Kenya 'political' banks come under scrutiny: Complaints from IMF and aid donors prompt inquiry after export swindle

FOUR BANKS in Kenya are being investigated by a special audit ordered by the Central Bank of Kenya after complaints about the banking system voiced by the International Monetary Fund and Western aid donors.

Kenya's aid donors are deeply worried about the activities of so called 'political' banks in Kenya, which are believed to have close links to the political establishment, and have insisted they are investigated.

One of the banks under investigation, the Delphis Bank, is owned by the Dolphin Group of companies chaired by Lord Parkinson, the former Conservative Party Chairman.

On the orders of the Central Bank, investigators from Price Waterhouse will examine documents like those obtained by the Independent which show that on 2 April this year the Delphis Bank transferred 152m Kenya shillings (pounds 2.5m) to the Exchange Bank, one of the other banks to be audited, and that three days later Ksh215m (pounds 3.6m) was transferred back to Delphis from Exchange.

The four banks - Delphis, Exchange, Post Bank Credit and Pan African - are believed to be the channel for an inflow of Ksh24bn into the Kenyan economy last year, which derailed inflation and credit targets and caused a dramatic fall in the shilling.

One other bank, the Trade Bank, was closed by the government on 15 April and senior officials arrested pending further investigations. At the time the Minister of Finance, Musalia Mudavadi, denied allegations that banks with links to the political establishment had been allowed to run up overdrafts with the Central Bank.

Delphis Bank was formerly the Bank of Credit and Commerce International in Kenya but was bought by a businessman, Ketan Somaia, in late 1991 after the collapse of BCCI. Mr Somaia, a young enterpreneur close to Kenya's poltical leaders, is the president of the Dolphin Group and last year he persuaded Lord Parkinson to act as chairman of his company. Lord Parkinson, who first met Mr Somaia when he was MP for Hertsmere, is understood not to take a fee for his role. Earlier this year he went to Dubai for a one-week briefing on Dolphin and then flew to Kenya where he met President Daniel arap Moi.

Dolphin has interests in Kenya, India, the Middle East and Britain. It recently moved its base to Dubai and moved its registration from the Isle of Man and Guernsey to Bermuda. These offshore registrations allow the company to disclose only a minimum amount of information about its activities.

The Exchange Bank is owned by Goldenberg International Ltd, the Kenyan company whose multi-million-pound swindle based on the fictitious export of diamond jewellery was revealed in the Independent yesterday. For a time the Delphis Bank acted as bankers for Goldenberg, providing an export credit for diamond jewellery to Switzerland.

Asked about a letter confirming this assistance, a spokesman for the Delphis Bank in Nairobi said the two employees who signed the letter in April last year had left the company but their departure had nothing to do with the case. He said the Delphis Bank had asked Goldenberg to close its account as it was no longer being used.

According to customs documents submitted by Goldenberg to the Kenyan Central Bank, it has exported pounds 50m-worth of diamonds and jewellery to Switzerland and Dubai in the past two years. The Minister of Finance claimed in March that these exports had earned Kenya more than Ksh9bn. But the latest annual Economic Survey of the Kenyan government does not mention diamond jewellery or gold as exports and says almost nothing was exported to Switzerland in 1991.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Telesales / Telemarketing Executive - OTE £30k / £35k plus

£18000 - £35000 per annum: Recruitment Genius: This company specialises provid...

Austen Lloyd: Commercial Property Solicitor - Exeter

Excellent Salary: Austen Lloyd: EXETER - A great new opportunity with real pot...

Austen Lloyd: Senior Private Client Solicitor - Exeter

Excellent Salary: Austen Lloyd: EXETER - An outstanding senior opportunity for...

Sauce Recruitment: Retail Planning Manager - Home Entertainment UK

salary equal to £40K pro-rata: Sauce Recruitment: Are you available to start a...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower