How Kamlesh Pattni has beaten Kenya’s criminal justice system for 20 years

Saturday April 27 2013

Kamlesh Patni at a Milimani Law Court during a mention of a case he is charged with conspiracy to defraud the state over Goldenberg saga on March 29, 2012.  Justice Mutava of the High Court, blocked the Director of Public Prosecution from Pattni for crimes arising from his dealings with the Central Bank over the Grand Regency hotel, sold off to Libyans and now trading as Laico Regency. PHOTO/FILE

Kamlesh Patni at a Milimani Law Court during a mention of a case he is charged with conspiracy to defraud the state over Goldenberg saga on March 29, 2012. Justice Mutava of the High Court, blocked the Director of Public Prosecution from Pattni for crimes arising from his dealings with the Central Bank over the Grand Regency hotel, sold off to Libyans and now trading as Laico Regency. PHOTO/FILE  NATION

By WACHIRA MAINA

Three times Kamlesh Pattni has asked the High Court to stop criminal cases against him. Three times, three different judges have given him the orders.

The latest order, granted by Justice Mutava of the High Court, blocks the Director of Public Prosecution (DPP), from prosecuting him for crimes arising from his dealings with the Central Bank over the Grand Regency hotel, sold off to Libyans and now trading as Laico Regency. An outraged DPP, Mr Keriako Tobiko, has said that he will appeal.

The Law Society of Kenya (LSK) has written a strong protest letter to the Judicial Service Commission (JSC), asking how yet another Pattni case ended up before Justice Mutava given the Society’s earlier complaint to the Commission about his handling of past Pattni cases.

No one can tell how either matter — the appeal by the DPP and the complaint by LSK — will be determined. The merits of either case cannot be discussed here.

However, as this investigative report shows, there is enough evidence from Pattni’s 20-year romp through the Judiciary to warrant a fresh investigation and prosecution for abuse of the judicial process. It is a story of egregious and audacious fraud, manipulation, forgery and appalling impunity.

The Attorney-General, Prof Githu Muigai, can bring it to an end by asking the High Court to declare Pattni a vexatious litigant under the Vexatious Proceedings Act.

If declared that, Pattni would never file another case without the permission of the court. This article, based only on court documents mostly filed by Pattni, shows why that application is urgent and necessary.

The starting point is Pattni’s tussle with the Kenya Airports Authority (KAA) late last year.

That wrangle links Pattni, the World Duty Free company and the Goldenberg scandal, the core of most of what Pattni has been doing in court over the last two decades.

The argument with KAA was the last chapter in Pattni’s 14-year fight for World Duty Free, which in turn is central to his effort to hobble the DPP from ever successfully prosecuting him for Goldenberg.

The story must begin with why World Duty Free was so central to Mr Pattni’s efforts to cover up the Goldenberg scandal. Once that is understood, it is easier to explain Pattni’s litigation methods, which are covered in the second part of this investigative report.

This story takes us from Kenya, Dubai, Switzerland, the Isle of Man, The Hague, the British Virgin Island and back to Kenya.

Pattni and KAA: Why World Duty Free was always key to the Goldenberg cover-up

The story of how Goldenberg International was paid billions of shillings for non-existent exports of gold and diamonds is notoriously well known.

Pattni’s scheme to defraud the country was based on claims that the minerals had been exported to three companies: Swiss-based Servino Securities, Solitaire and World Duty Free (WDF), a Dubai-based company with branches at the Jomo Kenyatta International Airport, JKIA. 

However, it was soon clear that neither Servino Securities nor Solitaire, actually existed. Goldenberg International’s response was to say that WDF had actually bought the bulk of the gemstones. Some of the export documents that had initially showed exports to Servino Securities and Solitaire were amended to retrofit WDF as the consignee.

But then WDF, a company owned by Mr Nasir Ali Ibrahim, a Canadian national resident in Dubai, and Dinky International, a Panamanian company owned by Ali and his wife, denied that it had ever bought any gold and diamonds from Goldenberg International.

This meant that contrary to Pattni’s claim, if he was ever charged with any crimes arising from these non-existent exports it would be a slam-dunk: two consignees were fictitious and the third had never received any gold and diamonds.

Initially, though, WDF denials that it had not received Goldenberg exports did not alarm Pattni as he had not been charged with any offence associated with those exports. But Goldenberg, thanks to LSK and its then chairman, Dr Willy Mutunga, now Chief Justice, and to the World Bank and the IMF, Goldenberg would not stay buried.

A quick reminder of the essential facts will help.

In 1993, frustrated that Attorney-General Amos Wako had not prosecuted Pattni for the Goldenberg fraud, LSK asked the court for permission to file a private prosecution.

