Intrigues emerge in Keter’s Sh633m fraud arrest drama

Details of the intrigues that led to the arrest of Nandi Hills MP Alfred Keter and two other people on Friday have unfolded even as the vocal legislator remained in police custody Saturday.

Mr Keter was arrested alongside Mr Arthur Ingolo Sakwa and Mr Madat Suburali Chatur for what the Central Bank of Kenya and the Banking Fraud Investigations Unit said was presenting forged 90-day Treasury Bills dated 1990.

On Wednesday afternoon, Mr Keter reportedly received a call from CBK Governor Patrick Njoroge asking to see the vocal MP urgently.

He told the Governor he was heading to a funeral and they agreed to meet at the CBK on Friday.

To Mr Keter, the call was a signal that a longstanding matter on Treasury Bills had finally been sorted and he wanted Mr Chatur and Mr Sakwa to see the governor on their own — a suggestion Dr Njoroge apparently turned down as he wanted the three of them together.  

CBK VISITS
On Saturday, Mr Keter told the Sunday Nation in an exclusive interview at Muthaiga Police Station he had not recorded a statement and there were no indications that he would be released on cash bail.

Some MPs from the Rift Valley led by Baringo Senator Gideon Moi were at the police station demanding that Mr Keter be released even as investigations went on.

Cherangany MP Joshua Kutuny held a press conference at the police station and warned against intimidation of leaders using the police.

“Good roads, electricity connection, and water in every home will not earn you a name.

"It is the respect of the rule of law that will earn you a legacy. Rift Valley is watching and I want to tell, Mr President, stop this. Stop intimidating leaders,” Mr Kutuny said.

Mr Keter said he had gone to the governor’s office on several previous visits but, on the fateful day, he noticed the sitting arrangement had been changed.

The MP and the two men accompanying him were given seats at a corner in the office and not near the governor as was the usual arrangement.

“Mheshimiwa, you will be sorted, let the secretariat look at it,” Mr Keter recalls Dr Njoroge telling them as he stepped out, leaving them in the room.

INVESTIGATIONS
The three were then asked to sign a document detailing their interactions with the CBK, and this, too, Mr Keter says, caught him by surprise.

He claims he agreed to sign as a “witness” and was not expecting any money — something investigators will be establishing as they prepare a case against the three.  

Minutes later, plainclothes police officers from the Banking Fraud Investigations Unit walked in with handcuffs and whisked them away in front of rolling TV cameras.

At Muthaiga Police Station where the Sunday Nation met him, the controversial Nandi Hills MP briefed his lawyer Kimutai Bosek on his case.

Wearing the same shirt and pair of trousers he had on Friday, the vocal MP looked jovial, and had, in the midday interview, removed his coat and replaced it with a brown sweater.

In the interview, Mr Keter claimed he had met Dr Njoroge several times since November 2017 to seek payments for the T-Bills that he says had gone unpaid even after back and forth communication between Mr Sakwa, Mr Chatur and their lawyers.

DESAI INDUSTRIES
In a series of correspondence seen by the Sunday Nation, the Sh633 million demanded by Desai Industries under Messrs Sakwa and Mr Chatur was from T-Bills 1138 (Sh286 million) and 1148 (Sh347 million).

While the two maintained they had not been paid the Sh633 million bought on July 7, 1990 after a February 5, 1990 application to trade in T-Bills was approved, the CBK said that the bills had been cashed in, hence the involvement of Mr Keter with the hope the two individuals could get their payment faster.

“The above have not been cashed due to turbulence in commercial banking industry then, and unavailability of our chief executive who was out of Kenya,” Mr Chatur and Mr Sakwa, who sign off as executive director and director of Desai Industries Limited, respectively, said in a letter to the CBK dated July 4, 2017.

The letter was promptly replied to by the CBK on July 10 and signed by a Mr Jeremiah Tomno and Mr John Njau who sign off as “authorised signatory”.

“Kindly be advised that after checking our records, we ascertain that the Treasury Bills were indeed redeemed and proceeds therefrom paid in full,” the CBK said in the letter.

“In view of this, kindly be advised that the Central Bank of Kenya is not holding any funds for Desai Industries (K) Ltd.”

PAYMENT
Dissatisfied with the answer, the two engaged Lusweti and Nabutola Company Advocates, who wrote to the CBK governor in a letter dated August 18, 2017.

“Our client could not redeem the Treasury Bills after the expiry of the 90 days, as the practice then was the bearer of the Treasury Bill certificate was to surrender payment to be made by cheque,” lawyer Nabutola Wanjala said in the letter.

“Our client’s chief executive officer had been out of the country and with him, the possession of the Treasury Bill certificates.”

In the letter, Mr Nabutola warns of legal proceedings within seven days of failure to pay the money.

“Our client firmly states that they have never received any payment, whether the principal amount nor the interest thereof, neither did they surrender its original Treasury Bill certificates for purposes of payment,” the lawyer states in the letter copied to Treasury Cabinet Secretary Henry Rotich.

CERTIFICATES
The Goldenberg scandal of the early 1990s featured cases where unscrupulous individuals and well-connected banks redeemed volumes of the certificates issued for foreign exchange.

It would later be discovered that 18 sacks of these certificates had been stolen from the Central Bank.

It was not known where the stolen certificates, which were suspected to have been recycled several times, went.  

Mr Kwame Owino, the chief executive of the Institute of Economic Affairs, said in a Twitter post that if true there has been fraud in the payments for Treasury Bills, then someone has found unauthorised ways to add to the public debt.

“Given this background, IEA Kenya will propose for Parliament to demand a forensic and management audit of the debt register,” Mr Owino said.

He also challenged the Central Bank to assure Kenyans that its register of government paper is secure.

KETER'S ENTRY
In reply to Desai Industries’ August 18 letter, the CBK, in an August 22 letter signed by K.K Abuga, the director of Legal Services, the bank regulator refers to its July 10 letter saying payment had been made.

A day later, Mr Nabutola wrote back to the CBK stating that they had not been paid and made one more request.

“To be specific, our client needs records to show the year, date, month, the bank account name, bank account number, and the amount allegedly paid for our kind attention,” Mr Nabutola, the lawyer, said in the letter.

After seeing that they had hit the wall, Mr Keter explained, the two approached him for intervention.

“As a Kenyan MP, under Article 95 (2), I am elected to deliberate on and resolve issues of concern to the people, not of my constituency alone, but any Kenyan. And these people are Kenyan. I just wanted to help,” he said.

Treasury Bills used to be issued in the form of paper, like share certificates, but the physical form was abandoned in 1997 through a process called demobilisation.

It was however possible to come across bills that had not been demobilised and redeem them from the Central Bank.