When Samuel Gichuru stepped into Kenya Power and Lighting Company, he was a struggling lawyer. By the time he left, he was worth billions of shillings, some stashed in Jersey Island. He had also built a Sh20 billion empire that, at one time, included Kenya Bus Service, plus a thermal company that sold electricity to Kenya Power!
Making money within this citadel has a tradition. It has a history perfected through years of sleaze — no arrests and no convictions.
As it emerged later, when Mr Gichuru was the boss at the utility firm, mostly during the Moi years, he would masquerade as a consultant for the companies that bid for big projects in the company he was running. He was not alone in the chain of theft that had beleaguered the company.
Barons in the power sector took the cue and easily learnt from the best in the game of sleaze in the energy sector. Insiders say Mr Gichuru was not working alone but did his business with the full knowledge of President Moi, who was also building his own financial empire.
Fighting in local courts
The story of how Mr Gichuru and Moi’s Finance minister Chris Okemo participated in an intricate web of deceit is now contained in court papers filed in the Island of Jersey and where they are wanted to answer money laundering charges.
Both have been fighting in local courts to save themselves from extradition.
Within Kenya Power, and among the Moi political elite, Mr Gichuru was simply Mr Moneybags and is today a reflection of the kind of sleaze that took place within the parastatal.
Win tenders
When Mr Gichuru formed Windward Trading Company that he registered in the offshore haven of Jersey, he never knew he would be exposed.
After all, it had separate directors masquerading as the owners. He also had the blessings of the Minister for Finance, Mr Okemo.
What we know from court records is that both Mr Gichuru and Mr Okemo ran an intricate web where foreign companies would win tenders and contracts at Kenya Power — guaranteed through the Treasury — and in return would pay “consultancy” fees to Mr Gichuru’s Windward Trading Company, which had an offshore account in Jersey. He would later pay to an account ran by Mr Okemo.
For instance, when John Brown Engineering was awarded a tender to install a gas turbine for Kenya Power’s Kipevu power station, it claimed in court that it paid Windward £451,037 (Sh68 million at the current exchange rate).
When this turbine broke down, the company was asked to install a new one and paid Mr Gichuru’s Windward an extra £386,000 (Sh58.3m) “in return for this business”.
Mr Gichuru was able to shelter his true wealth from public scrutiny —until a trove of documents exposed how he siphoned off money through contracts.
Part of this information came to light when Mr Gichuru’s ex-wife, Salome Njeri, filed for divorce and demanded a share of the family’s Sh20 billion empire. Njeri has since died.
The court papers indicated that Mr Gichuru not only controlled a multibillion-shilling empire, but had accounts in Jersey, where he stashed money from Kenya Power kickbacks disguised as consultancy fees.
Ewaso Ng’ro hydro-power
Some 20 years ago, the British House of Commons also started investigating what happened to some Sh8.2 billion that had been loaned to Kenya for the Ewaso Ng’iro hydro-power plant. They discovered that, through the feasibility study — which was part of the loan — money had been diverted to Mr Gichuru’s Jersey account for a project that never took off.
Read: Gichuru and Okemo lose Sh520 million stashed in Jersey Island
For ages now, a tradition of sleaze via projects has been set up within KP and has never been broken. During Mr Gichuru’s tenure, most of the sleaze was in the form of carrying out feasibility studies for power dams, most of which were never completed.
It would also involve the building of mega-dams, such as the Turkwel project, where senior government officials benefited from the French kickbacks, thanks to inflated costs.
For instance, in 1992, a World Bank study team reported that the feasibility study awarded to British firm Knight Piesold for the Ewaso Ng’iro dams cost “five times what such services would normally cost”.
This was for three dams that were to be built by 2007 at $350 million (Sh38.4 billion). The Ewaso Ng’iro dam scandal prompted the British government to start investigating Mr Gichuru and Mr Okemo.
Chris Okemo and Samuel Gichuru will not be extradited to the UK for money laundering charges
To deposit bribes into Gichuru’s Windward Trading Company, Knight Piesold was first paid $15.3 million upfront by KP although the dam had not taken off 10 years later.
Ewaso Ng’iro dam never materialised, leaving Kenyan taxpayers paying a loan for a non-existent project. But Mr Gichuru, and the people he represented had made their money.
What Kenya Power was left with were 14 reports done between 1991 and 1993 with each report costing an average of $2.7 million. That means that the feasibility studies alone cost Kenyan taxpayers Sh3.8 billion, of which they paid Mr Gichuru’s firm consultancy fees, according to court papers.
Blind eye to corruption
This was done at a time when the British Export Credits Guarantee Department (ECGD), whose duty was to back UK companies to seek and win tenders abroad, was being criticised for turning a blind eye to corruption in several developing countries.
Once nicknamed “the department of dodgy deals”, ECGD had drawn the attention of Transparency International and other lobby groups for failing to tame bribe-paying firms.
It was this department that had, on June 21, 1990, supported a £68.1 million loan between ANZ Grindlays Bank and the Moi government — and which, on paper, was to assist in financing the contract between KPLC and Knight Piesold.
As it emerged in court papers, part of this money was diverted to Jersey Island, where Mr Gichuru had opened some secret accounts in 1986 with the help of Deloitte & Touche, a Jersey accounting firm.
