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Building Bridges to Nowhere: Some Reflections One Year After ‘The Handshake’

The question that has been boggling many Kenyans’ minds is: What exactly led to President Uhuru Kenyatta and Raila Odinga…to suddenly make peace? Was this a spontaneous reaction of two leaders who had suddenly been imbued with an undying desire to save their country, which was on the verge of ethnic and geographical fragmentation?

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Building Bridges to Nowhere: Some Reflections One Year After ‘The Handshake’
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A year ago this month, an unexpected political commotion jolted unsuspecting Kenyans who were still reeling from the effects of two presidential elections that had taken place in a space of just 79 days. These elections had openly split the country into ethnic fault lines that were now threatening to plunge the country into an abyss of anarchy and civil strife.

The 9 March 2018 “handshake” between President Uhuru Kenyatta and opposition leader Raila Odinga – pejoratively referred to as “the handcheque” by cynics and Raila’s former front line and hard core supporters, who see the détente between the president and his main rival as the ultimate betrayal – took place against a backdrop of four months of palpable ethnic rivalry and tension that had been simmering since the 26 October 2017 presidential poll, in which Uhuru had essentially run against himself.

When he was sworn in on 28 November 2017, it was evident that President Uhuru did not seem to savour his presidential victory: In the first general election of 8 August, half of the total registered voters of 19.6 million people who cast their votes had voted against him, even as claims of rigging by the opposition outfit, the National Super Alliance (NASA) were rife. On 1 September, the Supreme Court of Kenya overruled the Jubilee Party win, and sued for a fresh presidential election in 60 days – a decision that to date rankles and startles President Uhuru, said a Jubilee Party MP from Central Kenya.

“In a country where the judiciary has always been malleable and at the beck and call of the executive since 1963, it was unheard of that a court would dare rule against the president’s wish,” observed the MP. “It had never happened, hence Uhuru was secure in the knowledge that the court wouldn’t ever dream of ruling against him, just like it hadn’t in 2013. And because African presidents don’t lose elections, at least not through the courts, he did not expect to lose his.”

So, when the Supreme Court ruled in favour of a repeat election, Uhuru Kenyatta hit the roof and swore against the court’s judges, threatening to “revisit the issue”.

In the repeat October election, Uhuru Kenyatta garnered far less votes than in the August election. Seven and half million people supposedly voted, a figure the MP, now with the knowledge of hindsight, told me was cooked. A majority of Raila’s supporters had boycotted the October election and apathy, fatigue and a don’t-care attitude among Uhuru’s support base ensured that the October election was even less credible than the August one.

The question that has been boggling many Kenyans minds is: What exactly led to President Uhuru Kenyatta and Raila Odinga, two of the bitterest of political rivals, who had left nothing to chance – as one fought to keep the coveted seat of the presidency to himself, while the other hoped to snatch it from the incumbent – to suddenly make peace? Was this a spontaneous reaction of two leaders who had suddenly been imbued with desire to save their country, which was on the verge of ethnic and geographical fragmentation?

The politics of handshakes is not exactly a new phenomenon in Kenya, so this was not a first. Ten years ago, almost to the month, on 28 February 2008, President Mwai Kibaki and his chief political nemesis, Raila Odinga, shook hands on the steps of Harambee House to the great relief of many Kenyans. The 2008 handshake had been occasioned by a hotly disputed presidential vote between Kibaki and Raila, which had driven the country on the precipice of ethnic warfare that had flared in the Rift Valley and in several other parts of the country.

The question that has been boggling many Kenyans minds is: What exactly led to President Uhuru Kenyatta and Raila Odinga…to suddenly make peace? Was this a spontaneous reaction of two leaders who had suddenly been imbued with an undying desire to save their country, which was on the verge of ethnic and geographical fragmentation?

The truce between Kibaki and Raila was a negotiated peace settlement: both politicians had been encouraged by the chief negotiator, Kofi Annan, and his team to form their own respective negotiators, who then for weeks discussed the modalities of how they would accommodate each other in a government of national unity. And so it came to pass that a government of national unity with Raila Odinga as a non-executive Prime Minister was formed. The process was transparent and Kenyans were kept abreast of the proceeding by the media.

