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Sanjay Shah: The Defunct Charterhouse Bank Mafia Shah and his Continued Money Laundering and Tax Evasion Activities

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After losing bid to stop the anti-graft detectives from linking him to a Sh18 billion money laundering and tax evasion scheme in 2016, the former managing director of the collapsed Charterhouse Bank, Sanjay Shah, and now the CEO of Kingsway Tyres went straight to meddle with the affairs of Nakumatt holdings ltd where sources say he participated actively to its downfall.

It’s reported in the dailies that “Nakumatt’s collapse has brought back echoes of the Charterhouse scandal, with revelations of insider deals in which the retailer’s directors siphoned Sh1 billion in interest-free soft loans by the time it was placed under administration on January 22, 2018”

Nakumatt ownership

On records, the company is a private business that is owned by Atul Shah through a 100 per cent ownership stake in the entity Nakumatt Group, Mauritius Ltd. In turn, Nakumatt Group Ltd is owned 100 per cent by Nakumatt Holdings Kenya Ltd.

A recent audit by KPMG found that the company did not have an independent board in place and so all its key decisions were made at family level, mainly by CEO Atul Shah and his two sons: Neel Shah, the commercial director; and Ankoor Shah, the head of supply chain management and expansion.

KPMG further reported that by the time it was conducting the review, the family had more or less left the company to be run by the CEO of Kingsway Motors, Mr Sanjay Shah, who was the former managing director of the defunct Charterhouse.

The involvement of the CEO of Kingsway Tyres in the day-to-day management of Nakumatt is an intriguing aside because in the CBK documents, Sanjay Shah is listed as a director of both Nakumatt Holdings Ltd and Nakumatt Investments Ltd.

Who is Sanjay Shah?

In 2016, the Ethics and Anti-Corruption Commission (EACC) succeeded in linking the ‘boss’ to a Sh18 billion money laundering and tax evasion scheme. And among the firms that were under investigation over alleged money laundering and tax evasion through the collapsed lender are W. E. Tilley, which is also at the centre of the fall of Imperial Bank. That time businessmen Shailesh Prajapati and Paolo Sattanino and lawyer Kariuki Muigua were also under investigation according to the interim report filed by Mr Shah.

In the Ksh18 billion scandal, EACC was acting on the findings of a parliamentary report. The agency’s detectives had raided the bank and carted away crucial information including Accounts and customer information.

Nakumatt dissolution

It’s emerging that Sanjay Shah played a crucial role in the collapse and voting to dissolve Nakumatt Supermarket. He, Sanjay Shah, no matter how ‘clean’ he pretends to be currently, the mention of Nakumatt should not leave out his name in the USD1.5 billion (Sh153 billion) Charterhouse bank collapse.
It is now common knowledge that Charterhouse Bank allegedly aided Nakumatt, to evade tax and to launder money.

According to Wikileaks, estimates are that the country lost approximately US$240 million (sh24 Billion) in taxes over a period of five years. Nakumatt is alleged to have under-declared sales to report trading losses for years. Curiously, in spite of the losses, the supermarket chain expanded, opening numerous new stores countrywide.

Charterhouse Bank is alleged to have flouted know-your-customer principles by allowing the supermarket chain to open accounts under fictitious names, which were then used to launder receipts. Other companies linked to Nakumatt as well as its lawyers, are said to have been some of the bank’s biggest depositors, according to ISS Cape Town.

Inside the world of Sanjay Shah, everybody was corrupted including the defunct Kenya Anti-Corruption Commission (precursor to EACC); it took the intervention of then US Ambassador Michael Ranneberger in 2011.
KACC (now EACC) issued a clean bill of health to the bank on numerous occasions.

In its report, Africa Centre for Open Governance also hit out at the Central Bank of Kenya (CBK), the financial services sector regulator, for failing to detect Charterhouse’s dubious operations for more than seven years ending 2004.

Huge sums of money were being transacted inside Charterhouse bank enough to catch the attention of CBK, but the regulator seems to have turned a blind eye on it.

It is not rocket science that then CBK Governor Prof. Njuguna Ndung’u faced corruption charges over his alleged role in the award of a Sh1.2 billion tender to a private company and in which the Kenyan public lost Sh400 million.

The greed for money by CBK governors was a clear sign why Charterhouse bank succeeded to run a scam for far too long, Though Prof. Ndung’u was not in the eye of the Charthouse Bank storm, his predecessor Anrew Mullei was.

