An Mpumalanga task team flies out to check=20 the credibility of would-be nature reserve=20 magnate amid claims of dubious deals=20 overseas. Justin Arenstein reports
A MULTI-PARTY task team from the Mpumalanga=20 legislature is visiting Kenya and Dubai to=20 investigate allegations against the Dolphin=20 Group, the company that was handed control=20 over the province’s prime nature reserves.=20
The allegations – discovered by the Mail &=20 Guardian while conducting a company search=20 on Dolphin with the international Reuters=20 database – include links to banking=20 scandals in Britain and Kenya, as well as=20 possible involvement in fraudulent gold and=20 diamond exports.=20
The task team, headed by environmental=20 affairs MEC David Mkhwanazi and including=20 senior members of the African National=20 Congress and National Party in the=20 province, left to conduct their own “due=20 diligence” investigation this week.
The investigation was launched after the=20 M&G disclosed aspects of the 50-year=20 contract signed between Dolphin and the=20 Mpumalanga Parks Board – designed to stay=20 secret – that granted Dolphin wide-ranging=20 exclusive commercial rights to at least six=20 provincial reserves as well as other key=20 attractions, such as the Blyde River Canyon=20 and Pilgrim’s Rest.
The team is expected to visit Dolphin=20 offices in Kenya and Dubai to gauge the=20 company’s credibility and that of its=20 president, Ketan Somaia.
According to articles in the database, both=20 Dolphin and Somaia have been accused by the=20 Bank of England of abusing banking=20 principles after allegedly siphoning funds=20 out of Kenya to buy controlling shares in=20 Kenya’s Block Hotels (the subsidiary which=20 will operate hotels and lodges in=20 Mpumalanga) and the Equatorial Bank in=20 London.
Another Dolphin subsidiary, Delphis Bank,=20 has been accused of failing to remit more=20 than R749-million in foreign exchange to=20 Kenya’s Central Bank, and is instead=20 accused of using the money to generate=20 profits by buying Kenyan treasury bills.
Somaia created Delphis — classified as a=20 “political bank” in Kenya because of its=20 close links to President Daniel arap Moi=20 and the ruling party – after taking over=20 control of interests in Kenya and Mauritius=20 held by the Bank of Credit and Commerce=20 International (BCCI) when it collapsed in=20 1991.
Delphis and three other “political banks”=20 were also investigated by the Kenyan=20 government for allegedly participating in a=20 gold and diamond exporting scheme headed by=20 a Kenyan businessman who shared the same=20 Nairobi office block as Dolphin, Kamlesh=20 Pattni and his company, Goldenberg.
Between November 1990 and December 1992,=20 Pattni claimed to have exported more than=20 R343-million of gold and diamond jewellery=20 from Kenya to companies in Switzerland and=20 Dubai.
For this effort he was paid a R119-million=20 bonus by the Kenyan government – a system=20 devised allegedly to encourage exports.=20 Instead of the usual 20%, the government=20 curiously undertook to pay Pattni 34%.=20
But the exports were fake. Kenya produces=20 no diamonds and very little gold, all of=20 which is panned by hand. The Switzerland=20 companies Goldenberg claimed to deal with=20 were not registered there and did not=20 appear in the phone books.
When Goldenberg was paid out its export=20 bonus in Kenya shillings, it used the money=20 to buy foreign currency on the Kenya=20 market, sending the shilling plummeting by=20 almost 50% and severely rocking the Kenyan=20 economy.
Delphis was one of three banks that lent=20 money to the Exchange Bank, which Pattni=20 set up to move the foreign currency and=20 which handled sums far in excess of the=20 official limits. The others, the Trade Bank=20 and Post Bank Credit, were closed and some=20 officers arrested, but Delphis survived. No=20 evidence was found that Delphis knew of the=20 scam or of the illicit transactions.
Dolphin has since, however, moved its base=20 to Dubai and its registration from the Isle=20 of Man and Guernsey to Bermuda, an=20 ownership structure banking sources say=20 allows Dolphin to disclose only a minimum=20 amount of information about its activities=20 to British and Kenyan regulators.
The Mpumalanga Parks Board does not appear=20 to have discovered any of this information=20 while researching Dolphin. A board=20 representative said this week: “We did our=20 homework, including a trip to Kenya to=20 visit Dolphin facilities.”
The parks board’s chief executive, Alan=20 Gray, refused to speak to the M&G this=20 week, saying he was afraid the press would=20 begin “playing the man and not the ball”.
According to the deal with Dolphin, which=20 was signed without public consultation on=20 November 1 last year, Dolphin will pay the=20 parks board’s budget deficit over the next=20 50 years, in return for the monopoly of=20 state-owned conservation areas in=20 Mpumalanga.
Gray estimates Dolphin will have to pay the=20 parks board at least=20 R12,2-billion over that period, with a=20 further R55-billion in business spin-offs=20 for the province.
Environmentalists and critics of the=20 Dolphin scheme stress that their objections=20 to the deal are not based on opposition to=20 the commercial development of public parks=20 but rather on Dolphin’s credentials and the=20 lack of public consultation.
Leading provincial environmentalists such=20 as Dr Sue Hart point to the “alarming”=20 international media and business reputation=20 of Dolphin and its president, as reflected=20 in news reports in Britain, Kenya and on=20 Reuters: “At the very least, as a point of=20 honour, thorough research on Dolphin should=20 have been done before even sitting down to=20 negotiate with them. After all, 50 years is=20 practically forever for most people.”
l The chairman of Kenya’s Parliamentary=20 Public Accounts Committee, Michael Wamalwa,=20 said this week Somaia had never been=20 accused of fraud in Kenya, as reported in=20 the M&G two weeks ago.
Somaia was summonsed to testify before=20 Wamalwa’s committee in connection with two=20 companies that defaulted on a R35-million=20 armaments tender with the government, and=20 which were thought to be connected to=20 Somaia.
No official link could be established=20 between Somaia and the two companies, said=20 Wamalwa. But the committee had still=20 forwarded an official recommendation to=20 Parliament that a resolution be passed that=20 the government never again enter into any=20 contracts or tenders with Somaia or any=20 company even slightly related to him.
The recommendation will be debated in=20 March. Wamalwa was confident it would be=20 adopted.