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Political protection and patronage in Kenya have allowed gangs to flourish – and undermine the state's responses to the problem. This is one of the defining characteristics of Kenya’s gang world.

The Politics of Crime, a new report for the Global Initiative Against Transnational Organized Crime by Simone Haysom and Ken Opala, traces the evolution of this criminal economy from the colonial-era through the transition to democracy, the effects of structural adjustment policies, and the formal and informal privatization of urban services as cities grew rapidly.

Urban growth, political patronage of gangs, and the criminalization of urban municipal services are inextricably linked in many instances. This has created lucrative profit-making opportunities for gangs and other criminal groups in areas characterized by high unemployment, especially among the youth. Certain criminal gangs have become wealthy by providing informal services or taxing residents for transport, waste removal, electricity and water provision. As a result, they have become deeply embedded in the everyday lives of citizens in Nairobi and Mombasa.

The Politics of Crime traces the evolution of this criminal economy from the colonial-era through the transition to democracy, the effects of structural adjustment policies, and the formal and informal privatization of urban services as cities grew rapidly.

From the UK’s first Deferred Prosecution Agreement to a plea bargain in Tanzania

The first Deferred Prosecution Agreement (DPA) of the United Kingdom Serious Fraud Office (SFO), secured on 30 November 2015 at the Royal Courts of Justice, London, has on 26 August 2020 given rise to a plea bargain settlement in Tanzania. As announced by Tanzania’s National Prosecutions Service (NPS), this nets the Tanzanian authorities TZS 1.5 billion (approx. USD 650,000 or GBP 500,000).

Standard Bank PLC (now ICBC Standard Bank PLC) was the subject of an SFO investigation leading to an indictment alleging failure to prevent bribery contrary to section 7 of the UK’s Bribery Act 2010. This represented the first significant use of this section of the Act and led to the first DPA entered into by the SFO.

As a result, the criminal proceedings were immediately suspended, Standard Bank was fined a total of USD 25.2 million, and required to pay the Government of Tanzania a further USD 7 million in compensation. In addition, Standard Bank was bound to cooperate fully with the SFO in its ongoing enquiries and make available material to support the domestic investigation in Tanzania.

From London to Dar es Salaam – making international cooperation work

The investigation in Tanzania, led by the Prevention and Combating of Corruption Bureau (PCCB), related to a USD 6 million payment made in March 2013 by a former sister company of Standard Bank (Stanbic Bank Tanzania) to a local partner (Enterprise Growth Market Advisors – EGMA). The payment was suspected to be intended to induce Tanzanian public officials to show favour to Stanbic Bank Tanzania and Standard Bank’s proposal for a USD 600 million private placement to be carried out on behalf of the Government.

The PCCB investigation in 2016 led to the arrest of former Tanzania Revenue Authority Director General, Harry Msamire Kitilya; Stanbic Bank’s former Head of Investment Banking, Shose Mori Sinare and former Chief Legal Counsel, Sioi Graham Solomon; and two Ministry of Finance officials, Bedason Anthony Shallanda and Alfred Paul Misana.

Between 2016 and August 2020, this case consumed a significant amount of time and effort of the PCCB and the NPS. During the early days, the investigation focused on material held in Tanzania. However, quickly it became clear that the material held abroad was equally essential. A combination of UK and international partners, including the International Centre for Asset Recovery (ICAR) at the Basel Institute on Governance, came together to support the PCCB and NPS. A large number of witnesses were interviewed and significant volumes of material were shared from the UK and South Africa.

This cross-border sharing of material and evidence was challenging due to their sheer volume but also cross-border legal differences. In the SFO, the PCCB and NPS found a willing partner to tackle these challenges. With the help of the UK Criminal Justice Advisor in Tanzania, the mutual legal assistance process with the UK was actioned. The PCCB also partnered with the Basel Institute to secure evidence from South Africa and to collate the significant electronic material from the UK for use during the trial.

The like-mindedness of all partners involved created a perfect environment for swift and pragmatic problem solving, testing new ideas and investigation methods, and building a closer rapport with fellow law enforcement officers and prosecutors. A series of firsts and positive results meant that the case was ready for trial in 2019. However, only part way through the hearings when the global covid-19 pandemic hit, the trial faced many adjournments during the early part of 2020. In the meantime, in September 2019, Tanzanian legislation was amended to permit plea bargain agreements.

The combination of these facts resulted in the negotiation of a plea bargain under which, on 26 August 2020, the defendants pleaded guilty to 1 out of 58 charges of occasioning economic loss to the Government, were ordered to jointly issue a payment of TZS 1.5 billion and were fined a further TZS 1 million each.   