The economic boycott and demands for secession

Fast forward to March 2018. The handshake between President Uhuru and Raila is mired in mystery and subterfuge. Days after the handshake on the steps of Harambee House, a working committee was formed on 24 March to cement the newly found rapprochement, thenceforth referred to as the Building the Bridges to Unity Advisory Task Force, also known as the Building Bridges Initiative (BBI).

The alleged behind-the-scenes secret talks, political manoeuvres and familial visits soon after Uhuru assumed his second term are as intriguing and interesting as they are revealing. Through wide-ranging interviews conducted through President Uhuru Kenyatta’s intermediaries, Raila’s close confidantes, Deputy President William Ruto’s associates and bosom buddies, Central Kenya and North Rift Jubilee MPs and through my own investigations, I culled an array of information that suggested a presidency in crisis, trapped in a paradoxical pyrrhic victory and a withering state. Then there was a defeated opposition leader who for the very first time in his political career was caught between the devil and the deep blue sea, and was faced with the devil’s alternative of either quitting politics altogether or re-engineering his ebbing political career. Add to this scenario a scheming deputy president who had already trained his guns on 2022 no sooner had his Jubilee Party won the presidential elections.

Looking back to one year ago, it is as if the clock was ticking and time was not on all of the three protagonists’ side. As one of Raila’s aides said to me: “Raila had come to the late realisation that he would never win the presidential elections as long as the Kikuyus were counting the votes. True, he would force them to spend billions of shillings, but that was just about it. It was about time he recalibrated his political career if he intended to keep it going.”

“Nothing had scared President Uhuru like the NASA’s economic boycott programme and secession talk,” confided one of the president’s friends. Like the Americans would say, Uhuru and his family were “scared shitless” of these two ideas. After opting out of the 26 October fresh presidential election, Raila and his team had come up with a raft of options that were meant to force President Uhuru and his Jubilee Party mandarins to listen to NASA. NASA supporters’ boycott of products made by certain companies associated with the Jubilee Party and resurgent demands for secession by some opposition politicians, particularly at the coast, threatened to tear the country apart – literally.

The most potentially lethal of NASA’s projects was the economic boycott, in which Kenyans of oppositional goodwill were asked to keep away from the Kenyatta family’s businesses and any companies that were either associated with them, or had, in one way or another, presumed to have abetted President Uhuru’s contested win. So, in addition to the family’s large business empire, Safaricom, the largest mobile network company in this part of the world, was on NASA’s radar of companies whose products were to be avoided. The second tier to the economic boycott was a proposal, through the creation of county assemblies in opposition strongholds, for people to decide, whether indeed they wanted to be part of Kenya.

The family business

The biggest Kenyatta family business visible on a daily basis in Kenyan homes is the Brookside Dairy Company. Plutocrats, as well as mainly urban proletariats, use one or more of the several milk products sold under the Brookside label.

Milky tea is consumed widely in Kenyan homes. Drinking a cup of tea is a habit so ingrained in Kenyans’ psyche that it has become second nature for Kenyan families to round off their supper with a steaming cup of tea. It is a habit they picked from the British colonialists, who encouraged tea growing as a cash crop.

With the onset of the boycott, Brookside, a market leader in processed milk, suddenly suffered a steep slump, so much so that Christina Pratt, President Uhuru’s sister, took to visiting various supermarkets, especially in Nairobi, to gauge the daily sales of Brookside products. (I confirmed this in December 2017 when I also did my own survey to measure to what extent the boycott was biting. The French consortium, Danone, had in 2014 acquired a 40 per cent stake in the milk conglomerate through the holding company Brookside Africa Holding Ltd, while Abraaj Group, the Dubai-based private equity firm, had staked a 10 per cent ownership in 2009. Danone is supposed to push Brookside products abroad, hence globalising the Kenyatta family’s business and leveraging its merchandise in a world of cut-throat competition.

With the onset of the boycott, Brookside, a market leader in processed milk, suddenly suffered a steep slump, so much so that Christina Pratt, President Uhuru’s sister, took to visiting various supermarkets, especially in Nairobi, to gauge the daily sales of Brookside products.

