Somaia guilty over Sh1.6bn fraud

One of the people who featured in the Goldenberg scandal that rocked Kenya in the 1990s has been found guilty of fraud involving Sh1.6 billion ($19.5m) at a trial at the Old Bailey in London.

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

Somaia 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 at 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 diamond 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 Delphis Bank.

Somaia, who boasted of a close friendship with the billionaire Hinduja brothers, 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 extracted a total of £13.5 million ($22.6 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 ($117 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 Somaia convicted on nine counts of obtaining money by deception, totalling $19.5m, from two separate victims, and acquitted of two counts of obtaining money by deception totalling $3.5m.

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.

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, who is of Indian origin but was born in Kenya, is said to have lured his victims by claiming that he had a personal fortune of $100m and companies worth $500m.

His Dolphin group owned some of the most prestigious hotels in Kenya including the famous Treetops Hotel where the young Queen Elizabeth spent her honeymoon.