Goldenberg Commission of Inquiry Report - Mars Group Kenya

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55. Since the regulations allowed it, it was not unreasonable to obtain the necessary banking licence before incurring the expense of forming the company, particularly since in the terms of the licence it should have been formed with an authorised capital of Ksh.40 million and stamp duty paid on that amount. 56. Exchange Bank Ltd was then formed on 1 st October, 1991 (Exht. 14 pg. 24) and the certificate was apparently received by EBL on 18 th October, 1991. Instead of the capital agreed to with CBK and the Minister, the company was formed with a nominal capital of 1 share each of Kshs.1000/- taken by Pattni and James Kanyotu. 57. A statement of nominal capital of Kshs.40million was filed on 1 st October 1991 but this is not an issue of share capital. For this to happen the share capital has to be paid up by the persons to be issued with the shares and a return of allotments made to the Registrar of Companies (Companies Regulations Form 213). This was never done and apparently CBK never insisted on seeing that the bank had the proposed capital. The nominal capital of the bank was increased on 28 th July, 1992 and 28 th August, 1992 but on no occasion was there a return of allotments of shares filed. 58. The proposed shareholding of Daksha Rana and Bhailal Patel and Rohit Damji as set out above in the application seems to have vanished without trace. That a bank can operate without capital is indicative of the laxity of bank supervision by CBK at the time. 59. The bank did not start operating until 4 th June, 1992 when the first entries were made in its account books (Exht. 90 pg. 1) and it was authorised as a depository under the Exchange Control Act on 30 th July, 1992.
60. Mr. J.D. Kabeberi who was appointed liquidator of EBL stated that he found no register of members of the company and no share certificate counterfoils (Exht. 181 pg. 2). Nevertheless he admitted that he did not inquire into this nor did he attempt to get in any of the capital which should have been paid up by the shareholders. 61. Before we consider in detail the operations of these two companies we consider it imperative to sketch out the political and economic situation in the country before and after these companies were incorporated.
Page 1: REPUBLIC OF KENYA REPORT OF THE JUD
Page 4 and 5: APPENDIXES APPENDIX A - GAZETTE NOT
Page 6: WB - World Bank
Page 10 and 11: [A] CITATION INTRODUCTION 1. By Gaz
Page 12 and 13: (ii) whether any or all the money w
Page 14 and 15: Nairobi. Thereafter, the sessions o
Page 16 and 17: must consider why the courts initia
Page 18 and 19: available to testify, he was not pr
Page 20 and 21: documents and other exhibits produc
Page 22 and 23: Code, in exercise of his powers und
Page 24 and 25: 23. And we did carry on, but not fo
Page 26 and 27: we deal with administrative matters
Page 28 and 29: was an International Women Aids Con
Page 30 and 31: themselves of the discretionary pow
Page 32 and 33: so, with tremendous respect to them
Page 34 and 35: These are some of the reasons norma
Page 36 and 37: each. The Memorandum and Articles o
Page 40 and 41: CHAPTER I ECONOMIC AND POLITICAL SI
Page 42 and 43: 65. It was argued then, and Prof. R
Page 44 and 45: promoting prudent macroeconomic pol
Page 46 and 47: confirmed and irrevocable letters o
Page 48 and 49: application, discussed it before th
Page 50 and 51: compensation. Secondly, that it be
Page 52 and 53: Hezekiah Oyugi, who was then a Perm
Page 54 and 55: CHAPTER II ACCEPTANCE AND IMPLEMENT
Page 56 and 57: letter itself upon which the Minist
Page 58 and 59: 1) The granting of Sole rights to e
Page 60 and 61: Sign. (C.S. Mbindyo) 28 th January,
Page 62 and 63: 2. Folio 42/1 V.P. approves except
Page 64 and 65: we consider the cost which is much
Page 66 and 67: As the addressee, references and da
Page 68 and 69: 123. It was the duty of the exporte
Page 70 and 71: licence which was issued by the Dep
Page 72 and 73: (ii) Procedure for Export of Eligib
Page 74 and 75: included its terms in its agreement
Page 76 and 77: that publication nor had he ever he
Page 78 and 79: innocent inquirer into the existenc
Page 80 and 81: 147. It is of interest that Pattni
Page 82 and 83: 153. Paragraph (e) of the same noti
Page 84 and 85: *$323,000 *$206,000 $121,000 *$179,
Page 86 and 87: would have each time accompanied th
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Nairobi which shall see Foreign Exc
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would receive its purported export
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166. As in the case of First Americ
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evidence before us that GIL had ach
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176. When EBL was formed and grante
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(vii) Compensatory Payments 182. Th
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compensation claims each time they
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exported eligible goods to have bee
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“THE CONTROLLER M/S GOLDENBERG IN
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agreement with GIL, or at least rej
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fraudulently redesignated, initiall
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with the then Chief Banking Manager
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215. There are some discrepancies b
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application (Exht 155 pgs. 16 & 18)
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229. The facility was retired by a
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236. The documents produced show th
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244. The pre-export financing schem
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GIL had a retention account with Ex
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256. Forex Cs were to be issued by
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In addition Forex Cs were used to e
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CHAPTER IV FINANCIAL DEALINGS (A) M
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ehalf of either themselves, or GIL.
