UK court convicts Ketan Somaia for $19.5m fraud

Ketan Somaia, a man who featured in the Goldenberg scandal in Kenya during the 1990s has been found guilty of fraud at a trial in London.

Somaia, who is now based in London, presided over the collapse of the Delphis bank and is best known for his involvement in the Goldenberg affair, a corruption scandal that helped wreck Kenya's economy and implicated former President Daniel arap Moi.

He was found guilty of a multi-million pound fraud on Friday and will be sentenced next month.

In 2003, Somaia was ordered to give evidence to an inquiry into the Goldenberg scandal, an export scam allegedly sanctioned at the highest levels of Moi's government.

The scam centred around a company called Goldenberg International which claimed to be selling Kenyan gold and diamonds to companies abroad. To encourage exports the government at the time paid Goldenberg bonuses for foreign sales.

But Kenya has no diamonds deposits and produces only a tiny amount of gold, and subsequent inquiries found its exports were fictitious.

However large payments associated with the scam were said to have passed through Mr Somaia’s bank Delphis.

Proceeds from the scam were used for foreign currency speculation, which sent the Kenyan shilling into freefall and national inflation soaring.

He was jailed for the alleged scam in 2004, but his conviction was quashed the following year.

Mr Somaia, a businessman and former associate of a close friend of the late UK Prime Minister Margaret Thatcher, the former British Cabinet minister Cecil Parkinson, fled the UK more than a decade ago and has been pursued by creditors on three continents.

But now he has been convicted at the Old Bailey of swindling $19.5 million (£11.5million).

‘KING CON’

Ketan Somaia, who boasted of his close friendship with the billionaire Hinduja brothers, was dubbed ‘King Con’, by the Daily Mail newspaper, is said to have wooed his victims with luxury trips on private jets, Champagne parties, extravagant dinners and expenses paid trips to Dubai, Kenya and South Africa.

The 52-year-old who owned an office in Mayfair and a palatial home in north London managed to extract a total of £13.5 million from entrepreneur Murli Mirchandani between June 1999 and May 2000 after promising high returns.

Mr Mirchandani - who himself claims to be worth more than £70 million - pursued Somaia in the civil court before finally launching a private prosecution in the UK.

The trial, which according to the Guardian newspaper is thought to have been the largest ever British private prosecution brought by an individual, saw Mr Somaia convicted of nine counts of obtaining money by deception, totalling $19.5 million, from two separate victims, and acquitted of two counts of obtaining money by deception totalling $3.5 million.

Mr Ketan Somaia “was what is sometimes called a confidence trickster, but on a grand scale,” said William Boyce QC for the prosecution.

His lavish lifestyle was being paid for by people whose money was “taken and not given back”, in a "systematic series of frauds".

The Guardian reported that Mr Mirchandani, who made his fortune in food and chemicals, pursued Somaia for more than a decade and was the primary complainant in the successful Old Bailey trial.

The jury found Somaia had also defrauded a London businessman, Dilip Shah, of £200,000.

NOT ALL WEALTHY

Somaia's victims were not all wealthy.

His personal assistant, Arifa Parkar, said in evidence that she had eventually left Somaia's employ, exhausted by fielding calls from unpaid creditors, after he failed to pay her wages.

"How could I survive without money?" she told the trial.

Somaia was said to have lured his victims by claiming that he had a personal fortune of $100 million and that his companies were worth $500 million.

He laid on all-expenses-paid trips to Africa to entertain business clients, and his Dolphin group owned some of the most prestigious hotels including Treetops Lodge, where the young Queen Elizabeth spent her honeymoon.

In Somaia's defence, barrister James Woods QC claimed Mr Mirchandani had given the money knowing there was a risk it might be lost.

"We suggest Murli Mirchandani, rather than the weak man portrayed, is more likely a hard-nosed business entrepreneur. It was he who looked at Mr Somaia in order to try and embark upon a business partnership.

"He was prepared to pay out big money to secure that business relationship. He gambled his money on Ketan Somaia. You win some and you lose some but you take it in your stride. This was no fraud."

GOVERNMENT CONTRACTS

Somaia was born in Kenya is alleged to have made most of his money from government contracts issued during the era of former President Moi.

Under one of these contracts, he was alleged to have been paid to import hundreds of second-hand black cabs from the UK to Nairobi, but a judge found that while 500 had been paid for, only 300 were delivered.

He was sent to prison for the alleged scam in 2004, but his conviction was quashed the following year.

When the Bank of Credit and Commerce International collapsed after an international corruption scandal in 1991, Somaia bought a number of its branches and changed the name to Delphis.

But a decade later Delphis also collapsed, with its branches in Nairobi, Mauritius and Tanzania closed or bailed out.

By 2002, Somaia had been arrested by Hertfordshire police for allegedly taking £500,000 from a local entrepreneur. He fled to Kenya, and the Crown Prosecution Service was not able to secure his extradition

In 2008, he was arrested in India while attending a wedding, and extradited to the UK.

The Hertfordshire case was dropped, on the grounds the money had been repaid and Somaia was in ill health.

'SOME CLOSURE'

Speaking after the verdict, Mirchandani said: "Securing a conviction against Mr Somaia will not undo the harm he has caused and the pain he has inflicted upon me and my family, but knowing that he has been brought to justice helps bring us some closure."

Concluding the trial, Judge Richard Hone QC said: "This case has been exceptional for a number of reasons – the sums involved, the extraordinary lifestyles, the famous names, the world of international businessmen and the outpouring of $23 million simply relying on the concept of 'My word is my bond'."

Somaia is due to be sentenced later this month after a medical report.