How graft and drug lords have found safe haven in cars, houses

Wednesday, December 9th, 2020 00:00 |
NYS suspects Phyllis Njeri Ngirita (left) with her sister, Anne, during a past court proceeding at Milimani Law Courts. Photo/PD/File

When the global financial crisis hit the world in the early 2000s, gangsters saw an opportunity they could not miss.

From Mexican drug lords to Al Qaeda operatives, the underworld of gangs, arms dealers and drug lords developed an unhealthy relationship with some of the biggest banks in the world. 

The network thrived for a decade. But it was broken and it was a game changer in money laundering.

Huge fines, collaborations between institutions, tough legislations and hawk-eyed administrators among other measures made it difficult to clean money using the banking system.

The lords of the underworld were back to square one. Where do they clean their ill-gotten wealth without catching the authorities’ attention?

Ethics and Anti-Corruption Commission (EACC) boss Twalib Mbarak, in an interview with People Daily, says Kenya’s corruption lords and drug barons have turned the real estate sector and car dealerships into their local havens to clean their ill-gotten wealth.

Up to 47 properties and numerous vehicles have been seized in a crackdown on corruption and drug dealers’ networks involving investing money in the property market.

Apparently, detectives are burning the midnight oil as they rush against time to trace and recover about Sh3 billion invested in property and cars.

In a bid to cover themselves from detectives who have been corroborating with banks to flag suspicious transactions, corrupt Czars and drug dealers have now been laundering their money through assets and motor vehicle purchases.

Corruption suspects and drug traffickers, sometimes with complicity from unscrupulous bank officials, are purchasing land, palatial houses and apartments at exorbitant costs in swanky suburbs, cities and main towns.

They also purchase fleets of vehicles for transport businesses and register them using their own names, those of close associates or companies linked to their cronies.

This led to the “real estate bubble” that has since burst, where properties whose value before 2012 was approximately Sh500,000 shot up to Sh20 million by 2015 depending on location.

On the other hand, car bazaars have mushroomed everywhere in the city, competing to make a kill from the dirty cash dumped into businesses.

Detectives from EACC, Directorate of Criminal Investigations (DCI) and Assets Recovery Authority (ARA) while probing corruption cases, drug trafficking and other financial related crimes have traced dirty wealth to properties and cars, some of which they have successfully recovered.

Mbarak, who said the commission has so far instituted suits seeking to recover approximately Sh2.5 billion, notes suspects of crimes prefer to hide the loot in properties and cars because it is no longer easy to bank it or transact in a financial institution.

“They fear going to banks because the Central Bank of Kenya has become strict that you have to explain banking and withdrawing huge sums of money, most of the graft suspects are hiding the monies in properties, farms and transport sectors.

You will find that some bought expensive houses, land or buses and lorries to engage in transport business,” Twalib told People Daily.

Banks have also been accused of aiding the movement of ill-gotten funds by allowing individuals with Sh10 million in their accounts to write 10 cheques of Sh800,000 to different people to withdraw and use to acquire properties and cars in cash.

“That is a tactic they have devised to skirt around the requirement that nobody cannot withdraw more than Sh1 million from the bank,” Mbarak said.

“You will only need to go to the bazaar, agree with the owner, meet him in a hotel or office and give him the cash of up to over Sh5 million and the sale deal will be executed.

It will be the owner’s business to find a way of putting the money into his system,” the source said but wished not to be quoted.

Kiambu developer

For instance, a developer who had put up dozens of apartments in Kiambu County, which he was selling between Sh7.5 million to Sh14 billion per unit in 2017, has been forced to lower the cost to Sh5 million after he failed to sell even a single unit in the last one and half years. 

While some top government officials including former Principal Secretaries, former and sitting governors as well as businessmen are battling court cases where their properties have been charged on suspicion that they acquired through proceeds of crime, others have lost them to the State.

Joseph Njoroge, chairman of Eden Park and Country Gardens, a real estate firm that has been in business for over a decade, agrees that the sector has become “a dumping site for dirty money” earned through theft pushing the prices through the rooftops.

“Cartels that do tender works in the government, when they steal, they come and dump them in the real estate. Someone buys 200, 100, 0r 50 acres of land all in the name of hiding money.

The real estate bubble is no longer there because the prices skyrocketed and the ordinary mwananchi is not able to purchase.

Some of us who invested earlier with clean money have actually stagnated,” Njoroge said.

Dr Samuel Nyandemo, a senior lecturer at the School of Economics at the University of Nairobi, said a recent research proved that much of the money from illicit trade, piracy from drugs and corruption has found its way in the estate development and transport industry in the form of six-wheel cargo transporters.

Most government officials and tender dealers, Nyandemo said, own palatial houses worth millions in Runda and other high end places, which they would have never owned if they never got to the positions they currently have.

“This has caused the prices to be highly exorbitant. Easy come leads to easy spending.

You just buy a property at any rate because you have not worked for that money.

In any case, you want to conceal it very first and that is why property prices have skyrocketed,” the lecturer said. 

A governor from Rift Valley, who is being investigated over Sh1.6 billion theft in his county through questionable tenders, has been on EACC radar, which says he used part of the proceeds to develop multiple high-end properties across the country, with five of them in Nairobi.

The governor, according to EACC evidence against him, acquired his first home near Carnivore Restaurant in his first year in office before suddenly indulging in an investments spree with a massive interest in the real estate, including a palatial mansion in Karen.

ARA director Muthoni Kimani said in 2015, the outfit mandated to identify, trace, freeze and recover proceeds of crime, raised a red flag because while the cost of property had risen abnormally, there were people who were purchasing them with ease, triggering a chase.

“ARA raised eyebrows in 2015 and 2016 after the property rates shot up and people were still buying.

That is when we targeted money laundering with focus on, among other things, land and car purchasing.

In fact, you can do a comparison on the prices of property about how they have skyrocketed,” Muthoni said, adding that they have so far recovered assets worth millions from suspects.

A former government official, who has been charged with theft through dubious road tenders, has been at pains to explain how he acquired multi-billion property including some in Nairobi  central business district. 

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