Is this a good result?

If we focus strictly on the principal sum involved – a settlement for approximately one tenth of the sum (TSZ 12 billion) which was fraudulently obtained – it sounds like a small prize. But this needs to be seen in a wider context and in light of other positives to be drawn from the process.

First, we must understand that the loss suffered by the Government had already been compensated by Standard Bank. Second, the defendants had already been held in custody in Tanzania for a period of over four years at the point of the plea. Third, the financial enquiries made did not identify realisable assets of any great value in relation to the defendants who were arrested.

Finally, in the current court timeline, the prosecution would have needed to continue to call evidence well into the next 18 months, with the defence case to follow. Further covid-19 related delays could be expected with respect to securing witness testimony, all together causing significant costs to the Tanzanian judicial system. And we should not forget that irrespective of the confidence in the evidence leading to prosecute, a conviction is never guaranteed until the court passes its final judgement.

Beyond that, from a practitioner’s perspective, another positive take-away has been the opportunity for five separate entities, from Tanzania and abroad, to come together successfully for a common goal. This multi-agency effort and learning process was key to allow the investigation to be completed, secure all necessary evidence, charge and ultimately bring the matter to trial. It is clear that the collective weight of the domestic and international evidence was a factor the defendants considered when entering a plea mid-trial. Whilst not envisaged at the start, a resolution that is agreeable to all parties, taking into account all factors, must be considered in a positive light.

Finally, the result sends an important message amongst the Tanzanian and international community – stating clearly that the PCCB and the NPS are working together, and that Tanzania can count on its international partners to jointly ensure that international borders do not present a barrier to Tanzania’s fight against corruption.

Trade Based Money Laundering Webinar

Financial intelligence flagged Fishrot deals worth N$10 billion

Fishrot accused back in court

News - National | 2020-08-31

by Werner Menges

FORMER ministers Bernhard Esau and Sacky Shanghala and the four men charged with them in the Fishrot corruption case are due to return to the Windhoek Magistrate's Court at the end of this week, following the latest postponement of their case on Friday.

The case was postponed for a week after lawyers representing the six accused objected to magistrate Alweendo Venatius deciding a request by the state for a longer postponement. Venatius last year issued search warrants used by the Anti-Corruption Commission (ACC) in its investigation of the matter.

Also on Friday, one of the co-accused of Esau and Shanghala, James Hatuikulipi, a police reservist, Kuutondokwa Kokule, and a Windhoek resident, Jason Iyambo, were informed that the prosecutor general has decided to arraign them in the Windhoek Magistrate's Court on charges of corruptly giving gratification, alternatively bribery, and defeating or obstructing the course of justice.

The charges are based on allegations that they tried to bribe an ACC officer in January in an attempt to get him to hand evidence seized by the ACC – bank cards issued to Hatuikulipi and a handwritten document – to them.

Hatuikulipi, Kokule and Iyambo are due to appear in the court again on Wednesday to have dates set for their trial.

Esau, Shanghala, Hatuikulipi, Esau's son-in-law Tamson Hatuikulipi, Ricardo Gustavo and Pius Mwatelulo are charged with corruption, fraud and money laundering in connection with the use of Namibian fishing quotas allocated under a fisheries cooperation agreement between Namibia and Angola.

They are alleged to have received corrupt payments of more than N$103 million from two Icelandic-owned companies allowed to exploit fishing quotas allocated under the fisheries cooperation agreement with Angola.

Esau, Shanghala, James and Tamson Hatuikulipi, Mwatelulo and the former chief executive of the National Fishing Corporation of Namibia (Fishcor), Mike Nghipunya, are also scheduled to appear in court on Friday in the case in which they are charged over alleged corruption with the use of fishing quotas allocated to Fishcor and  made available to Icelandic-owned companies under quota usage agreements.

In that case, the six accused are charged with having diverted N$75,6 million from Fishcor to themselves or entities of their choice between August 2014 and December 2019.

https://www.namibian.com.na/94185/read/Fishrot-accused-back-in-court

The scandal that kept ex-TRA boss Kitilya behind bars for 4 years

In Summary

The scandal that kept ex-TRA boss behind bars for 4 years

By Bernard James @TheCitizenTz bjames@tz.nationmedia.com

Dar es Salaam. Former Tanzania Revenue Authority (TRA) commissioner general Harry Kitilya, 70, and four other people breathed fresh air yesterday after languishing in remand prison for four years in one of Tanzania’s high profile and dramatic Sh12 billion ($6 million) bribery scandal.

