Welcome home, Mr Devani, after long run

Fugitive oil magnate Yagnesh Devani thought he could run from justice – perhaps like the infamous “Old Unger”, Moses Ehrich, said to have served “as a fence to burglars, thieves and shoplifters”.

After a decade-long fight to escape justice, we shall finally know the truth about the Triton oil scandal and close one of the most embarrassing chapters of Kenya Pipeline Company (KPC).

Devani, a man with a deceitful persona, was in a class of his own and when he pulled the Triton scam, he not only left the country reeling with an oil shortage but left so many unanswered questions. Who else was behind this scandal? We still don’t know.

The man who was to unravel this crime was the then Director of Criminal Investigations, Karanja Gatiba. But Devani had escaped to India.

On April 24, 2010, Mr Gatiba thought he had made a breakthrough after detectives arrested a man at Jomo Kenyatta International Airport said to resemble the fugitive.

A manifest had indicated that there was a man on board the plane by the name Yagnesh Devani and the detectives were at the airport when the plane landed shortly after 1pm.

They had been tipped off by Interpol in New Delhi that the man on board could be the fugitive.

It was a rainy April and the long rains had devastated much of the country, killing more than 100 people.

As the country grappled with the crisis, Mr Gatiba’s focus was on Devani. It was the biggest case on his docket - the whereabouts of a man who had disappeared after fuel worth Sh7.6 billion was released to him without authorisation from the financiers of the cargo.

GATIBA DIES

After the arrest, Mr Gatiba told the media that they would check the fingerprints to determine whether the man arrested was Devani. But it turned out he was a relative.

At this time, the Grand Coalition government of Mwai Kibaki and Raila Odinga was going through political upheaval, with accusations of corruption on both sides.

Mr Odinga had attempted to remove Mr William Ruto from his docket – only for the latter to be reinstated by Kibaki.

Thus, when Immigration minister Otieno Kajwang claimed that the police had arrested and released Devani, he may have as well been playing politics.

What we know, however, is that on April 29, 2010, the police finally paraded the man they had arrested, who turned out to be Kalpesh Devani. He said: “Mr Yagnesh Devani is my uncle, but I have not been in touch with him for a long time now.”

But the quest to arrest Devani received a blow after the man who was spearheading his search, Mr Gatiba, suddenly collapsed and died at his Juja home on May 9, 2010.

Mr Gatiba, who had taken over from the retired Joseph Kamau, had, according to relatives, not been ailing.

He had arrived at his home that Sunday at around 1pm and spent the whole afternoon with his family: three sons, two of them police officers.

At 10pm they had all retired to bed, but in the morning Mr Gatiba was found writhing in pain. By the time he was rushed to Thika hospital, he had passed on.

SELECTIVE JUSTICE

Also, Mr Gatiba was expected to present proof to International Criminal Court prosecutor Luis Moreno-Ocampo, who was in the country, that the Kenyan government had prosecuted some individuals responsible for the 2007-08 post-election violence.

Back to Triton, those who were in a position to explain what had happened seemed tongue-tied and could only agree they had been duped.

They included Energy minister Kiraitu Murungi, KPC managing director George Okungu and Energy PS Patrick Nyoike.

For his part, Mr Okungu, weeks after he was fired over the Triton scandal, was charged but not over the release of processed petroleum worth Sh7.6 billion to Devani, but for selling some KPC houses worth more than Sh60 million.

And that way, the story of Triton seemed to have died and High Court Judge George Odunga, in February 2014, stopped the Okungu case, arguing that he was the victim of “selective” justice and “discrimination”.

Now the UK government has decided to hand over Devani to Kenya and soon we shall know the truth behind the Triton oil scandal and all those who were involved.

Triton was not the work of juvenile thieves. It was executed at KPC, which had turned out to be the citadel of thieves and charlatans, where oil was siphoned and sold to the market without proper accounting.

This is a story known by oil marketers, insurance companies and the energy regulator. Devani was just an unlucky man. Perhaps not.

LIBERALISATION

Devani had registered his company, Triton Petroleum Ltd, in 2000 to cash in on the open tender system that had been introduced to help small indigenous oil companies to access fairly priced crude oil for processing at the refinery in Mombasa.

They would join hands with big companies to purchase a single consignment and one company would purchase the crude oil.

Previously, the big players, Caltex, BP and Shell, had dominated the market, but with liberalisation, other small players had entered the fray but lacked the financial muscle to ship in consignments.

Devani, like many other independent players, had no money. He was a broke broker. But like any other smart alec, he had come across a British company, Glencor Energy, which was willing to work with him.

As the Court of Appeal would later say, Glencor Energy was not an innocent financier and knew that it was about to enter into an illegal deal with Devani.