Dr Mullei left the position entangled in the web of controversy involving procurement of forensic services to investigate alleged crimes at Charterhouse Bank. He had appointed four people to the forensic investigations, one of whom was his son.

Reformed Sanjay Shah?

In the Charterhouse Bank money laundering scheme, the crooks led by Sanjay Shah exploited the loopholes that were there in the law. Before 2009, Kenya didn’t have Anti-Money Laundering (AML) laws, however, tax evasion laws were in place.

Tax Evasion, money laundering of proceeds of drug business and possible terrorist links apart from creative accounting were some of the sins of Sanjay Shah led Charterhouse bank.

Initially, we had mentioned a company by the name W. E. Tilley as one of the tax evasion and money laundering sister-firms to Charterhouse Bank, see how it was used in Nakumatt.

According to an expose’ in September 2007, the criminal enterprise of Sanjay Shah not only included Supermarket chain Nakumatt, it also had Tusker Mattresses, John Harun Group, Kingsway Tyres, W.E Tilley (Muthaiga) Ltd, Creative Innovations, and Kariuki Maigua and Company Advocates.

In 2006, then shadow Finance Minister Billow Kerrow, now retired from politics, tabled documents in parliament that showed blatant and widespread tax evasion by the above mentioned companies over a period of six years.

All these companies were found to be linked to Nakumatt Holdings. “This is an extension group of allied accounts that were identified but not fully examined. They are undoubtedly involved in significant tax evasion if not other economic crimes,” the report said.

The report pointed out that Nakumatt supermarkets, for instance, was performing 20 times better than Uchumi Supermarkets – that collapsed around 2006 – yet paid less taxes than Uchumi. While Uchumi was paying between sh500 million and Ksh600 million per annum in VAT Nakumatt was only paying between sh33 million and Ksh85 million per annum.

“It should be noted that Nakumatt has never shown a profit to date; always loses. Its VAT payments are between Sh33 and sh85 million per annum. Uchumi pays sh500 to sh600 million per annum. As Nakumatt’s turnover is much higher than Uchumi, you would expect corporation tax and VAT to be in the range of Ksh1.8 to sh2.5 billion per annum,” said a report that CBK governor then, Dr. Andrew Mullei sent to finance minister then David Mwiraria.

Former Finance minister David Mwiraria in 2004 formed a task force with officers from the EACC, the CBK, the Kenya Revenue Authority and the Department of Governance and Ethics from the Office of the President, which authored an interim report implicating the bank and Mr Shah in the scam.

This chain of the scam did not leave behind Businessmen Shailesh Prajapati and Paolo Sattanino and the now Advocate for Nakumatt, lawyer Kariuki Muigua, through his company Kariuki Muigua & company Advocates if the recent report by independent auditor Parker Randall is anything to go by.

Sanjay Shah led CharterHouse Bank, the report said, abated the questionable activities of the suspect firms. The bank, the report points out, operated multiple accounts for some of its clients, an alarm bell sign for money laundering and tax evasion. Some of these accounts had been opened without signing of opening forms, the report says.

According to Central Bank of Kenya (CBK) report, Charterhouse Bank was closely linked with Nakumatt and its branches were located inside the supermarket’s stores. Nakumatt had a common shareholding with the bank.

Remember, Nakumatt Holdings had Sh123 million in accounts at Charterhouse Bank at the time it collapsed over claims of money laundering.

The loot

Atul Shah, his son Ankoor Shah and Sanjay Shah are directly involved in the Nakumatt’s collapse. While Atul and son Ankoor are accused of writing off stock worth Sh18 billion in May 2018, just weeks before the company ground to a halt; accessing and failing to refund interest-free loans amounting to Sh1 billion from the retail chain at a time when the stores were struggling to repay its suppliers, landlords and other creditors, Mr Sanjay Shah ensured that their investments such as a Sh2 billion property in Nairobi owned by Collogne, Park View Shopping Arcade (Sh600 million), a Sh220 million plot in Westland under Nakumatt Investments, an office block valued at Sh350 million in Mombasa and River View Plaza, which is worth Sh200 million blossoms.

This investment happened at a time Nakumatt owed DTB Sh3.6 billion, Standard Chartered Sh900 million, KCB Sh1.9 billion, Bank of Africa Sh328 million, UBA Sh126 million and GT Bank Sh104 million.

The assets are in no doubt linked to Atul Shah and other related entities such as Collogne Investment Limited, Nakumatt Investment Ltd, River View Plaza and Park View Shopping Arcade among others as indicated in a report by Nakumatt administrator Peter Kahi.

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