“The boycott was a dangerously crippling idea as a political tool, because the Kenyattas’ best-known flagship was going down the drain, right in front of their eyes…something had to be done fast…and done very fast,” said my friend, who works for the Brookside Dairy Company in Ruiru, off the Thika Superhighway. “Let us cut to the chase,” added my friend. “Uhuru Kenyatta is not concerned with the Kenyan nation’s legacy but with the Kenyatta family’s legacy.”

“The family business had to be protected by all means, by any means necessary,” said a Central Kenya MP who is close to President Uhuru. “Instructions from the matriarch, Mama Ngina, to Uhuru and family was that the cardinal rule was to protect the business and not politics per se. In other words, use politics to shield your businesses from external interference or collapse.”

The other issue that terribly worried President Uhuru and his close-knit political cabal was the talk about secession. “It became a terrifying waking nightmare to them, that a section of Kenyans would even contemplate the thought of slicing off the country because of political dissatisfaction,” said the MP. “These were a different type of angry Kenyans, separate from the Kenyans who even when their votes had been stolen in past elections never contemplated going their own away.”

Apart from the Kenyatta family’s business agonies, Safaricom, which NASA and its opposition supporters countrywide had accused of providing servers to the Independent Electoral and Boundaries Commission (IEBC) – servers the election commission to date has refused to open for public scrutiny – was seriously looking to the possible end of its close to two decades of mobile telephony monopoly. Kenyans allied to NASA were furiously opting for Safaricom’s competitor, Airtel. “The Safaricom management team was wailing in its boardroom, wondering what to do, as scores of Kenyans daily migrated to Airtel,” said a Safaricom senior manager to me. “The team called Raila and asked him why he was hell-bent on collapsing the company. Similarly, the team was also piqued by President Uhuru because he seemed impotent in the wake of the economic boycott. They were peeing in their pants, in a manner of speaking.”

The economic boycott, the threats of secession, a withering state, and pressure from Western governments became the push factors that drove the Kenyatta family to initiate a political rapprochement with Raila Odinga, confided an aide to President Uhuru.

The people’s president

Raila, on the other hand, was also undergoing his own political catharsis. “Wherever he went, the people become cantankerous and difficult to calm down: “Hapana…hapana…kula Bible kwanza, kabla hujaongea na sisi” (Swear by the Bible first before talking to us), roared the crowds. Critically, his political career was on the cards, observed one of his aides recently in an interview. “The masses had run ahead of Raila and they were demanding he become their president, failure to which they would abandon him.”

The economic boycott, the threats of secession, a withering state, and pressure from Western governments became the push factors that drove the Kenyatta family to initiate a political rapprochement with Raila Odinga, confided an aide to President Uhuru.

The NASA brigade had decreed that in the light of the contested presidential elections, Raila Odinga would be publicly sworn in as “the Peoples’ President”. He had postponed this once on Jamhuri (Independence) Day on 12 December 2017, and the backlash from his supporters was unmistakable. “If he postponed it again, they were going to have him for supper and that would have been the end of his illustrious political career,” reminisced one of Raila’s aides. “On 30 January 2018, a reluctant Raila was publicly sworn in at Uhuru Park as the Peoples’ President to great aplomb by the throngs of the masses who attended the rally.”

Western countries’ ambassadors and like-minded envoys told Raila point black: “You’ve been appointed the peoples’ president, but know that you’re all alone.” They reminded him of his political stature as one of the country’s leading politicians, his international reputation, and his input of many years in national and global political arenas. They asked him whether he was willing to see all that credibility washed away because of his recalcitrant stance. “Separately, therefore, Raila Odinga was also having his moments of exorcising his demons and coming to terms with the political realities of the day,” observed the aide.

Although the same Western envoys did not rebuke President Uhuru, they nonetheless asked him to map out ways of accommodating and working with Raila. “It was a veiled threat because they let him know that if he failed to do so, they would institute economic sanctions on his regime and make his life as a president keen on a legacy difficult,” confided a foreign diplomat friend who works for the European Union (EU).

Raila Amolo Odinga has paid a huge price for dabbling in national politics: He has been detained for close to a decade by the state. In the 2007 general elections, he saw his presidential victory snatched. In recent times, he has also experienced personal traumas: His first-born son Fidel died in 2015; his daughter Rosemary is recovering from a debilitating sickness (both of these two calamitous situations have been energy-sapping, friends of Raila tell me); and real threats had been made on his life. At 75, Raila is also no longer the youthful adrenaline-driven politician who could pack public rallies and indoor meetings into 18 hours and still spare four hours of just enough sleep to see him through the next day’s political onslaught.

