A business tycoon and former associate of the Tory grandee Cecil Parkinson who fled the UK more than a decade ago and has been pursued by creditors on three continents has been convicted at the Old Bailey of swindling $19.5m (Â£11.5m).
Ketan Somaia, who is now based in London, presided over the collapse of an African bank and is best known for his involvement in the Goldenberg affair, a corruption scandal that helped wreck Kenya’s economy and implicated its former president.
But it was through the British courts, in what is thought to have been the largest ever British private prosecution brought by an individual, that the two-times Miss World sponsor was finally brought to book. He was convicted of nine counts of obtaining money by deception, totalling $19.5m, from two separate victims, and acquitted of two counts of obtaining money by deception totalling $3.5m.
Somaia, 52, claims to have been a friend of the billionaire Hinduja brothers. His companies were chaired by Parkinson for eight years, and he is now involved in a takeover of London’s biggest Asian radio stations, acting as a consultant to Lyca Mobile, a firm which helped fund Boris Johnson’s re-election campaign.
“Mr Ketan Somaia was what is sometimes called a confidence trickster, but on a grand scale,” said William Boyce QC for the prosecution. His lavish lifestyle was being paid for by people whose money was “taken and not given back”, in a “systematic series of frauds”.
In a single year, he was accused of extracting a total of $23m (Â£14m) from another entrepreneur, Murli Mirchandani, after promising him stakes in his ventures.
Aside from some money for interest, Boyce claimed: “Not a penny of the $23m capital advanced to Mr Somaia has ever been repaid.”
Mirchandani, who made his fortune in food and chemicals, pursued Somaia for more than a decade and was the primary complainant in the successful Old Bailey trial.
When Mirchandani refused to keep lending, Somaia approached the Hindujas for loans. The jury found Somaia had also defrauded a London businessman, Dilip Shah, of Â£200,000.
Before meeting Mirchandani, Somaia was said to have fleeced a third man, Surajit Sen, for $2m in 1997. Sen shared an office in Dubai with the accused, and said in evidence that he believed himself to be Somaia’s business partner.
Somaia’s victims were not all wealthy. His personal assistant, Arifa Parkar, said in evidence that she had eventually left Somaia’s employ, exhausted by fielding calls from unpaid creditors, after he failed to pay her wages. “How could I survive without money?” she told the trial.
Even as his hotels, media and banking empire began to crumble, Somaia continued to host lavish parties in Dubai, where his group had offices, and at a mansion with an indoor pool and a helipad in Hadley Wood, a London suburb where his neighbours have included Cheryl Cole and Lennox Lewis. According to the prosecution, Somaia served only “cases and cases” of Dom PÃ©rignon 1984 champagne.
The cost of a single one of Somaia’s parties, said Boyce, would have paid his secretary’s salary for a year.
Somaia was said to have lured his victims by claiming that he had a personal fortune of $100m and that his companies were worth $500m.
He laid on all-expenses-paid trips to Africa and Dubai, where the visitors, accompanied by hired musicians, travelled in chauffeur-driven cars and on a private jet, and stayed at luxury hotels. Somaia’s Dolphin group included the Treetops Lodge in Kenya, where the young Queen Elizabeth spent her honeymoon.
The accused built up a feeling of “fevered excitement” in his victims with false opportunities of being his business partner, said Boyce. But in the case of Mirchandani, the only surety given for the loans was his word. To Shah, he issued a fraudulent share certificate for one of his banks.
In Somaia’s defence, barrister James Woods QC claimed Mirchandani had given the money knowing there was a risk it might be lost.
“We suggest Murli Mirchandani, rather than the weak man portrayed, is more likely a hard-nosed business entrepreneur. It was he who looked at Mr Somaia in order to try and embark upon a business partnership.
“He was prepared to pay out big money to secure that business relationship. He gambled his money on Ketan Somaia. You win some and you lose some but you take it in your stride. This was no fraud.”
Somaia, who is of Indian origin but was born in Kenya, made his money from government contracts issued during the era of Kenya’s longest-serving president, Daniel arap Moi.
Under one of these contracts, he was paid to import hundreds of secondhand black cabs from the UK to Nairobi, but a judge found that while 500 had been paid for, only 300 were delivered.
Somaia was sent to prison for the alleged scam in 2004. But his conviction was quashed in 2005 and he was set free, having spent much of his sentence in the private wing of a Nairobi hospital.
When the Bank of Credit and Commerce International collapsed after an international corruption scandal in 1991, Somaia bought a number of its branches and changed the name to Delphis.
But a decade later the bank collapsed, with its branches in Mauritius, Tanzania and Nairobi closed or bailed out, after allegations that they had been plundered by related third parties for loans that were not repaid.
In 2003, after Moi’s 24 years in power came to an end, Somaia was ordered to give evidence to an inquiry into the Goldenberg scandal.
In an export scam sanctioned at the highest levels of Moi’s government, a company called Goldenberg International claimed to be selling Kenyan gold and diamonds to companies abroad. To encourage exports the government at the time paid Goldenberg and other firms big bonuses for foreign sales.
In fact, Kenya has no diamonds and produces only a tiny amount of gold, and subsequent inquiries found its exports were fictitious. Huge payments associated with the scam were said to have passed through Delphis.
Proceeds from the scam were used for foreign currency speculation, which sent the Kenyan shilling into freefall and national inflation soaring.
By 2002, Somaia had been arrested by Hertfordshire police for allegedly taking Â£500,000 from a local entrepreneur. He fled to Kenya, and the Crown Prosecution Service was not able to secure his extradition.
But in 2008 he was arrested in India while attending a wedding, and extradited to the UK. The Hertfordshire case was dropped, on the grounds the money had been repaid and Somaia was in ill health.
Speaking after the verdict, Mirchandani said: “Securing a conviction against Mr Somaia will not undo the harm he has caused and the pain he has inflicted upon me and my family, but knowing that he has been brought to justice helps bring us some closure.”
Concluding the trial, Judge Richard Hone QC said: “This case has been exceptional for a number of reasons â€“ the sums involved, the extraordinary lifestyles, the famous names, the world of international businessmen and the outpouring of $23m simply relying on the concept of ‘My word is my bond’.”
Somaia is due to be sentenced this month after a medical report.