When the case came up for hearing, the previously slothful Mr Wako was frantic. He immediately asked to join the LSK case as amicus curiae (a friend of the court) and, once allowed, promptly filed an application to oppose it.

The AG’s reasons were not only fuzzy but also truly treacherous to the role of a friend of the court.

He seemed to be of three minds. First, he implied that he was waiting for an investigation report. Second, he seemed to be asking LSK to hand him the evidence that it had against Pattni, presumably so that he might prosecute the case himself. Thirdly, and perhaps inconsistently with the first two reasons, he told the court that it could not proceed with the matter because the Goldenberg issue was then pending before Parliament’s Public Accounts Committee (PAC).

To bolster that last plea, he got the Speaker of the National Assembly, Mr Francis ole Kaparo, to help. Mr Japhet Masya, then Clerk, swore an affidavit affirming that the case was indeed before Parliament.

This, he said, meant that the matter was not ripe for prosecution. But Parliament was blowing hot and cold. Though the PAC hearings were being used to stymie the LSK prosecution, there was real intention to deal with the matter.

After taking evidence, PAC recommended that “President Moi and other public officers involved [in Goldenberg] make full disclosures of the operators and beneficiaries of the funds from the accounts of [some] five named banks.”

But between the completion of the report and its printing, the Speaker intercepted it and had President Moi’s name deleted. However, the deletions were not thorough: the minutes of PAC’s meeting of June 4, 1996 still contained that damaging recommendation.

Back to the LSK case. The truth is that both the Clerk and the AG were being mendacious. The facts of the Goldenberg scandal had been in the public domain since 1992.

The AG offered no evidence that he had ordered an investigation into Goldenberg. If he hadn’t, what investigation report was he waiting for? More fundamentally, that an issue is before Parliament is never a bar to a criminal prosecution. Parliamentary committees oversee government and force accountability, they do not to decide the guilt of criminals.

Dr Mutunga saw through the machinations. He told the court that it was clear that “the Kenya Government is determined to complete the Goldenberg cover-up”.

He asked, incredulously, whether the AG expected Kenyans to believe that in 1995 the government was still “investigating crimes committed between 1990 and 1992”.

He sharply rebuked Mr Wako for behaving as if he were “leading counsel for all the accused persons”. He feared that if the court allowed Mr Wako to take over the case, there would be “protracted delays” leading to “mention after mention, adjournment followed by adjournment” and, eventually, “dramatic withdrawal of the cases”.

As it turned out, the collapse of the LSK case was even more dramatic than Dr Mutunga could have foreseen. The magistrate, Ms Uniter Kidullah, soon to be DPP, took the cue from the AG. In a long, hysterical jeremiad she dismissed the LSK case.

First, she argued that the documents Dr Mutunga had relied on were improperly executed because it was he, as chairman and not the secretary, who had signed them. Secondly, she agreed with Mr Wako that the LSK had no standing to prosecute because it could not show that it had been personally injured or damaged by Goldenberg.

Finally, she held that LSK was acting outside its mandate. With a schoolmarm’s scold, she said that this case showed that “the standards of conduct in the legal profession were at the lowest ebb”, concluding with the coup de grace that the only knowledge the Society had was “stealing from... clients.”

It sounded as if LSK itself were on trial. Questions of principle went unanswered: Why was the AG acting as if he were Pattni’s lawyer? What interest did Mr Wako or the Republic of Kenya have in whether the charges against Pattni were defective or not? After all, Kenya’s criminal procedure allows a prosecutor to withdraw or amend charges. Why did the AG not simply work with LSK to rectify these defects?

This decision set the chain of events that made Goldenberg case the cause célèbre that it became. Buffeted by pressure from the IMF and the World Bank and embarrassed by the Law Society, Mr Wako went into action, indicting Pattni and his co-accused.

However, he drafted the charges so badly the case was bound to fail. At first, he had put 48 counts in the charge sheet. Later — in total disregard of the applicable case-law and against the written advice of his own Director of Public Prosecution, Mr Bernard Chunga — he raised these counts to more than 90, knowing fully well that these many counts in a charge is fatal to a prosecution under Kenyan laws.

Pattni was not long in taking the cue. He filed an application attacking the charges as illegal. In July 1997 the High Court agreed and issued, as it has now, an order of prohibition stopping the magistrate’s court from going on with the trial. Unfortunately, the order of prohibition came on the eve of a Paris Club meeting on aid to Kenya.

Aghast at the news, the donors promptly announced that they would not ease the conditions they had set when they froze aid to Kenya.

The donors demanded action on corruption and, particularly, proper prosecution of the Goldenberg case. 