Although the same Western envoys did not rebuke President Uhuru, they nonetheless asked him to map out ways of accommodating and working with Raila. “It was a veiled threat because they let him know that if he failed to do so, they would institute economic sanctions on his regime and make his life as a president keen on a legacy difficult,” confided a foreign diplomat friend who works for the European Union (EU).

Amid all this, his dutiful wife, Ida, has borne the brunt of his oppositional politics. While Raila politicked, she held the family together, ensuring that politics did not come in the way of the family’s private lives. “But the 2017 presidential elections, his swearing-in ceremony on January 30, and threats on his life had tested her great patience and worn her down,” said a friend close to the Odingas.

Impeccable political folklore has it that it was the Kenyattas who approached the Odinga family for a candid sit-down, said a Central Kenya MP. “With the ongoing threats to their businesses, a wobbly economy and a hollow electoral win, the Kenyattas were in a bad place: they had to reach out to Raila, but only through Ida,” said a source who was privy to the on- goings.

“Before the actual handshake on the material day, President Uhuru and Raila had met for several hours, haggling and going over issues of mutual convergence and interest,” revealed an MP from Central Kenya. BBI has nine points that President Uhuru and Raila agreed to work on. They are: ethnic antagonism and competition, lack of a national ethos, inclusivity, devolution, divisive elections, safety and security, corruption, shared prosperity, responsibilities and rights.

“I remember President Uhuru telling his deputy William Ruto: ‘We’ve to bring on board Raila Odinga, if we don’t, we’ll not be able to govern this country,’” said my source, who is known to both of them. “The only thing that Ruto was not told was when and where the handshake would take place.”

Ruto had run the country between 2013 and 2017, quipped the Central Kenya MP, “and it had been a disastrous affair. Yet both Uhuru and Ruto share blame for running the country down.”

BBI and the Kikuyu-Kalenjin rift

In 2014, a year after Uhuru and Ruto formed the Jubilee government, President Uhuru summoned all Kikuyu MPs to State House and told them that if they needed anything, they should go to the Deputy President. “We must ensure our people trust the DP…you know our people are conservative,” the President is purported to have told the MPs. The two had campaigned on a platform of being the victims of the International Criminal Court (ICC) and therefore had been “joined at the hip” as they canvassed for votes from Kenyans who had been ethnically and emotionally whipped to vote for them.

“In that meeting, Esther Murugi (former Nyeri Town MP) disagreed with the president,” recounted the MP. “‘In Nyeri, we’ve had IDPs [internally displaced people] at Kinoru. Mwai Kibaki [Kenya’s third President] ruled with these people [the Kalenjin] because he feared them,’” said Murugi to President Uhuru. “This is simply untenable.” Three years down the line, Esther Murugi was one of the first Central Kenya MPs to fail to recapture her seat because she did not get the Jubilee nomination.

“Ruto is very vindictive,” the Central Kenya MP reminded me. “He doesn’t forgive: all those people he suspects of having implicated him in the ICC case must be punished.” The MP told me that some of the MPs who failed to bag the Jubilee Party nomination tickets and eventually “lost” in 2017 elections are suspected by Ruto’s people of helping to compile part of the report that incriminated him and sent him to the ICC.

2014 was not the last time that President Uhuru summoned MPs to State House. In August 2017, he met with newly elected Jubilee Party MPs. “He was soaking drunk and he lectured us, as a headmaster would his pupils,” said a first-time MP from North Rift. “Rookie MPs who had never been to State House were excited to be called for the breakfast meeting. But when they were lectured by a drunk president, who was allegedly banging tables, cursing and swearing, they were dumbfounded.”

“Ruto is very vindictive,” the Central Kenya MP reminded me. “He doesn’t forgive: all those people he suspects of having implicated him in the ICC case must be punished.” The MP told me that some of the MPs who failed to bag the Jubilee Party nomination tickets and eventually “lost” in 2017 elections are suspected by Ruto’s people of helping to compile part of the report that incriminated him and sent him to the ICC.

