Businessman Kamlesh Pattni never gave Sh1 million to Cabinet Minister George Saitoti at the inception of the Goldenberg scheme in 1990.
Mr Pattni instead gave the cash, which was packed in a brief case to the then Intelligence chief James Kanyotu, with whom he co-owned Goldenberg International.
The witness was giving evidence in cross-examination by lawyer Pheroze Nowrojee who represents Prof Saitoti at the inquiry.
Mr Pattni testified at the beginning of his testimony that he gave a Sh5 million cash gift to retired President Moi in 1990 when he visited him to request for an approval of the scheme.
He told the commission that the suggestion to offer the former President cash was made by Mr Kanyotu.
After visiting the President, Mr Pattni said, he had been asked to prepare a further Sh1 million in cash ahead of the visit to Prof Saitoti’s office and “to fit it in a big brown envelope.” At the time, Prof Saitoti was the Vice President and Minister for Finance.
Yesterday, Mr Pattni told the commission that he gave the Sh1 million to Mr Kanyotu who slid it into a brief case.
At Treasury, Mr Pattni was left aside while the two government officials spoke in “low tones” after which Mr Kanyotu reported to Mr Pattni that he had handed over the cash to Prof Saitoti.
Following are excerpts from yesterday’s proceedings.
Kuria: Your Lordships, the appearances as before and Mr Pattni is ready for further cross-examination by Mr Miller.
Kitonga: We remind you of your oath, Mr Pattni.
Pattni: Yes, My Lords.
Kitonga: We had made an order that a letter written to the Minister for Justice be produced and I think we were informed that it will be produced latest today. Is Mr Kalove or Mr Imanyara (Pattni’s lawyers) around?
Imanyara: Your lordships, I have confirmed that the search in my office was on February 22 this year. The letter was written on February 20 and my lords I have not been able to obtain the true copies but have managed to obtain a draft which I am sure must be substantially the same as the copy or the origin. But I will not be able to qualify it as a copy of the original letter that went to the minister. If that copy will be of any assistance to the commission, I have sufficient copies which I am ready to tender before the commission.
Bosire: Dr Kuria you can’t get that letter?
Kuria: No my Lords, I have not seen it.
Bosire: Then you get in touch with the minister to give us a copy. A photocopy of that letter would do.
Kuria: Ok, my lords.
Kitonga: Ok proceed Mr Miller. We all hope by break you will have completed your cross-examinations.
Miller: My lords, I will do my very best. Good morning Mr Pattni?
Pattni: Yes good morning Mr Miller.
Miller: Now yesterday we left off at Pan African Bank. We managed to establish that through Pan African Bank your company accessed direct credit from Central Bank of Kenya. Correct?
Pattni: Yes, my lords.
Miller:We have also established the fact that some of that money was used to settle the Pan African Bank overdraft at Central Bank.
Pattni: It can’t be possible, that is why I have presented a chart today to show that direct credit money can never last more than a whole night. I would just take my lords quickly through what I have done. It is an explanation of what direct credit is.
Miller: Perhaps what we will do is move on to the next question and then with the lordship guidance we can come back.
Pattni: Yes.
Miller: Now we also managed to establish that you took over the bank sometime in May … Pattni: March.. March 18 and by May 14, we left it.
Miller: That’s fine. Is it not true that the actual amount of money that would really be made from overnight lending would be actually the bonus as opposed to the interest made. There is a distinction between the two. Isn’t it? There is interest made from cheque kiting or direct credit then there is also overnight lending.
Pattni: No, there is only one. That is why my lords if you may permit the question he asking is very well explained in the exhibit I have given. There is only one interest made, not two and I have explained the interest.
Miller: Now before we go to that just listen. If I am wrong correct me again. What I am saying is that there is interest that is made but there is also money made from overnight lending.
Pattni: There is no interest made the only interest made is in the form of overnight lending interest. One interest.
Miller: That is it. Now how was that charged? What per centage was that?
Pattni:Anything from 18 per cent per annum …. It is explained in the exhibit I have given you.
Miller: That is fine. Is it not true you took over Pan African Bank at a time when the bank was in a lot of financial problems?
Pattni: When it was bankrupt?
Miller: It was bankrupt?
Pattni: Yes.
Miller: And within a very short time you were able to turn it into a very profitable bank?
Pattni: Yes.
Miller: Within those 56 days?
