The man who made millions from investing nothing in railways

• HARD QUESTIONS: How did highly paid technocrats in Kenya and Uganda and their World Bank advisers fall for a sham railways deal?

New evidence reveals how Mr  Roy Puffet, the South African investor on the right who is at the centre of what is emerging as one of Kenya’s most infamous privatisation scandals, thrived by projecting the image of a big corporate player and director of multiple companies in South Africa.

But, as it was to emerge later, it was all but a clever game: most of the companies owned by Mr Puffet are shelf units with no capital base.

Just how he managed to commit Kenya and Uganda into handing over to him the running of the Kenya-Uganda Railways system for a period of 25 years is one of the intriguing aspects of the saga.

Tracking companies owned by Mr Puffet leads you to a complex web of holdings registered in Kenya, Mauritius and South Africa.

But the names of the companies that are material to understanding Mr Puffet’s intriguinng game are four: Rift Valley Railways Kenya Ltd, Sheltam Rail (Pty), Sheltam Trading CC (both of South Africa) and RVR Investments(Pty) of Mauritius.

Three interesting trends emerge from a closer scrutiny of the files of these companies from registries in South Africa and Kenya.

No capital base

First, they were all registered in the  year 2005, only months before the  railway transaction was concluded.

Secondly, none of the companies had a capital base to own an asset as big as the Kenya Uganda Railway system.

Mark you, the international valuation company, Ecorys Nederland BV, which was contracted by the two governments to specifically value the assets of  the railway system, came up with a figure of $808 million.

Thirdly, none of  Mr Puffet’s companies had either the capacity or the financial muscle to manage a railway system as large and complex as the Kenya-Uganda Railways.

What is clear is that the moment Mr Puffet’s consortium was declared the leader in the bidding for the concession, he went into a spree, registering one company after another in multiple jurisdictions.

According to information from the companies registry, Rift Valley Railways Kenya Ltd, the entity whose name appears in the actual concession document, was  purchased off the shelves of Nairobi’s companies registry from two Kenyan businessmen, Philip Kingai and Julius Mwangi Ng’ang’a,  on October 25, 2005 under certificate number 120151.

The two handed over this shelf company to Mr Puffet for a consideration of Sh200 million, hardly a week after the company was registered.

On November, 4, 2005, the name of the company changed to Rift Valley  Railways Kenya Ltd. Mr Puffet and another South African national, Wesley Graham Kruger, were appointed directors.

According to the records, the share capital of the company was stated as Sh98,000.

At this stage, other names come into the picture, namely, RVR Investments (Pty) Ltd, an entity registered in the Republic of Mauritius, Sheltam Rail (Pty) of South Africa and Sheltam Trade CC, also of South Africa.

The shares held by Philip Kingai were transferred to Sheltam Rail Company (Pty) based in Port Elizabeth, while the shares owned by Julius Mwangi Ng’ang’a were transferred to Sheltam Trade CC.