Kenyan named in scam was at Tory ball: Richard Dowden reports on the latest twist in the unravelling of a multi-million pound export fraud

THE MAN at the heart of a multi-million pound export scam in Kenya last year attended the Conservative Party's chief fund-raising event, presided over by the Prime Minister.

Kamlesh Pattni, who is under investigation by the Kenyan police for his alleged part in the fraud, which robbed the Kenyan government of tens of millions of pounds, was one of a group of Kenyans who attended the pounds 75- a-head Winter Ball at the Grosvenor Hotel in London on 3 February 1992. With him was Eric Kotut, the Governor of the Kenya Central Bank, who recently resigned over the scandal. Douglas Hurd, the Foreign Secretary, greeted guests at Mr Pattni's table during the Ball.

Conservative Central Office said that it would not confirm or deny that the Kenyans were at the function. A spokesman said the ball was open to anyone and no list was kept. A month ago a spokesman said it would be easy to check to see if the men had attended. The disclosures will revive concern about the sources of Conservative Party funding.

The ball was attended by the Prime Minister and most leading members of the Conservative Party. It raised pounds 250,000 but it is unclear whether Mr Pattni contributed more than a pounds 75 ticket.

The 'Kenyan' table at the Winter Ball was made up of Mr Pattni, Mr Kotut, Wilfred Koinange, the Permanant Secretary at the Ministry of Finance, Philip Mbiti, head of the Civil Service, and Ketan Somaia, Kenya's foremost businessman. Mr Somaia said he was there with his family, invited by another businessman.

Mr Pattni is the joint owner of Goldenberg International, a company which acquired the monopoly of exports of gold and diamonds from Kenya and was granted a 35 per cent export bonus for the commodities by the government. The bonus was agreed by George Saitoti, the Vice-President and, at the time, minister of finance. Mr Pattni set up his own bank, the Exchange Bank, to deal with the transactions.

Between November 1990 and December 1992 Mr Pattni claimed to have exported at least pounds 49m of gold and diamonds, putting in for at least pounds 17m from the Kenyan treasury as an export bonus. This sudden influx of extra money into the economy led to a dramatic fall in the value of the Kenya shilling.

Kenya, however, possesses no diamonds and very little gold, and neither gold nor diamonds appeared in official exports. Suspicions were aroused about the existence of the exported goods. The new Finance Minister, Musalia Mudavadi, ordered closure of the Exchange Bank and said prosecutions would follow. Some of those involved in the scam argued that the transactions were legal because they were approved by the Finance Ministry and that all the appropriate official paperwork exists.

Mr Saitoti has argued that he was simply carrying out the instructions of an inter-ministerial committee. That defence highlights the problem of tracking down corruption in a country where corruption extends to the heart of the state. The man who threatened to expose corruption in Kenya, the then foreign minister, Robert Ouko, was murdered in 1990. His murderers have never been found and a Scotland Yard detective called in to investigate the case complained of official obstruction. He said that senior ministers refused to be interviewed in connection with the killing.

In the wake of the Goldenberg scandal and other financial irregularities, the Central Bank ordered a special audit of four Kenyan banks on the prompting of the International Monetary Fund and the World Bank. The four banks are: the Exchange, the Pan African, the Post Bank Credit and the Delphis Bank. Delphis is owned by Mr Somaia. Lord Parkinson, former chairman of the Conservative Party, is chairman of Delphis' parent company, the Dolphin Group.

The results of the audit have not been released but Mr Somaia said recently that it had cleared his bank of any wrongdoing. According to a Central Bank internal memo, however, Exchange, Post Bank and Delphis failed to remit dollars 156m ( pounds 104m) to the Central Bank two months ago but instead invested the money.

After his resignation as Governor of the Bank last week Mr Kotut said: 'The impression that I was sacked due to some misconduct or that I may be associated with some malpractices committed either in some commercial banks or by some individuals within the Central Bank is false and unfair.'

The Finance Minister, Mr Mudavadi, said in a statement that he had launched 'intensive investigations' into the operations of the Central Bank and that reports by the independent team of auditors to look into the activities of the bank had revealed financial irregularities - and prosecutions would follow.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
News
One of the 'princesses' in the video
videoYouTube reinstates sweary video after takedown for 'violating terms'
Sport
Mario Balotelli (left) trudges off at half-time last night, to be substituted during the interval
football
News
Russell Brand arriving for the book launch in East London
peopleRussell Brand cancels his book launch debate due to concerns about the make-up of the panel
Life and Style
Could you tell the difference between this and an organic alternative?
food + drink

Culinary experts in The Netherlands thought it was 'fresh' and 'tasty'

Arts and Entertainment
Contestants during this summer's Celebrity Big Brother grand finale
tvBroadcaster attempts to change its image following sale to US
Life and Style
tech

Of all the computers Apple has ever made there’s only one that Steve Jobs had to sell his car to finance

News
New look: Zellweger at Elle's Women in Hollywood awards on Monday

Actress sees off speculation about her face in an amazing way

Arts and Entertainment
Sarah Dales attempts to sell British Breeze in the luxury scent task
tvReview: 'Apprentice' candidates on the verge of tears as they were ejected from the boardroom
News
Call me Superman: one of many unusual names chosen by Chinese students
newsChinese state TV offers advice for citizens picking a Western moniker
Arts and Entertainment
film

Marvel has released first teaser trailer week early after it leaked online

Arts and Entertainment
Awesome foursome: Sam Smith shows off his awards
music22-year-old confirms he is 2014’s breakout British music success
News
Let’s pretend: KidZania in Tokyo
educationKidZania lets children try their hands at being a firefighter, doctor or factory worker for the day
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

ICT/Business Studies Teacher

£21000 - £35000 per annum: Randstad Education Cambridge: ICT/Business Studies ...

Front end web developer - URGENT CONTRACT

£250 - £300 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT** Our...

Year 3 Teacher

£21000 - £31000 per annum: Randstad Education Chelmsford: KS2 Teachers - Chelm...

ABAP Developer

£32000 - £38000 per annum: Ampersand Consulting LLP: SAP ABAP Developer - Rugb...

Day In a Page

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker
Renée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity

'Renée Zellweger's real crime was to age'

The actress's altered appearance raised eyebrows at Elle's Women in Hollywood awards on Monday
From Cinderella to The Jungle Book, Disney plans live-action remakes of animated classics

Disney plans live-action remakes of animated classics

From Cinderella to The Jungle Book, Patrick Grafton-Green wonders if they can ever recapture the old magic
Thousands of teenagers to visit battlefields of the First World War in new Government scheme

Pupils to visit First World War battlefields

A new Government scheme aims to bring the the horrors of the conflict to life over the next five years
The 10 best smartphone accessories

Make the most of your mobile: 10 best smartphone accessories

Try these add-ons for everything from secret charging to making sure you never lose your keys again
Mario Balotelli substituted at half-time against Real Madrid: Was this shirt swapping the real reason?

Liverpool v Real Madrid

Mario Balotelli substituted at half-time. Was shirt swapping the real reason?
West Indies tour of India: Hurricane set to sweep Windies into the shadows

Hurricane set to sweep Windies into the shadows

Decision to pull out of India tour leaves the WICB fighting for its existence with an off-field storm building
Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?