Pattni:Yes
Miller: Ok. And you would put this to the relationship that you had, as you said being the blue-eyed boy of Central Bank. Correct?
Pattni: Well not only that but there was always one when he touches something … there was some effort. You can give me another bankrupt company and you see what I can do.
Miller: You can turn it round?
Pattni: Why not.
Miller: With the same results?
Pattni: I have done it even after that.
Miller: I leave that to the chairman to decide. I put it to you Mr Pattni that the sums of money you claimed to have put into Pan African bank amounting to Sh6.3 billion were actually funds that were railed through cheque kiting.
Pattni: And I put it to you that all that is a gossip. It’s not true, it’s just opinion of individuals and again I put the explanation and proof in this exhibit.
Miller: Ok. Yesterday you told us about a sum of Sh1.8 billion that was part of the Sh5.8 billion, you remember that, Sir?
Pattni: Yes I have mentioned it.
Miller: And you remember mentioning that it came from money that Dr Koinange released?
Pattni: Indeed and I will not deny. It is in my new exhibit, my lords.
Miller: And that you said was part of the fifteen per cent export compensation
Pattni: Yes my lords.
Miller: Now Mr Pattni I put it to you that even that Sh5.8 billion export compensation you were not entitled to because the export actually never went.
Pattni: I don’t know who said they didn’t go.
Miller: Well we had a few examples here of you exporting things to your pseudo companies in Europe.
Pattni: But exporting to pseudo companies does mean they did not go. And I presented my testimonies and evidence that everything went and I have given exhibit 154L which was the requirement under the law with CBK.
Bosire: Were you exporting cattle?
Pattni: No. That I deny my lords. As I said I was not dealing with that company my lords.
Bosire: But you see eventually it was shown as an export?
Pattni: No my lords, there is no stamp of any shipping vessel or any exit of that entry. Even the CD3 form I have brought it here it was never processed. Just a photocopy. There is no exit, there is nothing there. Even the name of the vessel is not there there is no shipping agent, intended shipping line, nothing, my lords.
It is not like Goldenberg where we had British Airways, Kenya Airways where we have the real exit and there is not no original form for this one 848122 for cattle, pangas or slashers my lords.
Bosire: And it is not on that list which was initialled by the former President?
Pattni: My lords it is that is why the original was for gold.
Bosire: Is it on that list?
Pattni: Yes.
Bosire: But that list was supposed to show what you were entitled to as fifteen per cent ex-gratia payment.
Pattni: Yes my lords, the original CD3 848122, the export is diamond jewellery my lords. It is not slashes and pangas, my lords so we must look at the original forms not at photocopies, my lords.
Bosire: What was exported on the original CD3 forms?
Pattni: Diamond jewellery, my lords.
Bosire: That is what Mr Miller is saying that you cannot make anybody believe that such an export took place, because if one copy is saying cattle, camels and slashers and the other is showing gold, diamonds and so on, there must be something wrong somewhere?
When I read through his mind, I can see him thinking this way. If you were able to lie about cattle, sheep, camels and whatever with regard to pre-shipment, what would prevent you from lying about gold and diamond?
Pattni: My lords, the only difference is the one Mr Miller has presented, 90H there is no lie there, because I have never signed it nor dealt with it. As I said there were several people dealing with it my lords. I will not lie to myself, My original CD3 is there I will present.
Miller: But you do accept Mr Pattni, the fact that you have lied in certain areas relating to pre-shipment finance puts in question your claims for export compensation?
Pattni: There was nothing there. It was just the pre-export finance which was being obtained and repaid. So there was no lie to steal or anything. And in this world my lords, there is none who can throw the first stone, everybody has sinned one time or the other.
Bosire: If you ask criminal lawyers, they will tell you that it you take money improperly with a view to using it for sometime and returning, it is still theft.
Pattni: My lords, not in this case because the guidance is there from the circular under pre-shipment finance. It provides for what is to happen if you use it improperly or rightly. There is a penalty, my lords.
Bosire: Yes you have obtained it by trick? You didn’t intend to export?.
Pattni: My lords we are talking now of Panther not Goldenberg. Goldenberg everything was exported. Panther is what you are saying it was not exported.
Bosire: And Panther?
Pattni: Panther as I have said there were people who came from Dubai. My lords where there is honey, it will always attract bees (laughter). There are many conmen who came, my lords.