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eflect money which is unaccounted f
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282. Mr. Smith was referring to the
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exchange rate and interest from len
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Exchange Bank Operational Aug-92 29
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like Seville Investments Ltd and Du
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commented that certain banks were i
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associated organisations or account
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“We have remitted US$ 19 million
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e on the same day or within 48 hour
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the same day. This contract was rev
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our account at the Federal Reserve
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dates. It is also very clear that M
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Discussed with Manager Foreign Depa
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356. On the other side it is clear
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This is the background of the agree
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Wanjihia, and to do so without thei
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of the fact that EBL had placed no
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The governor appeared not to be awa
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Permanent Secretary is not the acco
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him time to find a way round the pr
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395. The English revolution of the
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it, it would have been extremely un
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410. Omo bills were sold by auction
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Later still the witness said: “My
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from the then governor of CBK, Mr.
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425. In conclusion, we think that t
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Gama Rose and S.B.R. Shah. On 21 st
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438. The letters of credit issued b
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lend money (Banking Act, Section 10
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“We refer to the above matters an
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March, 1993 and payments were made
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468. On 30 th March, 1993 a sum of
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them. The actual exhibit referred t
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y Mr. Kulei has not been provided a
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Kanyotu received GIL funds which th
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commercial and social relationship.
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503. The late Hon. Jaramogi Oginga
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509. He was served with an adverse
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ooks or there is no recall on their
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Name Shearson Lehman Bros London Ac
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525. The Controller and Auditor Gen
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531. Sometimes in or about May 1993
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een achieved by them. Be that as it
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earned the country well over Kshs.2
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exported when in fact that was not
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of Kshs.2.6 million by GIL allegedl
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The payment was administratively re
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compensation. The witness further s
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prompting of the former President.
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intelligence officer, he inquired a
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and therefore who would advise on t
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arguing that the company earned the
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Mr. Charles Mbindyo 590. It should
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the former President to make paymen
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Pattni. Dr. Koinange used the same
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latter having admitted that he is t
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608. Mr. Mulili was the Deputy Comm
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left this country. Apart from Mr. P
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egardless of whether they were prop
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625. Mr. Riungu was also involved w
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1993 but it wasn’t effected. Mr.
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Shs.2 billion, and also that the St
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643. The evidence before us shows t
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evidence is that Mr. Kotut avoided
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652. We heard Dr. Koinange, Mr. Wer
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keep the documents “for my own pr
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counsel, Mr. Bowry, did cross-exami
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674. He was the General Manager of
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681. Mr. Wanjihia was also involved
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688. It was he who should have reve
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was quite prepared to stand by thes
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707. Pattni is therefore shown conc
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alleged to have talked to, Mr. S.N.
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make any assessment as to how the a
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us as printing money. Professor Rya
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public funds in debt servicing at t
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(3) Effects on Government Instituti
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e used to influence the propriety o
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Njoroge testified that Prof. Mbithi
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to the Government of Kenya. (3) The
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766. But even before such prosecuti
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This is the case in which Job Kilac
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775. Despite the misleading appeara
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however to enable us to state with
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13. HCCC29/95 Uhuru highway Develop
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39. HCCC669/03 Kenya Commercial Ban
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791. Besides tax cases Mr. Pattni a
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800. Mr. Kirira is of the opinion t
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809. It is not therefore at all lik
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efore us for 18 days. This has been
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822. At the time with which we are
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undesirable political influence may
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836. The Controller and Auditor-Gen
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international attempts to deal with
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Notes: through EBL (Exht. 141 pg. 2
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APPENDIX “A”
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APPENDIX “C” TEXT OPENING SESSI
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een fulfilled. This became the subj
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1.1.1.1.2 APPENDIX “E” 1.2 TEXT
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GAZETTE NOTICE NO. 1566 THE COMMISS
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184. HON. SHARRIF NASSIR 185. MR. K
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DAWA 578. HUSSEN MURSALE 579. ALICE
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973. NJAGI NANCY WAMBUGU 974. IRERI
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1369. REUBEN KITHITU 1370. GIRIARI
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9 10 11 MUKURIA, INSP. JAMES GITAU-
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19 20 MAGARI, MR. JOSEPH MBUI (Perm
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21 22 23 RYAN, PROF.TERRY C.I. (Eco
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37 NGONZE, MRS. MIRIAM TSINGUI (Sen
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61 MUTUNGA, MR. MRS. BRETTA NDULULU
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71 NJOROGE, MR. H.H. (Retired CBK e
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77 AURA, MRS. ANTONINA (Retired emp
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1.3 APPENDIX “I” LIST OF WITNES
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2 SUNKULI, MRS. ZILPAH EMMA NTEMEL
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2 EX-PARTE ) HONOURABLE JACKSON MWA
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closes its pulic hearings the corre
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Order 53 rule 2 which prescribes th
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Similarly rule (i) is also in direc
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APPENDIX “K” RULING OF COURT OF
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720655 D7/009/92 71,635,000 25-Jun-
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709538 G5/017/92 42,806,263 06-Feb-
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2.1.1.1 APPENDIX “M” (i) Cheque
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to be short-term as the forex trans
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28 Waruhiu & Muite Advocates 29 Gac
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109 Philip Ochieng 110 Abraham Kipt
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53 Silpack Industries Ltd. 54 Haide
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134 Khetshi Samat & Bros 135 Reliab
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214 Inder Singh 215 Olivia Ndangire
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295 Sherali Kassam Jiwa 296 B.S. Sh
Page 390:
APPENDIX “P” FINANCIAL GRAPHS
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