The plot, when you look at it, was simple. Devani had the licence to import 72,284 metric tonnes of crude oil and Glencor Energy had the oil.

Also brought on board was Kenya Commercial Bank (KCB), which was willing to back Devani as a credible businessman.

After the oil was imported, it would be picked up by French oil marketer Total Kenya.

The months of May and June 2008 were volatile in Kenya and the country was going through the first few months of peace after the post-election violence.

FUEL CRISIS

That was the time the crude oil arrived at the port of Mombasa aboard five vessels, the Bahamas-registered SPT Navigator, Elka Aristotle, Chem Marigold, Arctic Blizzard and Kara Sea. Devani had many friends in high places.

He could knock on any door and was well-known at KPC, which had entered into a transportation and storage agreement with Triton, dated December 8, 2001, and another dated July 7, 2004 which recognised the interest of financiers for Triton’s oil importation business.

In all these agreements, it is the fine print that is used for deception. While one agreement was that KPC would not release oil products in its custody without the express instructions of financiers, another clause said the “ownership in the petroleum products at all times remained vested in Triton”.

There was to be a joint account operated by the financiers, Triton and Glencor Energy and before any fuel was released, payment had to be made into these accounts.

But Mr Devani, with the collusion of some managers at KPC, managed to circumvent the financiers and had the oil passed on to third parties with the payments never getting to the joint accounts of the financiers and Triton.

It was crude siphoning at KPC that led to a fuel crisis in the country – and it is interesting that it has been made to look like rocket science.

Glencor decided to sue Devani, arguing that “he dishonestly procured or conspired with others to procure the transfer of oil to Total” with the knowledge and intention that this would result in his financiers losing security over the product.

PAYMENT CANCELLED

Devani was thinking of playing in the big league and he had registered Triton Bulk Storage Ltd, which was building an oil storage facility in Mombasa.

KCB had hoped to recover its money by selling this facility, but another bank, ABN Amro Bank, also claimed that a bank it had acquired, Fortis Bank, had been swindled too.

Fortis had apparently financed the purchase of a consignment of 12.62 metric tonnes from Chevron Products Company of Houston, Texas, and it was delivered in Mombasa in July 2008.

KPC had assured Fortis that it would not release the consignment without its express permission.

This is what we know of that deal: on August 12, 2008, Fortis Bank had received a notification from Triton Energy that it had reached an agreement with Total Kenya Ltd (Total) for the sale of a part of the cargo amounting to eight million litres.

This, court documents show, was also confirmed by Total Petroleum Company Ltd through a September 17, 2008 letter, which issued an undertaking for payment to Fortis.

Based on this, Fortis authorised KPC to release the eight million litres of oil to Total. But Fortis was told that this deal had collapsed and that the payment undertaking had been cancelled and revoked.

Fortis had by this time issued a letter authorising the release and another cancelling the transaction. Both were with KPC.

On December 10, 2008, KPC wrote to Fortis informing it that the Triton stock held under the collateral agreement was nil.

That meant it had been withdrawn and sold. Where did the fuel and the money go? We will know soon.

LEGAL PRINCIPLE

Back to Glencor, we find that while the other companies sued Devani for their loss, Glencor decided to sue KPC. There was a reason for this.

Actually, why Glencor did not sue Devani’s company for the loss of fuel baffled the judges and as KPC lawyers argued, the UK entity was suing the wrong entity.

Actually, the judges were surprised that Glencor and Devani had entered into “a compact of mutual immunisation from any suit”, which explained why they were not going for each other.

Devani had brought in a company that was not licensed under Section 80 of the Energy Act to carry out oil business in Kenya.

Both had engaged in an illegality, according to the Court of Appeal. As such, Glencor had become an accomplice in the oil scandal and now, after burning its fingers, wanted to use the courts to get its money.

There is a legal principle called ex dolo malo actio non oritur, which was invoked to lock out Glencor from wasting the court’s time.

The Court of Appeal said Glencor “has no right to be assisted… No court ought to enforce an illegal contract where the illegality is brought to its notice and if the person invoking the aid of the court is himself implicated in the illegality,” said the judges when they dismissed the award of Sh4 billion offered previously by the High Court.

But this did not mean that KPC was a house of saints. As Devani returns to carry his cross, the story of how Triton has managed to dodge justice all these years will be interesting to watch.

It might finally unravel the workings of KPC and why a company that is a monopoly has been turned into a cash cow.

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Meanwhile, the MT Ocean Tiara, the tanker that was turned away by KPC, left international waters and has been spotted near Singapore with the cargo that Kenya refused to take.

Officials of the oil company had hoped to offload the cargo at Kipevu. A story for another day.

[email protected] @johnkamau1