Bosire: The whole idea of pre-shipment was that you were preparing a particular item for export so the use of CD3 forms was to warn the bank that this is the export you are going to prepare. Eventually when you export, the bank’s copy will reflect that export so that the importer upon receipt of the export will remit his money to the commercial banks, that was the whole idea?
Pattni: I agree with you.
Bosire: So all the document have to carry the same information?
Pattni: My lord in the case of Goldenberg that CD3 has always reflected the actual export.
Bosire: What was the differences between Goldenberg and the others.
Pattni: My Lord Panther I said they were trying to do new things…
Bosire: And doing it the wrong way?
Pattni: Yes my lord.
Bosire: But it happens to be you?
Pattni: No my lord I have never signed anything, I was not a party.
Bosire: They were under your tutelage, so to speak.
Pattni: My lord they were not referring to me I was not dealing with that company. That company was theirs.
Bosire: But you were the main shareholder and the main player in all those other companies.
Pattni: My lord there are many companies which are formed as are used abit.
Bosire: But the brain behind all the companies was you?
Kitonga: And the profits also came to you?
Pattni: No, my lords just like in a bank there are many transactions.
Kitonga: Why would you start a company and not partake of the profits, What is the sense of it?
Pattni: Mr lord, the company was formed long ago. They wanted to start new business and they used the company my lord.
Kitonga: Why wouldn’t you want the profits?
Pattni: My lord they must have been counting of profits. But there were so many ventures going on.
Miller: Mr Pattni, I put it to you that even with this pre-shipment finance of pangas, slashers and axes, in spite of the fact they never went which you have admitted, you did claim export compensation on them?
Pattni: Not a all. Show me where export compensation was made? Export compensation is for diamond jewellery, nothing for pangas.
Miller: But if you used the same CD3 form number for pre-shipment, could you then not also not use it again for gold and diamonds which means there is a confusion.
Pattni: No no no. The one which is used for pre-shipment is a photocopy. No original.
Miller: Fine, but the fact remains that it is the same CD3 number. Which means you have caused confusion again which will allow you to claim for either gold or diamonds using the same CD3 number and maybe even claim for compensation for pangas, slashers, the camels and everything else.
Pattni: But you see it is a different department. There is the pre-shipment finance facility. You will use the same CD3 forms for export department.
Mr Miller then referred the witness to CD3 form number 754404 for pre-shipment finance where there was an entry for cattle, sheep and goats as items to be exported. However Mr Pattni disowned it saying it does not bear his signature.
Mr Miller them moved to page 9 of Exhibit 50, and showed a document for export compensation from Ministry of Finance’s Customs Department. He then showed the witness the third CD3 form, again bearing number 754404.
Miller: Are we in agreement that this is now a totally different section in terms of export compensation and not pre-shipment finance.
Pattni: Very well, my lords.
Miller: Thank you. Is the CD 3 form I have shown you and the one I showed you for pre-shipment of live animals the same?
Pattni: The number is the same but this is the original which has gone to Engelhard.
Miller: No problem. In this particular section what are you claiming for ?
Pattni: We are claiming compensation for gold exported on June 18, 1992.
Miller: And how much are you claiming?
Pattni: Sh4,736,627.
Miller: Supposedly to go to Engelhard?
Pattni: Yes my lords.
Miller: You got money on this CD3 form, didn’t you Sir? For export compensation
Pattni: Yes.
Miller: So you got money for claims paid for … did you say gold or diamonds?
Pattni: You can see it is Engelhard, its gold.
Miller: Yet we have the same CD3 number dealing with live animals?
Pattni: It is a photocopy from pre-export finance.
Miller: There is not problem, its the same number.
Mr Miller then traced entries for the same CD3 form number through several other exhibits and then said: “What I am trying to put across to you is that you used the same CD3 number to claim falsely for pre-shipment finance in Post Bank Credit for cattle sheep and goats then use the same CD3 form number in this for cattle sheep and goats”.
Bosire: What Mr Miller wants to show is that it was a deliberate ploy to get more money.
Pattni: My lords it was a pre-export finance where the funding was available and people..
Bosire: It does not matter, but it is not a question of confusion. It is somebody consciously trying to get more money using same scheme.
Pattni: My lords it was pre-export finance somebody was trying a new thing. I was not attending to every bit of paper.
Bosire: You were not doing everything, but the superintendent was on you. You were controlling the operations, guiding people what to do.