When the British sought to extradite Mr Gichuru, a Knight Piesold official would later reveal in an affidavit: “It was impossible to do work in Kenya without paying a commission to important political figures. It was like a tax.”
“Knight Piesold paid such commissions to various people. Without doing so, we would never have been able to work there. One person we paid was Samuel (Gichuru),” said Mr Peter Garrat, an official at Knight Piesold, in the extradition papers.
Working in KP for many years, Mr Gichuru had found a way to fund his dream projects. He would approach a UK bank, which would then ask the ECGD to provide a guarantee to the bank that the loan will be paid.
The Minister for Energy and Minister for Finance in Kenya would then sign the relevant government guarantees and the bank would then use the loan to pay the contracted UK firm. Mr Gichuru would then receive his commission as a consultant.
Jersey records show that Knight Piesold used to wire Mr Gichuru and Mr Okemo’s commissions through a company known as Camargo. This was “justified by vague invoices … dictated by KP”.
Once Camargo received the money, it would deduct 2 per cent and send the balance to Mr Gichuru’s Windward and Okemo’s accounts — in the hope that it would never be traced.
Although Gichuru was the MD of Kenya Power, he also masqueraded as Knight Piesold’s agent and thus charged them agent fees for all the contracts they received. The records indicated that every time Knight Piesold’s was paid by Kenya Power, Mr Gichuru’s inflated agent fee would later be passed on to Kenya Power.
“This evidence is supported by the records, which show that the greater part of the payments to Gichuru and Windward came after KP was paid millions of pounds … with respect to a hydro-electric power project known as Ewaso Ng’iro and that commissions were included in consultancy fees,” court records show.
For his case, Mr Okemo is said to have opened his bank accounts while en route to Finland to meet officials of Wartsila, a Swedish energy company. That is when Mr Okemo granted them a letter of undertaking. Mr Okemo was then the new minister for Finance and had participated in the negotiations with Wartsila when he was Moi’s minister for Energy. Only Mr Okemo, according to the court papers, had authority to give Wartsila the papers they needed to advance with the project. If the project was approved, Windward —or rather Mr Gichuru — would also get the consultancy fee.
In all these dealings, hundreds of millions were being minted through projects undertaken by KP but hidden from scrutiny.
Court records further show that Mr Gichuru as the power firm’s MD disguised himself as a broker and consultant. They show that on different dates between 1986 and 2002, Windward received payments of $5.4 million (Sh540 million), £5.3 million (Sh636 million), £4.4 million (Sh528 million), $3.3 million (Sh330 million), and 6.8 million Danish kroner (Sh102 million) from various companies contracted by KP.
The records say Mr Gichuru used part of the Sh2.1 billion for his “personal expenditure” while Mr Okemo kept the money in his Jersey accounts before investing it with “recognised financial institutions”.
But the fall of Kanu regime had left most of the Nyayo demi-gods exposed. As the Mwai Kibaki government started pursuing some members of the Nyayo era web of sleaze, Mr Gichuru decided to pursue the billions he had in Jersey and stash them elsewhere.
According to records from his case in Jersey, this was after a Deloitte in-house trust company, Walbrook Trustees (Jersey) Limited, filed a Suspicious Transaction Report in May 2002 on his company.
The company was then providing Mr Gichuru with directors as he remained in the shadows.
After Mr Gichuru realised that the British were onto him, he attempted to hide some of the cash in a Gibraltar-based company Argus Management Services. For instance, on May 18, 2001 Mr Gichuru’s Windward wired $150,030 to Argus.
But when the directors of Windward Trading were sued in a Jersey court for money laundering, they surprised Mr Gichuru when they pleaded guilty and had Mr Gichuru’s more than Sh520 million seized.
Mr Gichuru, in a complete lack of imagination, had told a Jersey court in a separate case that he was the beneficial owner of the company — and not the directors and that is how it emerged that the money flow was from KP through various contracts.
Mr Gichuru lost his Jersey case, with the judge ruling that he “accepted bribes from foreign businesses that contracted [Kenya Power] during his term of office and hid them in Jersey. (Windward) knowingly enabled Gichuru to obtain substantial bribes paid to him while he held public office in Kenya. The company played a vital role without which corruption on a grand scale is impossible: money laundering.”
When Parliament started to investigate KP and a forensic report known as Nyanja Report was tabled, Mr Gichuru— who was adversely named — went to the High Court, which quashed the report on July 28, 2005.
When MP Sammy Weya asked what would become of the forensic study, he was told that it was null and void.
Mr Mwangi Kiunjuri, an assistant minister for Energy, told Parliament that the KP board had also commissioned forensic auditors Ernst and Young on “alleged cheque fraud. However, it turned out there was no evidence of the alleged fraud”.
While he said that criminal cases were handed over to the Kenya Anti-Corruption Commission, none of the barons within KP has ever been prosecuted.
After Mr Gichuru’s exit, KP never ceased to be the playground of cartels; instead, it became the place for big projects and easy money. Soon, the dams started running dry and the coffers started to get empty. Some new Mr Moneybags had taken over. BY DAILY NATION
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