The Corruption and Economic Crimes Division of the High Court declared Kitilya, the 1996 Miss Tanzania and former head of Investment Banking with Stanbic bank, Shose Senare, and former chief legal officer to the bank Sioi Sumari free after they entered a plea bargain agreement with the Director of Public Prosecutions (DPP) to pay a whopping Sh1.5 billion for their freedom.

Others who walked free were two senior officials of the ministry of Finance-- Bedason Shallanda and Alfred Misana, who also entered a plea bargaining arrangement with the DPP.

The court ordered them to jointly pay Sh1.5 billion on plea bargaining agreement and additional Sh1 million each to secure their freedom for causing the government a $6 million in losses.

Plea bargaining was introduced in the country last year and has mostly been the avenue for suspects in mega corruption cases to escape full trial.

The four pleaded guilty of causing the $6 million loss to the government before Lady Justice Immaculate Banzi.

They were facing charges of forgery, uttering false information and fraudulently obtaining $6 million (about Sh12 billion) which was paid to them as a kickback in facilitating the securing of the $600 million foreign loan by the government of Tanzania.

Mr Kitilya’s firm, Enterprise Growth Markets Advisors (EGMA), was allegedly paid the over Sh12 billion bribe in the loan transaction.

How it started

The lucrative loan facilitation deal that would lead high profile bribery scam started with an idea in the US between Mr Kitilya and Ms Sinare during a meeting of the International Monetary Fund (IMF) in Washington in April, 2012, and had conversation on government financing.

The two later took their dream to a top level, playing key roles in securing a $600 million foreign loan for the government and opening a can of worms over mega corruption in the country.

After the Washington meeting in which both attended as part of a government delegation, Ms Sinare allegedly boasted to fellow staff that Mr Kitilya introduced her to two African central bank governors who convinced her bank to consider the business of raising funds for the government.

Details of what followed came to the limelight following investigations by UK’s Serious Fraud Office (SFO) that exposed how the 2013 government loan was used to create the Sh12 billion bribery conduit that benefited public and private corporate executives.

Details from SFO show how Ms Sinare and Mr Kitilya’s EGMA, the firm that was paid the Sh12 billion in bribe in the loan transaction, facilitated behind-the-scene talks to secure the deal.

Who played what role

SFO which carried out the corruption investigation involving Stanbic and its main unity, Standard Bank’s role, revealed a link between individuals who were central to the deal and how they may have influenced it.

Other than the former TRA chief who played a camouflage role as EGMA coprincipal, the negotiations were handled at either stage by former finance minister Mustafa Mkulo, his successor William Mgimwa, former Finance permanent secretary Ramadhan Khijja, former finance permanent secretary Dr Servacius Likwelile, and other senior treasury officials.

The two officials of the Ministry of Finance, Bedason Shallanda, who was the commissioner for Policy Analysis-Debts and Alfred Misana, the assistant commissioner for Policy Analysis-Debts were joined in the case in January, 2019.

The two officials were jointly facing one count of use of documents intended to mislead the principal with the additional charge of leading organized crime, one count of money laundering, obtaining money by false pretences and occasioning loss to the government.

Court documents show that the two officials acted on documents containing false statement to show that Stanbic Bank (Tanzania) Limited in collaboration with Standard Bank London, would raise the loan of $550 million for the government of Tanzania at an agreement fee of 2.4 percent of the principal amount.

They were also accused of using the Standard Bank’s Financing Proposal with the intention of misleading the government.

Sioi together with Mr Kitilya and Ms Sinare, allegedly prepared a false agreement dated November 5, 2012 purporting to show that the bank has established a consortium to collaborate with EGMA Limited to arrange for the financing of the money.

The former taxman and the ex-officials of Stanbic Bank, Ms Sinare and Sioi were arraigned on April 1, 2016 and they have since been languishing in jail for facing the unbailable money laundering charge.

In a dramatic turn of events, the DPP dropped all charges against Kitilya and two co-accused in January last year and filed a new case with 58 new charges against them.

They have appeared at the Kisutu Resident Magistrate’s Court over 72 times when the case against them was called for mention, hearing of applications and rulings.

Yesterday, Lady Justice Banzi said she considered submissions of both parties and the plea bargain agreement and its execution mode and ordered each of the accused to pay Sh1 million in court and another Sh1.5 billion to be paid jointly.

The plea bargaining agreement between the accused and the DPP was filed in court on Monday for registration.