Pattni: No my lords not in this case.
Bosire: Let us conclude it this way, whoever did this, did it behind your back?
Pattni: Yes, my lords.
Miller: Let’s go to page one of Exhibit 138 G.
Pattni: That is HZ & Co Ltd.
Miller: Who are the signatories there?
Pattni: It N. S. Srikanth, James Norbury and K. C. Batavia.
Miller: Do you know Mr Srikanth?
Pattni: Yes.
Miller: Let’s move to page three of the same exhibit. That is a letter dated May 26, 1993 on the letter head of HZ & Co Ltd and it is addressed to the manager Exchange Bank Ltd. Who are the signatories?
Pattni: James Norbury and N. S. Srikanth.
Miller: Let us move to page five. It is a letter head from Exchange Bank dated November 18, 1992.
Pattni: That’s right.
Miller: Who are the signatories?
Pattni: It is Mr Srikanth as the foreign exchange manager for Exchange Bank.
Miller: Look at page seven.
Pattni: It is a certified copy of resolutions passed by the directors of Goldenberg on July 30. The people authorised to operate account number 100001 of Goldenberg International with Exchange Bank were myself or any two of the following jointly; Mr Vaju Pattni, Mr Srikanth and Mr Hanu Rao.
Miller: And who signed the letter?
Pattni: It is my brother.
Miller: Was he also the chairman of Goldenberg?
Pattni: He later became.
Miller: You can see that there is a common thread here. We keep seeing Mr Srikanth.
Pattni: Yes.
Miller: Let’s go back to Exhibit 79 page two. Look for account number 100129, International Trading Consortium and the signatory is Mr Srikanth again.
Pattni: Yes.
Miller: And the next page, you have him there for HZ & Co Ltd and in Ziba Management and Services Ltd.
Pattni: Yes my lords.
Miller: Let’s look at your Exhibit 154 P and turn to page twelve. Look at serial number 408. It’s dated April 7, 1993 and it says Srikanth, salary, and it is listed as an office expense.
Pattni: He was collecting some expense form his salary.
Miller: Who is N. S. Srikanth?
Pattni: He was one of our executive … one of our staff.
Miller: Why is he spread all over some companies?
Pattni: He was one of the signatories in many of your companies. He was very trustworthy. He was also representing other people in other companies.
Miller: Whose employee was he?
Pattni: He was ours. Exchange Bank, Goldenberg and group.
MIller: I would like us to move to Exhibit 145 B and turn to page 123. That’s a notification of change of directors and secretary.
Pattni: It’s for H Zad Holdings.
Miller: Let’s go to the same page and read “with effect from February 26, 1993 Mr Chandrakhan Madhubhai Patel and Augustine Okori Mwasame were appointed as directors of the company. Ms Equatorial Secretaries and Registrars were appointed as secretaries of the company.” Miller: There is a stamp at the top which indicates that it’s been lodged with the Registrar of Companies.
Pattni: On April 20, 1993.
Miller: If you go to the same page you will notice that H Zad Holdings. Read the bottom part.
Pattni: “With effect from March 2, 1993. Resignations. Mr Kipyator Nicholas Kiprono Biwott, Akbar Abdulla Ismail, Paul Lobo and Mr Johnstone Mwandawiro resigned as directors of the company.” Miller: You seem to have your trusted manager Mr Srikanth as a signatory to HZ Ltd and your trusted driver as a director of the same company.
Pattni: Yes.
Miller: Whose interests were they representing?
Pattni: As I have explained here, I was looking at buying this company and then we were studying it but it did not materialise.
Miller: Does that mean putting a signatory in the company account?
Pattni: The company had problems at the time. Honourable Biwott had difficulties and we were looking at whether it was viable or not.
Miller: On July 2, this year, you stated that your lawyer had told you that there was nothing wrong with having nominees sitting in companies on your behalf. I put it to you that you had interest even before 1992.
Pattni: No. You only have interest when your people are there. Srikanth was there to study the company which needed a lot of restructuring.
Bosire: Mr Miller is saying that you had an interest, which may have been minor or major.
Pattni: Yes my lord.
(In cross-examination by lawyer Evans Monari for former Central Bank deputy governor Mr Eliphaz Riungu, Mr Pattni told the commission that the retired banker had rejected the initial Goldenberg proposal when presented to him in November 1990.
Mr Pattni said that Mr Riungu never received any money from him during his days at the Central Bank.
