How motor firm bosses stashed away Sh255m in secret accounts

At 82 years of age, Mr Jeremiah Gitau Kiereini’s illustrious career in government and business was supposed to have a happy ending.

But then, at the wrong moment, two rival groups of five newly-rich men and fellow directors who would traditionally be expected kiss his ring as the chairman of the CMC Motors board decided to start airing their dirty linen in public.

Then he was caught in the cross-fire.

It was humiliating enough that in a March board meeting, these men had worked in cahoots to kick him out of the board together with Mr Martin Forster, who had served as the group managing director. Together, they had served the 67-year-old company for many years.

However, documents reviewed by the Sunday Nation dating back to 1996 reveal that Mr Kiereini and Mr Forster have been sitting on deep secrets of their own — worth more than £1.7 million or Sh255 million at one point last year.

The existence of this money has never been revealed neither in the annual financial statements that the company sends out to its shareholders on the Nairobi Stock Exchange nor in the books it maintains for the taxman. (Read: Judge drops order on CMC over ‘conflict of interest’)

The money was accumulated by colluding with suppliers to overcharge CMC on invoices. The monies would be paid back to the two along with other employees over the last 26 years.

For instance, in March 2011, Mr Kiereini was paid £5,000 (Sh750,000), Mr Forster £18,500 (Sh2.8m) and similar amounts in September.

Since 2008, payment schedules reveal that Mr Kiereini received £20,000 (Sh3m) and Mr Forster got £77,750 (Sh11.7m). The money was not taxed.

CMC saga

Although Mr Kiereini had approached the Sunday Nation for a meeting to “put facts straight” on the CMC saga, he postponed the meeting and did not respond to further requests for an interview.

The big question now is how Mr Kiereini, the patriarch of Kenya’s high society, corporate chieftain, and a man who rose the career ladder whispering into the ears of three presidents got ensnared into a two-decade web of offshore money laundering.

Why would a wealthy man who owns major shares in CMC risk so much for such small amounts?

Official documents, including audited accounts and disbursement schedules, reveal that, in the last 20 years, Mr Kiereini and Mr Forster have operated three secret offshore trust accounts which funds were built by adding half a percentage point to the invoiced cost of every car purchased from Jaguar Land Rover and Nissan UD. The two dealerships were at one point the rainmakers for the company.

During Presidents Kenyatta and Moi’s eras, Land Rover was the official face of government transport when the British were the favourites.

Nissan Diesel, manufactured by UD Trucks of Japan, remains a popular lorry brand on Kenyan roads.

According to people familiar with the details, this is how the plan worked out.

CMC would order Land Rover and Nissan Diesel vehicles and strike a particular price negotiated at arms-length.