The agreement, among other things, exonerated the accused of 57 out of 58 counts they face but sustained one charge of causing Sh$6 million loss to the government, of which the accused pleaded guilty and ordered to pay Sh1.5 billion.

The accused took an oath before the judge questioned them on the voluntariness of the agreement and if they have read them through and understood its stated terms.

The agreement also means the accused denied themselves the right to have their case heard to the end and decided on merits and the right to appeal on the same.

Under the agreement, the accused may face fresh charges in return for a guilty plea if it is discovered that they have given false information. All the accused agreed to the terms of the contract.

Details of the plea bargain were not made known to the public as the matter is completely a private process.

Yesterday, DPP Biswalo Mganga represented the Republic in person and asked the court to order the accused to pay a Sh1.5 billion compensation for the loss they have caused to the government as agreed in the plea bargain.

“All the accused, have pleaded guilty to the charges. This court has convicted them all for pleading guilty of causing a $6 million loss to the government,” said Lady Justice Banzi.

Lead defence counsel Alex Mgongolwa pleaded with the court to give a lenient punishment considering the accused have confessed to the offences to save court time and government resources.

He added that Mr Kitilya, with 70 years of age, had underlying health conditions and that the accused who have spent over four years behind bars have families depending on them.

Why Haji wants Obado and his three children jailed

Governor to be charged alongside his three children and directors of 11 companies of his proxies.

• Money was sent to Obado's children abroad for fees and upkeep.
• Obado's proxy Jared Kwaga roped in his family in the grand scheme.

It is end of the road for Migori Governor Okoth Obado and his proxies whom he is alleged to have used to siphon millions of county funds to local and offshore accounts.

Director of Public Prosecutions Noordin Haji on Tuesday approved the arrest and prosecution of Obado and his three children, dealing a staggering blow to the family as the governor is separately battling murder charges.

Obado will now be barred from accessing office, a precedent that has already been set in other graft cases. 

Also to be charged is Jared Kwaga — said to be Obado’s closest proxy in the siphoning of county cash. Kwaga, also roped in his own family — including his wife and mother. 

Also to be charged are directors of 11 companies that Obado and his associates registered soon after he became governor through which they pocketed millions of shillings in “fictitious” contracts.

“The investigations were in respect of Sh73.4 million being sums indirectly received by the governor Migori county through his children who received multiple payments from companies trading with the Migori county government between 2013-2017,” Haji said in a statement to newsrooms.

According to an audit trail by the Ethics and Anti-Corruption Commission, the companies that were trading with the Migori county government wired Sh38.9 million to the accounts of Obado’s three children.

The money was used as their school fees, upkeep, maintenance and medical bills in Australia, Scotland and United Kingdom. 

The three children who will be charged alongside their father are Achola Dan Okoth, Susan Scarlet Okoth and Jerry Zachary Okoth.

“Some of the monies were also traced to have bought two motor vehicles of make, Toyota Land Cruiser V8,” Haji said. 

Obado has had a troubled career after his re-election in 2017.

In September 2018, the governor was arrested over the gruesome murder of his pregnant girlfriend Sharon Otieno.

Obado’s wife was also questioned in relation to the gangland killing that shocked the nation.

In the new case, Kwaga’s wife Christine Akinyi Ochola, his mother Peninah Auma Otago and his brothers Joram Opala Otieno as well as Patroba Ochanda will also be charged.

Also to be arraigned is Kwaga’s sister-in law Carolyne Anyango Ochola.

Recently, EACC discovered that Kwaga had purchased a Sh35 million house in Loresho, yet it was Obado’s daughter Everlyne who was collecting the rent.

EACC chief executive officer Twalib Mbarak said the 23 persons and entities will be charged with, among others, conspiracy to commit an offense of corruption, conflict of interest, money laundering and unlawful acquisition of public property.

According to the documents EACC filed in court, Kwaga’s companies were paid Sh1.6 billion since 2013.

"These funds have been used to acquire and construct properties worth over Sh1 billion registered in the governor's and Kwaga's names. We have traced these properties," EACC said in court papers.

In 2018, the High Court issued orders barring Kwaga and his family from selling or transferring about  65 properties — including maisonettes, apartments and land — all valued at over Sh382 million.

The High Court restrained the owners and interested parties or their agents from “transferring, charging, disposing, wasting or any other way alienating the properties.”

The DPP is likely to ask the court that the properties be surrendered to the government.

Also to be charged is Jared Kwaga — said to be Obado’s closest proxy in the siphoning of county cash. Kwaga, also roped in his own family — including his wife and mother. 

Also to be charged are directors of 11 companies that Obado and his associates registered soon after he became governor