Mwau and Kabogo].“

2006 was the turn of MP Billow Kerrow, who exposed the results of a leaked task force investigation conducted into CHB. The MP publicly linked Nakumatt Holdings and Charter House Bank to money laundering and tax evasion, alleging also that the supermarket company held a 10 percent stake in the bank.

An extensive report called „Smouldering Evidence“ presented by the Africa Centre for Open Governance (AfriCOG) in 2006 closely examined the CHB scandal and its irregularities. Earlier, PricewaterhouseCooper (PwC) and the Central Bank of Kenya’s due diligence team shed light on the scandal, highlighting the way money was laundered and taxes evaded. Despite the resistance they faced during inspections, they all „uncovered considerable evidence of activities suggesting that there was gross money-laundering at Charter House Bank“ and that „the bank’s clients were involved in both tax evasion and money laundering“, according to the AfriCOG report. During the investigations, CHB management made it difficult for PwC and CBK auditors to operate. They „even undertook surveillance of the team’s work by mounting a CCTV camera and miniature microphone in the team’s working room.“

The report noticed how the CHB allowed money to flow to a network of companies and persons through unregistered or illicit transfers. PwC registered numerous cases of large cash transactions, both as deposits and as withdrawals. In the auditors opinion, this „indicated an intention to conceal the true source of the beneficiary of the payments made“, with each withdrawal averaging US$ 11.000.

A typical modus operandi was to split a large amount of money into smaller transactions, in order not to raise suspicion within the bank’s own regulatory system: „a common practice among money launderers“, AfriCOG said. Exemplary is the case of mysterious Italian businessman, Paolo Sattanino, born in Turin in 1964.

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Sattanino currently works in Lugano, Switzerland, at Mercurio Corporate SA, a joint stock company. He is the founder of Eporedia srl, Mego srl and Tradex srl, all Turin based.

By holding several accounts at CHB as a legal person and as owner of the Italian companies he owned (Capricorn Srl and Tradex Srl), Sattanino received a number of payments of the same amount within consecutive days, as shown in the image below.

Sattanino received payments from Cargo Distributors, Kingsway Mart Ltd, Creative Innovations Ltd, Brand Imports Ltd, Aua Industria Ltd. According to the AfriCOG report, he then instructed the bank to transfer the money abroad without any relevant documentation, as required for transfers above US$10.000.

Send hundreds of payments from different senders to numerous receivers, and you have laundered millions and bypassed financial regulations.

“Kindly note the above amount has been remitted to your account by Hon Kabogo“ [The amount was EUR 5,270, ed.]

Email correspondence from Sanjay Shah (Managing Director of Charter House Bank, ed.) to Paolo Sattanino, July 7 2005

Journalists could not reach Sattanino for comment and the phones numbers registered to companies in which he owns shares ring endlessly. His lawyer Mauro Anetrini spoke on his behalf: „The whole story has never had any judicial consequence for my client, the Wikileaks files show that reports found wrongdoings within the bank, not from Mr Sattanino. If they asked him to provide all necessary documents he would have done so, but they never did. Besides, it is my knowledge that no investigation was done on him, why should he provide them?“. To clear his name, suggested journalists. „Ok, then, I shall ask whether he still has any“, Anetrini said.

Another peculiar Italian entrepreneur involved in the CHB scandal is Francesco Tramontano, a media businessman based in Dar Es Salaam, Tanzania. He is reported as having made several transfers amounting to € 80.000 to Sattanino’s bank accounts, both under his name and the Africa Media Group he controls. According to a document issued by a Belgian parliamentary committee in 2003, Tramontano was sentenced in absentia for having organised a group of people who defrauded the Belgian Development Office of €2.235.000 in aid funds. Extradition attempts sent to Tanzania have so far proved unsuccessful.

A 2012 study shows how easy it is to launder money in Kenya using shell companies. A common method was to move money across financial borders. Researchers from the University of Texas, Griffith University and Brigham Young University found that, out of 182 countries, Kenya was the least likely to ask for identification documents when people opened a shell company. With Nairobi being the financial center of the entire East African region, this makes Kenya a natural target for money launderers. The need for money laundering facilities is exacerbated by the constant political and social instability of Kenya’s neighboring countries, Somalia, Ethiopia and South Sudan.

“Another common practice in money laundering involves sending the money through a complex web of financial transactions to change its form and make it difficult to follow. Referred to as layering, it may involve myriad bank-to-bank transfers, transfers between different accounts in different names and countries to related companies, changing the money’s currency and form and so on. This is aimed at ensuring that the original illegal proceeds become difficult to trace. The PwC audit found a number of accounts that had similar patterns of transactions.

These accounts were operated by the following companies and persons: Fones Direct, Phones Direct, Intra Market Trading, Panorama Imports, Brand Imports, Triton Petroleum, Cashline Forex Bureau, Capricorn SRL, Creative Innovations, Kingsway Mart limited, Paolo Sattanino, Paul Mburu and Cargo Distributors.“

Smouldering evidence, the Charter House Bank scandal, page 8

“The proceeds of drug trafficking move through the banking system“, John Githongo tells IRPI. „In terms of movement of drug money, Kenya now rates higher even than Nigeria due to the rise of narcotics moving in and through the country, but also because of the sophisticated fiscal system that Kenya’s represents“, he adds.

Not one of the many investigations by Kenyan authorities into the Charter House scandal saw a single person in court. The bank was closed in 2006 but perpetrators are still running Kenya’s financial system, undetected or protected by secrecy.

“Normally this type of scandal would call for a transparent investigation, if the findings suggest that a criminal conduct took place then it’s the duty of the prosecution authority to call for a police investigation. The problem with countries like Kenya where the political elites have immunity is that justice is rarely made“, tells us Global Initiative Against Transnational Organised Crime senior advisor Peter Gastrow.

In 2010, a Parliamentary committee cleared Charterhouse bank of any wrongdoing and suggested it be reopened. Instead of opening the bank, the Kenya Anti-Corruption Commission (KACC) announced that it would reopen the investigation after receiving a file from the U.S. embassy, allegedly containing details of Ksh 60 billion ($738.5 million) worth of financial malpractice by Charterhouse Bank.

Joined by-line by Lorenzo Bagnoli and Lorenzo Bodrero

Infographics by Davide Mancino and Stefano Gurciullo

All texts are edited by Craig Shaw (Centre for Investigative Journalism)

This project is produced by journalism centres IRPI, ANCIR, CORRECTIV with QUATTROGATTI and made possible by IDR Grant and Journalismfund.