KPC saga a fraud-within-a-fraud

According to official estimates, Kenya Pipeline Company’s net worth is between Sh35-40 billion.

It has, this far, been rated one of the most profitable State corporations, with an excellent annual tax remission record to the Kenya Revenue Authority. It is a company official rent collectors have always wanted to ‘suck’.

The scramble for the Ministry of Energy during the formation of the Grand Coalition Government had an eye on the petroleum distributor’s capacity to enrich the foxy. But, now, a massive fraud, said to be the brainchild of junior managers, is evolving at the elite corporation.

This could be so. But to sceptical observers and right-thinking taxpayers, it appears the implosion at KPC is a minor fraud being orchestrated to blur a politically-driven deception.

The conspiracy is not a black swan, to use Nassim Nicholas Taleb’s metaphor in his book The Black Swan, which describes the impact of the highly improbable. The fleecing of KPC was more probable than the possibility of sighting a black swan.

The Triton hack into KPC was coming as another case of grand corruption. The scam, the latest in the Goldenberg/Anglo Leasing trilogy, seems scripted like this: Malign the golden goose to insolvency, then sell it to the highest bidder, who will most likely be ‘politically correct’, for a song.

Claims that KPC has been targeted for sale have been in the air, complete with allusions to potential buyers. It appears the time has come to complete the act — malign, cheapen and then sell at dumping prices.

Complicit

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Oil dealer Triton, whose disclosed owners include a politically-connected ‘architect’ (like the Anglo Leasing and Goldenberg scams did), could be a guise for political actors staging the fall of KPC. Behind fugitive Yagnesh Devani, said to be the proprietor, must be higher forces, giving orders from above. Devani could be a reincarnation of Kamlesh Pattni of Goldenberg infamy, but he did not have the capacity to drive KPC onto the road to insolvency, without local political patronage. The investor is said to have fled the country just before he was declared ‘wanted’. Sounds familiar if you remember other fugitives in the Goldenberg and Anglo Leasing infamies.

It is impossible to imagine the wily investor ordering schedule and depot managers and pump attendants to pipe out 126 million litres of oil products, worth about Sh7.6 billion. Junior managers are said to have pumped fuel out of KPC depots without reference to the former managing director George Okungu, officers close to him or the banks that paid for the imports. Who ordered staff to defy the CEO?

Surely it is more likely the KPC managers were acting on orders from above since it is rare for junior officers to defy corporate authority, unless part of a larger scheme, fortified by impunity.

The curtain is about to fall on Act One. Next, are Triton’s financiers, roasting KPC in court for shipping out products in breach of collateral financing contracts. Kenya Commercial Bank is demanding Sh1.8 billion for about 30 million litres of fuel, released to Triton without authority.

Glencore, another Triton financier, is demanding Sh2.2 billion for 38 millions litres of fuel piped out in the fraud-within-a-fraud. Fortis of France is also asking for Sh900 million, after losing 15 million litres of assorted fuels. Worse, Triton did not acknowledge receipt of the fuel.

There are still others cycling around KPC like vultures eyeing the carcass of a dying cow.

Triton, possibly with political patronage, did a pyramid scheme on KPC. It was borrowing from one financier to pay another; sometimes taking oil belonging to one firm to sort out others. The Ponzi scheme has exploded.

Since KPC has denied responsibility for the fraud, the creditors will stampede to court. A Bench will be constituted that could see KPC declared insolvent. The shell will be sold for a song.

The Minister for Energy Kiraitu Murungi and Permanent Secretary Patrick Wanyoike claim they did not know about this scandal because they were not micro-managing KPC. Okungu did not know because junior officers acted behind his back.

Replacing the former KPC MD is the chief manager, finance and strategy. What did this officer, responsible for financial controls and strategy, know? Is it possible the fraud unfolded without the ‘strategist’ knowing?

And, did the Kenya Anti-Corruption Commission have to wait for Kiraitu to invite it to investigate corruption at the Ministry of Energy’s gem? Investigation, if there is going to be any, should not get lost in the fraud within the fraud. But will Kacc, which had to wait to be invited to investigate, confront the elephant in the province of energy?