Nigeria’s Access Bank acquires Kenya’s Transnational Bank — and its murky past

By Morris Kiruga, in Nairobi
Posted on Wednesday, 22 January 2020 14:28

Outgoing Kenyan President Daniel Arap Moi (L) and newly elected President Mwai Kibaki (C) and his wife as they attend Kibaki's inauguration as president 30 December 2002. REUTERS/Antony Njuguna

Amid reports that Kenya’s second and longest-serving president, Daniel Arap Moi is on life support, a Nigerian bank has acquired a Kenyan bank associated with his family.

The Central Bank of Kenya (CBK) announced on Friday 17 January the acquisition of “up to 100% of the shareholding of Transnational Bank Plc by Access Bank”. The deal will be effective from 1 February and has been in the works since late 2019.

The deal received regulatory approval from the competition authority in October 2019 and has been awaiting Central Bank approval.

Access Bank, which is four years younger than its acquisition, has a total asset base of $16.1bn and subsidiaries in eight countries on the continent, one in the United Kingdom, and representative offices in China, United Arab Emirates, Lebanon, and India.

  • The Lagos-headquartered bank has been looking to expand its presence in the East African market, where it is already present in Rwanda.
  • Listed on the Nigerian Stock Exchange, Access Bank merged with Diamond Bank in April 2019, making it “the largest bank in Africa” with over 27 million customers.

Access Bank’s entry into the Kenyan market now brings the total number of Nigerian banks in the East African country to three, as it joins both United Bank of Africa and Guaranty Trust Bank.

  • It also fits into CBK’s campaign to strengthen the Kenyan banking sector by encouraging and facilitating mergers and acquisitions.
  • In recent years, Kenya’s largest bank by asset base, KCB Group, acquired struggling government-owned lender National Bank; and Kenyatta-owned bank CBA merged with NIC, owned by a former Central Bank Governor’s family.

Transnational Bank commenced operations in December 1985, riding on the wave of Kenya’s liberalisation of its financial sector. Access Bank will now acquire its 28 branches and use its presence to enter the larger East African financial market.

What did Access Bank just buy?

In the colourful history of Kenya’s systemic and industrial-scale corruption, Access Bank just acquired a bank that stands out as one of the conduits through which Moi, and his associates, including his sons, laundered billions of shillings.

  • The bank’s primary shareholders were powerful men during former the President’s time in power (1978-2002).
  • One of Transnational Bank’s shareholders, Sovereign Trust, is owned by Joshua Kulei, a former warder who served as Moi’s aide, and, according to a 2004 forensic audit, one of his primary bag men.
  • Two other shareholders are owned by politicians who were powerful in the late 1980s and throughout the 1990s. One, former vice-president George Saitoti, who served two terms (1989-1998, 1999-2002), died in a helicopter crash in 2012.

The bank’s current chairman is Henry Kiptiony Kiplangat, who also serves as vice-chancellor of Kabarak University, another institution owned by the Moi family.

  • Andre DeSimone, formerly CEO of Nicholas Biwott-linked Kestrel Capital – Biwott is another of Moi’s bag men and ministers – was a director at Transnational until late 2019 when he resigned after being involved and investigated in a high-profile insider trading scandal.

Paper trail

A 106-page audit by forensic auditors Kroll & Associates (now Kroll Inc.) submitted to the first post-Moi government in 2004 — only made public after it was leaked by Wikileaks in 2007 — outlined several money laundering conduits used by the former president and his family.

The Kroll audit estimated $200m was laundered “using Transnational Bank and its Nostro accounts held in Frankfurt and other jurisdictions. This money was parked in off-shore accounts such as Union Bancaire Privee (“UBP”) — Geneva.” [Read the leaked report on Wikileaks]

While the forensic firm was hired by President Mwai Kibaki’s government to dig into Moi-era corruption, the new government was already in the middle of a similar corruption scandal by the time it received the report in April 2004. The scandal, known as the Anglo-Leasing Scandal, was inherited from the Moi era and expanded by Kibaki-era ministers.

Kroll senior consultant for Africa Mark Simmonds told the Nairobi-based Business Daily in 2016: “We were never allowed to complete the work. We had only done 25% of the work.”

Even without a complete audit, however, the Kroll report painted a picture of industrial-scale corruption and money laundering involving Moi’s aides, associates in government and the private sector, and his children.

Through a network of companies, for example, the Kulei and Moi families were majority shareholders in multiple companies, including Standard Group Ltd, Kenya’s oldest media house.

“While Mark Too…was taking care of his political issues, Kulei was taking care of the business side of things,” a former insider told the Daily Nation in 2017.

In October 2001, Mark Too resigned as a nominated MP to pave way for the formal start of (now President) Uhuru Kenyatta’s ascent to the then ruling party’s leadership.

The end of an era

The retired president, who was never prosecuted despite such revelations, has been hospitalised since October 2019, around the same time the Access Bank/Transnational Bank became public. A report on 12 January by The Star newspaper, reported the 95-year-old former strongman had been “hurriedly put back on life support machines”.

Multiple government insiders told The Africa Report on condition of anonymity that the Moi family has been handling estate matters in preparation for his demise, having learnt from other families that have had to deal with such issues after the deaths of their patriarchs.

  • Moi’s favourite son and political successor, Gideon Moi, who now serves as a member of Senate, is leading the preparations, which include detaching the Moi estate from those of his bag men.
  • The Moi scions, particularly Gideon and his brother Philip, are said to have had a fraught relationship with Joshua Kulei from as early as the late 1990s.

In recent years, Gideon Moi has become a close ally to President Kenyatta, in what is a game of ping-pong between their two families. The two reconciled in early 2017 after Kenyatta’s mother, Mama Ngina Kenyatta, visited Gideon’s father. Their reconciliation is a counter-weight to Kenyatta’s increasingly antagonistic relationship with his deputy, William Ruto. Both Moi’s and Ruto’s primary support base is in the Rift Valley, specifically among the Kalenjin.

The younger Moi, who succeeded his father as MP for Baringo Central and now serves as senator of Baringo County, is said to be Kenyatta’s choice to replace Ruto ally Kipchumba Murkomen as Senate majority leader.

Ngunjiri Wambugu, Nyeri Town MP and a close Kenyatta ally, said in a related Facebook post on 16 January 1, “Any Jubilee MP who currently occupies a leadership position in either Senate or the National Assembly is therefore on notice. If you are not aligned with the President’s agenda; if you don’t agree with the fight against corruption or support the BBI; pack & leave that office, before February.”

Even the coverage of the former president’s health shows the power struggles within Kenya’s ruling families, past and present.

In late 2019, deputy president William Ruto acquired a stake in Radio Africa Group, a media conglomerate founded by Ghana’s Patrick Quarcoo, which owns The Star newspaper.

  • The newspaper has covered Moi’s health incessantly, as well as the power struggles going on in the country’s executive and legislature.
  • In 2014, Times Media Group of South Africa acquired 49% of the loss-making media conglomerate, whose chairman is Kiprono Kittony, the son of a close associate of President Moi.

What all this means

There are many threads to unpack here, but the primary one is that Access Bank’s new acquisition in Kenya is more than just a financial transaction. It forms part of an ongoing process by former President Moi’s children to detach his estate from those of his former allies.

Seen from a different perspective, the entire fabric includes within it threads of the ongoing power struggle within Kenya’s executive and political class and the country’s storied history of industrial-scale corruption.

While the deal works for the Moi family, Access Bank will have to work hard to rid its new acquisition of this history and focus on (just) providing legitimate financial services.

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