The businessman however helped Mr Riungu out of a cash crunch in 1996 or 1997 when the two jointly faced Sh5.8 billion theft charges.
Mr Pattni was then questioned by Mr Ben Munyasia representing former Chief of General Staff (Rtd) General Jackson Mulinge.
The witness, who had included Gen Mulinge in his list of recipient of money for the funding of the 1992 Kanu campaigns, testified that he never gave the former CGS money or a vehicle in person.
Mr Pattni however said that he had met the retired General at the office of Mr Joshua Kulei, then President Moi’s private secretary, during the election campaign period.) Pheroze Nowrojee for Cabinet Minister George Saitoti: Mr Pattni, do you have any objection in my questioning you as I act for you in pending civil matters in the High Court?
Pattni: I have no objection.
Nowrojee: In your statement in Exhibit 154 you mentioned the way in which the matters first started and I refer you to page 17, 18 and 19. Later on, you move to the meeting which you said took place with Mr Kanyotu and Prof Saitoti. You said that you gave Sh1 million to Mr Kanyotu. Is that correct?
Pattni: To Mr Kanyotu yes.
Nowrojee: And he put it in his brief case?
Pattni: Yes.
Nowrojee: Is it correct that you did not personally give that money to the minister?
Pattni: It is correct my lord.
Nowrojee: Going to the payment of export compensation, Goldenberg was paid 20 per cent export compensation under the Act?
Pattni: Yes.
Nowrojee: Who paid that 20 per cent?
Pattni: It was paid by the Customs people at Forodha House.
Nowrojee: And the items that you claimed for in relation to that export compensation were laid out in the tariff.
Pattni: Yes my lord.
Nowrojee: What were those items?
Pattni: Processed gold and diamond jewellery.
Nowrojee: The 20 per cent was not paid by the Treasury?
Pattni: No my lords.
Nowrojee: Goldenberg as additionally paid another 15 per cent?
Pattni: Yes my lord, it would be aid through a letter written by Customs to the Treasury and paid by the PS Treasury.
Pattni: Yes my lord.
Nowrojee: This was the ex-gratia payment?
Pattni: Yes my lord.
Nowrojee: Is it true that you were paid the 15 per cent after the particular 20 per cent was paid?
Pattni: Yes, after it was found thoroughly correct? The Commissioner of Customs would write to the Treasury calculating the extra 15 per cent to be paid from Treasury.
Nowrojee: The 15 per cent was also calculated by Customs?
Pattni: Correct.
Nowrojee: Once that letter was received with the calculation, would the payment vouchers be prepared?
Pattni: Yes.
Nowrojee: Do you know who prepared them?
Pattni: There were two officers; Mr Kibunja and Mr Oyula.
Nowrojee: And these were the accounting official sin the Treasury?
Pattni: Yes, the people in the accounts.
Nowrojee: It was not the minister who prepared the vouchers?
Pattni: No.
Nowrojee: Who signed the vouchers?
Pattni: Either Mr Kibunja or Mr Oyula and then taken to the PS Treasury.
Nowrojee: Who prepared the cheques?
Pattni: This was again Mr Kibunja, Mr Oyula and the staff below them. Mr Nowrojee, I thought that these are clear matters. We went through that and it was clear that the minister had no part in preparation of the payments.
Nowrojee: I’ll move on. Earlier in your evidence Mr Pattni, you have explained about the 15 per cent being discontinued and you have told the commission that there was no communication to Goldenberg.
Nowrojee: Is it correct that the decision of the discontinuation took place in January 1992?
Pattni: There was a hitch. It is possible.
Nowrojee: We have evidence here that the memorandum is dated January 9, 1992.
Pattni: A memo?
Nowrojee: Yes. Is it correct that the discontinuation was a year before the 1992 elections?
Pattni: Yes my lord.
Nowrojee: Is it correct that at the same time, 20 per cent was reduced to 18 per cent.
Pattni: Yes, there was a time there was a reduction of the compensation.
Nowrojee: Is it correct that in June 1992, there was another legal notice which made it mandatory for gold exports to be examined by Customs officers?
Pattni: I cannot recall because we were already going through Customs.
Nowrojee: I turn to Exhibit 154 P. In relation to this list, is it true that the vouchers relating to this exhibit have not been produced.
Pattni: Yes my lords.
The inquiry resumes this morning at 9 am.
