Wednesday, May 27, 2009

Piracy Money Finds Home In Kenya

Piracy money finds home in Kenya

May 27, 2009

The Standard, Nairobi, Kenya - Original Story

By Amos Kareithi

Sitting at a corner in a city’s upmarket restaurant, three smartly dressed millionaires engage in a lively conversation.

Every now and then, a mobile phone rings and it is answered swiftly in Somali language. Then rapid calculations are computed on a 12 digit calculator and answers shouted back on the phone.

Amidst numerous cups of masala and lemon tea accompanied by iced cakes and fruitcakes, the dons who are among the few who control about 80 per cent of Eastleigh’s real estate are at work.

Their table is the market where the scramble for Nairobi is taking place. Every other sentence they make is punctuated with millions, commissions and stamp duty.

These men have given Eastleigh, Pumwani, Juja Road, Parklands, Ngara and Nairobi Central Business District a ‘facelift’.

At first their treasurer warms up to the idea of talking to CCI but after consultations in their language, the Somalia businessman changes.

Security fears

"Look for the real big businessmen. We are just small people. We cannot share business secrets," their chairman says coldly.

However, they slightly open up but on strict condition that they are not identified.

As they continue to operate unperturbed, security experts and government technocrats are alarmed. Their worry is because of intelligence reports that laundering of proceeds from piracy in the Indian Ocean is done in Kenya. The money is being liberally invested in Nairobi.

"The scheme is bigger than you may think. These operators are controlling real estate and businesses at the Port of Mombasa, Jomo Kenyatta International Airport and other smaller airports," an intelligence officer, who cannot be identified as he is not authorised to speak to the press, says. The officer is convinced the money is from pirates in Somalia.

"The developers are just fronts. The real owners are in Somalia. They now have a foothold in Nairobi, Wilson Airport, Wajir, Eldoret and Mombasa," the intelligence officer says.

Indeed Kenya has earned itself the dubious distinction of a safe haven for the pirates and their money. The international media has now turned its spotlight on Nairobi. On Sunday, The Seattle Times published a story titled ‘Kenya Awash in Somali Pirates’ cash’ embellishing it with pictures of Ali Abdinur Samo, a 26-year-old confessed former pirate who is in Eastleigh hunting for an opportunity to invest $116,000 (Sh9 million) he got in two heists.

The paper tells of how some forex bureaux have been transacting money on behalf of Puntland pirates citing one hawallah (Somalia’s informal forex bureaus) in Kenya which has handled $10 million (Sh800 million in just a few months.

"One day in February one person received $500,000 (Sh40 million). The money came in four different names in Garowe, the Puntland regional capital," the paper writes, adding that the recipient just stuffed it into his socks waste band and belt and then disappeared. "Pirates Money is definitely being reinvested in Kenya. There’s a boom among Somali businessmen in Kenya, and it’s easy to hide the money because there is so much coming in. And I don’t think Kenyan authorities control or monitor this," the paper quotes Stig Jarle-Hansen, a Somalia expert at the Norwegian Institute for Urban and Regional Research as saying.

Grabbing culture

Asked whether police have found any evidence of the money raised by pirates hijacking ships in Indian Ocean being invested in Kenya, police spokesman Eric Kiraithe is non-committal.

He says: "It’s not about pirates or what they do with the money. We have some public officers who value themselves more than the country. That is why they will frustrate efforts of tracing criminals and trivialise the matter."

Even at the heart of the Nairobi city, there is an air of disquiet and uncertainty over the emerging trend. The chief’s office at Eastleigh and the administration police camp formerly situated along First Avenue have since been taken over by the developers and demolished. The chief is now operating from a kiosk-like container along a road reserve, dwarfed by skyscrapers.

The Administration Police staff quarters are a collection of tin shacks crowded in a small place sharing a solitary makeshift bathroom. The market place, which once served the local small-scale traders, has also been flattened and the compound surrounded by an iron sheet fence. "The new craze in Eastleigh started in 2000. Last year they took the chief’s camp now there is no public land left in the area," Marion Musyoki, a resident laments.

The water depot’s three acres of land has also been annexed.The New Eastleigh Primary School too has been targeted. The land acquisition by faceless foreigners has gone just next to Kenya Air Force, Moi Air Base in Eastleigh, a high security facility, where five story buildings are being put up.

"We have a five story building coming up near the air base. When complete such estates will be exclusively for the foreigners," a security officer in Eastleigh laments.

Out of bound areas

CCI was told of lodgings and residential buildings where Kenyans and even security agents are not let in. "There was an operation about a year ago. When a senior police officer went after suspects in a lodging in Eastleigh, he was locked in. He had to be rescued by his colleagues," a source told us.

The Somalia community in Kenya has formed a consortium of about 60 investors who are bankrolling the buying of residential and commercial property in Nairobi.

Investigations by CCI reveal the consortium has a chairman, treasurer and secretary who coordinate the buying under utmost secrecy. Once an investor identifies a building, money is not an issue as the committee then informs other members to raise money in case the investor cannot raise the whole amount. "We have buildings which are owned by as many as 15 people. They pay some money and are allocated the stalls once the shopping malls are completed," a security officer says.

The chairman of the consortium and key financiers travel every other week to Somalia to get money. To cover their tracks, they claim to be visiting Garrissa.

However, CCI has learnt that they ferry money by road during their frequent trips and also through hawallah.

Government investors

Some warlords and past officials of Somalia transitional Federal government are among those who have heavily invested in real estate in Nairobi.

They also have a heavy presence in Mombasa especially the old town where they have been purchasing old buildings and replacing them with modern ones.

When CCI traced a broker who has been buying on behalf of the foreigners, he denied that their money was from piracy.

He revealed that in one deal involving the sale of an up-market property worth over Sh1billion, he chalked up Sh300 million as commission. He says their businesses are legitimate. When CCI visited Eastleigh, we came across cases of Kenyans who have lost their property to the foreigners.

"Once they eye your property nothing can stop them. Some have been known to leave as much as Sh70 million to a property owners to entice them to sell," a plot owner who identified himself as Steve says.

The Eastleigh North Chief’s office has been flooded with such cases. "I cannot say much about the issue. Most of the disputes are in court. Others have lost their property after they failed to prove ownership. It’s very sad," says the area chief Mr Paul Ngugi.

Investigations by CCI show that majority of the original Kenyans owning commercial property along Eastleigh’s First Avenue, Second Avenue and Juja Road, have been replaced by Somalia investors.

"Out of the original 100 Kenyans who owned property here only four still own their commercial buildings. The rest have either been bought off or swindled of their property," an administrator who asked not to be named in fear of reprisal, noted. Kenyans residing in Eastleigh and other parts of Nairobi are worried of the influx.

In a letter to the editor dated April 17, Susan Kirerwa, a resident of Eastleigh sums up their frustrations. She writes: "A trend is emerging of foreigners buying old residential property from Kenyan landlords and converting them into shopping malls, leaving Kenyans to relocate to slums."

"We have no access to play grounds. Before long they will take over Nairobi," she warns.

Another resident explained how foreigners were taking over estates by offering exaggerated rents, which they pay upfront.

As we went to press, about 20 ships were still being held by pirates. The ransom that will be paid for their release may find its way in Kenya.