Thursday, September 27, 2007

US$1.5 billion Charter House of horrors

Charter House Bank (CHB) wasn't the biggest bank in Kenya. In fact by the time it was placed under statutory management last year it was ranked 26th. But CHB was not a normal bank. At the same time as having most of its branches within Kenya's largest supermarket chain (Nakumatt) it moved tens of millions of dollars in single transactions around the world. It was not so much in the business of keeping people's assets as moving them.

Its first claim to notoriety was a botched anti-money laundering operation against an account holder called Crucial Properties, who in 2001 received 25 million US Dollars from Liechtenstein for the purposes of "property development and trading in Africa." The account holder also ran a minor eatery in Nairobi which financial detectives didn't think suggested the ability to attract tens of millions of legitimate dollars. The 25 million dollars vanished one day after the courts let through a stay order against the investigators. Thus began a suspicion that CHB was in the business of laundering the proceeds of illegal business, and in fact constituted a threat to national security. Just three years before, al-Qaeda terrorists had bombed the US Embassy in Nairobi, killing 214 people.

Today CHB stands accused of being at the centre of a complicated series of financial scams, tax evasion schemes and money laundering operations that saw billions of Kenyan shillings (hundreds of millions of US Dollars) expatriated from the country by unidentified persons. Close to 100 accounts have been investigated by Kenyan financial police, anti-corruption officials and the Central Bank itself. Questions have been asked in Parliament and by foreign diplomats, and at least two whistleblowers have fled the country to take up asylum in the USA. CHB was the subject of a special audit by the Government of Kenya published here for the first time. At stake is over 1.5 billion dollars worth of transactions, which dwarf most scandals in a country known for mega-corruption.

Investigating this fraud may have cost a former Governor of the Central Bank his job. Certainly, virtually all those hired to investigate CHB have either fled into exile or been moved off the case. So it doesn't surprise some, that the Kenyan Finance Ministry is accused of foot-dragging in a scandal which the Government's own secret audit claimed "threatens the stability of the Kenyan economy." For some strange reason, CHB appears to enjoy political protection at the highest levels in Kenya.

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