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
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
Books should be for everyone, says Els, 8. Publisher Scholastic now agrees
booksAn eight-year-old saw a pirate book was ‘for boys’ and took on the publishers
Life and Style
Mary Beard received abuse after speaking positively on 'Question Time' about immigrant workers: 'When people say ridiculous, untrue and hurtful things, then I think you should call them out'
tech
Life and Style
Most mail-order brides are thought to come from Thailand, the Philippines and Romania
life
News
i100
Life and Style
tech
Voices
Margaret Thatcher, with her director of publicity Sir Gordon Reece, who helped her and the Tory Party to victory in 1979
voicesThe subject is being celebrated by the V&A museum, triggering some happy memories for former PR man DJ Taylor
  • Get to the point
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

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Recruitment Genius: Installation and Service / Security Engineer

£22000 - £40000 per annum: Recruitment Genius: This company is part of a Group...

Recruitment Genius: Service Charge Accounts Assistant

£16000 - £18000 per annum: Recruitment Genius: Are you a a young, dynamic pers...

Cancer Research UK: Corporate Partnerships Volunteer Events Coordinator – London

Voluntary: Cancer Research UK: We’re looking for someone to support our award ...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions