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The Goldenberg scandal was a
political scandal In politics, a political scandal is an action or event regarded as morally or legally wrong and causing general public outrage. Politicians, government officials, party officials and lobbyists can be accused of various illegal, corrupt, unethic ...
where the
Kenya ) , national_anthem = "Ee Mungu Nguvu Yetu"() , image_map = , map_caption = , image_map2 = , capital = Nairobi , coordinates = , largest_city = Nairobi , ...
n government was found to have subsidised exports of gold far beyond standard arrangements during the 1990s, by paying the company Goldenberg International 35% more (in Kenyan shillings) than their foreign currency earnings. Although it notionally appears that the scheme was intended to earn hard currency for the country, it is estimated to have cost Kenya the equivalent of more than 10% of the country's annual gross domestic product, and it is possible that no or minimal amounts of gold were actually exported. The scandal appears to have involved
political corruption Political corruption is the use of powers by government officials or their network contacts for illegitimate private gain. Forms of corruption vary, but can include bribery, lobbying, extortion, cronyism, nepotism, parochialism, patronage, in ...
at the highest levels of the government of Daniel Arap Moi. Officials in the former government of
Mwai Kibaki Emilio Stanley Mwai Kibaki (15 November 1931 – 21 April 2022) was a Kenyan politician who served as the third President of Kenya from December 2002 until April 2013 and is regarded as one of Kenya's founding fathers. He had previously ser ...
have also been implicated.


Background

Similar to most countries, Kenya encourages
international trade International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. (see: World economy) In most countries, such trade represents a significant ...
by granting tax-free status to commercial enterprises involved in the export of goods and sometimes subsidises these exports. The Goldenberg scandal was based on the fact that exporters who deposited US$ earnings with the Kenya
central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a central ba ...
received in exchange the equivalent in Kenyan shillings plus 20 percent. However, gold mining represented a tiny portion of Kenya's GDP, with only one operational gold mine (at
Kakamega Kakamega is a town in western Kenya lying about 30 km north of the Equator. It is the headquarters of Kakamega County that has a population of 1,867,579 (2019 census). Kakamega is 52 km north of Kisumu, the tenth largest city in Ken ...
). Goldenberg International therefore developed a scheme of smuggling gold into Kenya from
Congo Congo or The Congo may refer to either of two countries that border the Congo River in central Africa: * Democratic Republic of the Congo, the larger country to the southeast, capital Kinshasa, formerly known as Zaire, sometimes referred to a ...
, so that they could legally export it at the higher export price offered by the Kenyan government.


Details

The chief architect behind the scheme was a relative of the Kenyan businessman
Kamlesh Pattni Paul Kamlesh Pattni (also known as Brother Paul) was (born 1965). He was implicated in the 1990s Goldenberg scandal but was acquitted in 2013. In March 2023, Mr Pattni has been uncovered by Al Jazeera Investigative Unit as dirty Gold money laund ...
. However, it was Pattni who established Goldenberg International to implement the scheme. Almost all the politicians in the Moi government and a considerable percentage of the
Kibaki Emilio Stanley Mwai Kibaki (15 November 1931 – 21 April 2022) was a Kenyan politician who served as the third President of Kenya from December 2002 until April 2013 and is regarded as one of Kenya's founding fathers. He had previously se ...
government have been accused. The judicial system also appears to have been deeply involved, with twenty-three of Kenya's senior judges resigning after evidence indicated their involvement. The scheme began in 1991, almost immediately after the Kenya government, following directions from the IMF, introduced measures to reform the economy and increase international trade and investment, and seems to have stopped in 1993 when it was exposed by a
whistleblower A whistleblower (also written as whistle-blower or whistle blower) is a person, often an employee, who reveals information about activity within a private or public organization that is deemed illegal, immoral, illicit, unsafe or fraudulent. Whi ...
, David Munyakei. As a result of this, Munyakei was fired from his position at the Central Bank of Kenya, and remained largely unemployed until his death in 2006. There have been two investigations on the scam, one under the Moi government and the other under the Kibaki's government. The gold, if there was any, was likely imported from
Democratic Republic of the Congo The Democratic Republic of the Congo (french: République démocratique du Congo (RDC), colloquially "La RDC" ), informally Congo-Kinshasa, DR Congo, the DRC, the DROC, or the Congo, and formerly and also colloquially Zaire, is a country in ...
.


Bosire report

On 3 February 2006, following an investigation under the Kibaki government, a report by Justice Bosire recommended that the Education Minister at that time,
George Saitoti George Musengi Saitoti, State Commendations of Kenya, E.G.H. (3 August 1945 – 10 June 2012) was a Kenyan politician, businessman and American- and British-trained economist, mathematician and development policy thinker. As a mathematician, S ...
should face criminal charges for his actions and that former President Daniel arap Moi should be further investigated. Saitoti was both vice-president and finance minister under Moi in the early 1990s. On 13 February Saitoti's resignation was announced by President Kibaki in a television address. The Bosire report found that KSh.158.3 billion/= of Goldenberg money was transacted with 487 companies and individuals. A list of exhibits compiled by the commission placed Goldenberg International Ltd at the top of the primary recipients of the money, at KSh.35.3 billion/=. The directors of Goldenberg were named as Pattni and
James Kanyotu James Kanyotu (1936-2008) was Kenya's longest serving spy chief. He headed the Directorate of Security Intelligence (‘Special Branch’), for 27 years, from 1965 until his retirement in 1991. Born in 1936 in Kirinyaga District , Kanyotu attended A ...
. Although Kanyotu was the director of the Special Branch (intelligence unit of the Kenya Police, now known as National Intelligence Services, NIS) and a director of First American Bank, he described himself as a farmer in Goldenberg documents. President Moi was named by Pattni as having been a shareholder of GIL by nominee. However, President Moi himself was never called to present evidence despite this alleged link.


Cost

In response to a query by
Joseph Lekuton Joseph Lemasolai Lekuton (born 1968 or 1969) is a Kenyan politician. He belongs to the Orange Democratic Movement (ODM) and was elected to represent the Laisamis Constituency in the National Assembly of Kenya since the 2007 Kenyan parliamentary ele ...
, on 16 December 2008,
Orwa Ojode Joshua Orwa Ojode (29 December 1958 – 10 June 2012) was a Kenyan politician. He was first appointed to parliament on June 28, 1994 to represent the Ndhiwa Constituency for the National Development party. In 2007 he joined the Orange Democratic ...
the Assistant Minister for Provincial Administration and Internal Security confirmed to
parliament In modern politics, and history, a parliament is a legislative body of government. Generally, a modern parliament has three functions: Representation (politics), representing the Election#Suffrage, electorate, making laws, and overseeing ...
that the commission had cost the
Kenya ) , national_anthem = "Ee Mungu Nguvu Yetu"() , image_map = , map_caption = , image_map2 = , capital = Nairobi , coordinates = , largest_city = Nairobi , ...
Government Kshs 511,569,409.90.


Travel restrictions

Shortly after, Saitoti along with 20 several others suspected to be involved in the scandal were prohibited from leaving the country and ordered to surrender any weapons they possessed. Among those named were * Gideon Moi, retired President Moi's son, also the Baringo Central MP * Mr Philip Moi, retired President Moi's son * Mr Moi's lawyer, Mr
Mutula Kilonzo Mutula Kilonzo (2 July 1948 – 27 April 2013) was a Kenyan politician and Senior Counsel, who served as Minister of Education after having previously served as the Minister for Nairobi Metropolitan and justice and constitutional affairs He bel ...
* Mr Moi's former personal assistant, Mr
Joshua Kulei Joshua () or Yehoshua ( ''Yəhōšuaʿ'', Tiberian: ''Yŏhōšuaʿ,'' lit. 'Yahweh is salvation') ''Yēšūaʿ''; syr, ܝܫܘܥ ܒܪ ܢܘܢ ''Yəšūʿ bar Nōn''; el, Ἰησοῦς, ar , يُوشَعُ ٱبْنُ نُونٍ '' Yūšaʿ ...
* Former Central Bank of Kenya governor
Eric Kotut Eric Kotut is a Kenyan businessman who was the fourth Central Bank governor, holding office from 1988 to 1993. He was appointed to the position because of his father's relationship with the then president of Kenya, Daniel arap Moi, as they went to ...
* former Central Bank of Kenya deputy governor
Eliphas Riungu Eliphaz is one of Esau's sons in the Bible. Eliphaz or Eliphas is also the given name of: * Eliphaz (Job), another person in the Bible * Eliphaz Dow (1705-1755), the first male executed in New Hampshire, for murder * Eliphaz Fay (1797–1854), ...
* former Central Bank of Kenya employee
Job Kilach Work or labor (or labour in British English) is intentional activity people perform to support the needs and wants of themselves, others, or a wider community. In the context of economics, work can be viewed as the human activity that contr ...
. * former Central Bank of Kenya employee
Tom Werunga Tom or TOM may refer to: * Tom (given name), a diminutive of Thomas or Tomás or an independent Aramaic given name (and a list of people with the name) Characters * Tom Anderson, a character in ''Beavis and Butt-Head'' * Tom Beck, a character ...
* former Central Bank of Kenya employee
Michael Wanjihia Michael may refer to: People * Michael (given name), a given name * Michael (surname), including a list of people with the surname Michael Given name "Michael" * Michael (archangel), ''first'' of God's archangels in the Jewish, Christian and ...
*
Philip Murgor Philip Kipchirchir Murgor is a Kenyan lawyer. Early life and education Philip Machatha Murgor was born on the 4th of July 1961 at Iten District Hospital to Christine Chebor, a nurse, in Elgeyo-Marakwet District (now Elgeyo-Marakwet County), Ke ...
, the former director of public prosecutions ** Mr Murgor's law firm represented the Central Bank of Kenya during the two-year public inquiry headed by Mr Justice Bosire. * Former Treasury permanent secretary Charles Mbindyo * former Treasury permanent secretary Wilfred Karuga Koinange * former Treasury permanent secretary Joseph Magari * Prof
George Saitoti George Musengi Saitoti, State Commendations of Kenya, E.G.H. (3 August 1945 – 10 June 2012) was a Kenyan politician, businessman and American- and British-trained economist, mathematician and development policy thinker. As a mathematician, S ...
, who resigned as Education minister. * Goldenberg architect
Kamlesh Pattni Paul Kamlesh Pattni (also known as Brother Paul) was (born 1965). He was implicated in the 1990s Goldenberg scandal but was acquitted in 2013. In March 2023, Mr Pattni has been uncovered by Al Jazeera Investigative Unit as dirty Gold money laund ...
* Pattni's business partner and former Special Branch chief
James Kanyotu James Kanyotu (1936-2008) was Kenya's longest serving spy chief. He headed the Directorate of Security Intelligence (‘Special Branch’), for 27 years, from 1965 until his retirement in 1991. Born in 1936 in Kirinyaga District , Kanyotu attended A ...
* former commissioner of Mines and Geology Collins Owayo * Mr Arthur Ndegwa, senior mining engineer in the Commissioner of Mines Nairobi office * former commissioner of Customs and Excise Francis Cheruiyot. * former Kenya Commercial Bank general manager Elijah arap Bii Former president Moi himself was not listed. The Law Society of Kenya chairman Tom Ojienda criticised Police Commissioner Hussein Ali's move to seize travel documents. He described the decisions as "a total violation of the law and the Constitution". Ojienda regretted that individuals had been charged, tried and convicted by the court of public opinion and the media or through political statements. He commended three Cabinet ministers who resigned to pave way for investigations into the Anglo Leasing and Goldenberg scandals. "The resignation of three members of Cabinet signifies the maturity of our democracy, where leaders whose reputations are besmirched would opt to resign pending investigations to clear their names rather than hold the Government hostage. Such resignations are no pointers to guilt."


Prosecution

Two transactions stand out – one for KSh.5.8 billion/= from the Central Bank to Goldenberg International in 1993, personally authorised by then-president Daniel Arap Moi, and another for KSh.13.5 billion/=. The then CID director Joseph Kamau told reporters on 9 March 2006 that files on Pattni, Kanyotu, Koinange, Kotut, Bii, Riungu and Werunga had been passed to attorney-general
Amos Wako Amos Wako (born 31 July 1945) is a former Attorney General of Kenya and the first senator for Busia County from 2013 to 2017. Wako won the senatorial seat after defeating former minister of finance Chris Okemo. He won the senator seat on an Or ...
. Wako has been attorney-general since 1991, when Moi was in power. Wako is recommending that the country's chief justice consider overturning a previous court order exempting Mr Saitoti from prosecution. All except Werunga are to be charged. The prosecution hopes that Werunga will be their witness. In August 2006 it was reported that a constitutional court had ruled that Saitoti could not be charged.The Kenyan media reacted negatively to the decision. The Kenya Times saw political motives behind it, while The
Daily Nation The ''Daily Nation'' is the highest circulation Kenyan independent newspaper with 170,000 copies. History The ''Daily Nation'' was started in the year 1958 as a Swahili language, Swahili weekly called ''Taifa'' by the Englishman Charles Hay ...
editorialised that the "War on graft is, indeed, lost".


See also

* Corruption in Kenya *
Anglo Leasing Scandal The Anglo Leasing scandal was a government procurement facilitated corruption scandal in Kenya. Origins The scandal is alleged to have started when the Kenyan Government wanted to replace its passport printing system, in 1997, but came to light ...
*
Nicholas Biwott Nicholas Kipyator Kiprono arap Biwott (1940 – 11 July 2017) was a Kenyan businessman, politician and philanthropist. Biwott served as a civil servant, Member of Parliament and government minister, during which time he held eight senior minist ...
* John Githongo


References


External links


BBC

A short story on Goldenberg

USA government study of Kenya's mineral industry(pdf)



Forensic accountants traces goldenburg transaction

This article may explain Goldenburg in a different style

CNN report on deportation of Canadian



Graft evidence stuns Kenyan MPs
{{DEFAULTSORT:Goldenberg Scandal Scandals in Kenya Corruption in Kenya 1990s in Kenya