In Nairobi, if you give the man selling a phone by the street corner just a minute of your time, you end up buying expensive clay. Give the person on the other end of the phone probably from Kamiti prison another minute, you still lose more money.
But even in the safest space, the capital markets where investments are regulated and protected, transactions are digitised and monitored, in Kenya if you let your guard down, you lose more money.
In 2019 Sanlam Kenya was coming to the realisation that it could not recover almost Sh1.14 billion it had invested in several Kenyan companies.
Nakumatt was teetering towards certain death, Athi River Mining was down to cement dust and Kaluworks was wobbling. What they did not understand was a company called Real People whose business was simple, lend to small businesses and collect the cash.
In 2015 Real People had convinced retail investors, insurance firms and institutional investors to lend them Sh1.3 billion. They promised it would be paid back in tranches in three and five years. None of the principal payments were ever made.
What investors did not know is that the company never intended to pay.
Exclusive documents
According to exclusive documents seen by Smart Business, long before the bond was issued, plans were drawn in South Africa to transfer an internal loan to the Kenyan subsidiary. "After Kenya bond has been issued, it would make sense for Real People East Africa to fund itself… To achieve this, the loan receivable from Uganda must be transferred to RP (Real People) Kenya prior to repatriation of funds from Kenya bond issue to RP-in settlement of intercompany loan," the documents read.
Regulators have uncovered a paper trail that shows the company started draining the bond money in just over a week after collecting the funds at NIC Bank in August 2015.
A scheme that involved top managers at the lender saw them wire the funds in small tranches acting on emailed instructions to move them to an account in Standard Chartered Bank in Kenya and later transferred to a Standard Chartered Bank account in South Africa.
Some money was wired to Chase Bank then diverted back to the Standard Chartered account. Investigators believe the money was put into the company account at Standard Chartered to muddy the waters so that the bond money and company funds were one and the same.From 2015 to 2016 all the Sh1.3 billion […]