With the screws tightened afresh, the AG filed new charges against Pattni in August 1997. This, he reckoned, would mollify the donors and, from a PR perspective, offer the right optics for an IMF mission that was expected in Nairobi in early 1998.  Ahead of that 1998 mission, the then IMF Director for Africa, Mr Goodal Gondwe, made it clear that the Fund was keenly watching the criminal charges in the Goldenberg case. The case was due for hearing in early March 1998.

That IMF mission date explains Pattni’s next steps and brings WDF back into the picture. On February 24, 1998, Pattni hared off to court ex parte, his favourite litigation strategy.

He asked for an immediate injunction to stop Mr Ali and Dinky International from selling WDF shares or interfering with its management. He requested the court to immediately appoint a receiver to manage WDF.

The long, rambling affidavit in support of these prayers included a Memorandum of Sale and Agreement for WDF shares and copies of bank cheques. The memorandum was signed by Mr Ali and had a Dinky International stamp.

Pattni claimed that he had bought all the shares held by Mr Ali and Dinky in WDF in March 1992. According to him, since the agreement was executed Mr Ali had refused to complete the share transfer. 

He supported that claim with copies of letters he had ostensibly written to Mr Ali. As he told it to Justice Effie Owuor, the case was extremely urgent because he had now discovered that Mr Ali, a foreigner, was frittering away the assets of WDF. He feared that Mr Ali would soon flee the country, that WDF would then be worthless.

To forestall his imminent loss, he urgently needed an injunction to restrain Mr Ali, and an order to appoint a receiver to manage WDF from a list of names that he had helpfully put together.

Justice Owuor gave the orders. She held that there was ample evidence of dubious dealing by Mr Ali. She found that Pattni had shown that he had a valid agreement for purchase of WDF shares. But she also went further, making far-reaching factual findings.

She held, without hearing Mr Ali, that there was no dispute that Pattni had contracted to buy all the WDF shares; that there was no dispute that Pattni had done his part of the deal and that there was no dispute that Pattni was entitled to the dividends and profits from his investment.

She noted that that it was particularly disturbing that two warehouses owned by WDF had already been registered in Mr Ali’s name.

In giving the orders asked for, she said that it was in the interest of Pattni and of the public that WDF’s property be protected. 

An injunction was granted and an “independent” receiver from Pattni’s list, Mr Charles Gitungo, was appointed to husband the affairs of WDF until further orders of the court. Mr Githungo would subsequently feature in many of Pattni’s other schemes. First, though, let’s look at Judge Owuor’s decision a little more closely.

Even on the most lenient standard of criticism, this decision is hard to support. An ex-parte application is one in which the court hears only one party.

The urgency of the application means that the party before the court has no time to serve the other party. For this reason, a court has no grounds on which to make a categorical finding that “it is not disputed”.

Without the adversary, who is in court to dispute? The only issue in these types of applications is whether the person seeking orders from the court has put sufficient material before the court to justify a decision in his favour. Ex parte orders — especially when their consequences are as far-reaching as those Pattni was asking for should be very sparingly given.

Indeed, an exasperated Chief Justice Saeed Cockar had already held, in another case involving Pattni and ex parte orders, that if a person has taken too long to come to court, the court should be especially cautious in giving the orders.

Now apply Justice Cockar’s reasoning to this case. Pattni said that he and Mr Ali had contracted for WDF shares in March 1992; that by mid 1992 Pattni had paid the contract sums and that the shares were to be transferred to him by the December 31, 1993.

Notice that from the alleged completion date, Pattni had waited for four years and 53 days to go to court to enforce his rights. He gave the court no convincing reasons for the delay. Indeed, the excuses he gave were, depending on how charitable one feels, either laughable or audaciously insolent.

The Central Bank was to blame: he said that the bank had hounded and badgered him during that period over the Grand Regency Hotel case — itself another scandal — that he had not been able to concentrate on much else. The strain alone, he bragged, “would have cracked” a lesser man.

But facts that soon emerged would show that the alleged delay was the only benign element in this scandalous case.

All the things Justice Owour had said were not in dispute were, in fact, hotly disputed. Pattni’s entire case was a skein of lies, fraud, forgery and concealment. According to Mr Ali, when he rushed to court upon getting Justice Owuor’s orders, no sale of WDF shares had ever taken place. 

His signature was a forgery. The sale documents were cheap fakes. The Dinky International Stamp used to formalise those forgeries was fabricated in River Road. 

Pattni’s lawyer, Mr Bernard Kalove, had lied about the sale.  The story of this fraudulent conspiracy between a lawyer and his client stretches criminal brinkmanship to the limit.

Monday: How Pattni relied on forgery in the Goldenberg fraud cover-up.