“Don’t joke with a president who’s not seeking a second term,” President Uhuru is reported to have told the MPs. “I dare anyone who will not do as I say to walk through that door,” he hollered to the now cowed MPs. “Why he was angry, we don’t know. When he finished ranting, the MPs stood up and instead of heading to the laid out breakfast tables, they hastily walked to their waiting cars, and drove off in a huff.”

As fate would it, a few days after that tense meeting, the Supreme Court nullified the election on September 1. “Uhuru once again quickly summoned us to State House: ‘You’ve seen what the court has done to our win’” said a now mellow and pliant president. ‘We need to put our heads together and strategise on how to win the presidential seat again.’ He was now speaking to us in collegial terms – ‘our win’ – the insults and threats had gone, he wanted our help so badly…that’s our President Uhuru.”

“A year later, BBI has not communicated the handshake properly to Kenyans,” said my Central Kenya MP friend. “There hasn’t been enough awareness about its real and true agenda and intentions.”

Unlike the handshake of 2008, which was witnessed by, among others, Tanzanian leaders, Benjamin William Mkapa and Jakaya Mrisho Kikwete, and the Ghanaian statesman Kofi Annan, the 2018 handshake did little to reduce mistrust or to help build confidence and lend credence to the rapprochement. On the contrary, the 2018 handshake is shrouded in suspicion; many Kenyans believe it has an insidious agenda and most are hard put to explain what it means.

One of the very first things President Uhuru and Raila, now under the auspices of BBI, had planned to do was to visit Central Kenya, as the first entry point of selling the BBI agenda, said the Central Kenya MP. “It was a natural and obvious consequence that BBI seeks to build trust and confidence among these two warring communities, but the visit has remained on the cards, postponed several times.” The MP said Central Kenya has not been in the mood to welcome President Uhuru Kenyatta. “Right now, they don’t feel him, they feel let down by a leader who seem impervious to their economic tribulations. This is what the intelligence reports relayed to the president have been saying.”

But, said the MP, this could all be hot air: “Right now, it’s true they are angry and bitter with muthamaki, so, to project their anger they become emotional and end up saying irrational things like, ‘We’ll vote for William Ruto.’ Kikuyus are the most ethnocentric community in Kenya, and all this bottled-up anger melts on the D-Day [election day]. When they say they’ll vote for Ruto, they mean they’ll vote for him from their houses. No Kikuyu will troop to the ballot booth to line up and vote for a non-Kikuyu presidential candidate – Ruto included.”

Paul Mwangi, one of the joint secretaries (the other is Martin Kimani) to BBI, disputes the assertion that there has been a planned Central Kenya visit from the two leaders that has failed to materialise. “It is not true that the two leaders have been planning to visit Central Kenya. Remember BBI has been holding town hall meetings across the country and it wouldn’t be a great idea to start the visits. For two reasons: one, fear of raising political temperatures and two, fear of misinterpretation of BBI’s work by some MPs, who would want to hijack the BBI’s agenda for their own gain.”

“A year later, BBI has not communicated the handshake properly to Kenyans,” said my Central Kenya MP friend. “There hasn’t been enough awareness about its real and true agenda and intentions.”

Mwangi said BBI had already conducted 18 town hall meetings. “There 29 more to go, it is obvious we’ll not beat the stipulated one year deadline. We’re going to ask for more time from the principals.”

Even with less than half of the counties visited, the emerging theme in these meetings has been – punda amechoka…punguza mzigo (The donkey is overloaded and therefore fatigued…let’s lessen its weight). That is the literal translation. The interpretation is that the voter feels burdened and therefore fatigued by the seemingly overwhelming extra political seats created by the new constitution promulgated in August 2010.

With a ballooning wage bill, and mounting domestic and external debts that have apparently overwhelmed the government, the state has sometimes inadvertently been giving the impression that it cannot deliver development and services to the people because it is having to spend a lot of money paying political leaders.

Be that as it may, “BBI is nothing but an entrenched political cabal’s way of controlling national politics and state power so that they remain with the people who have always controlled the two. But more importantly, it is the cabal’s way of ensuring that state power does not land in the ‘wrong hands’’, said a Jubilee MP, who is a friend to both President Uhuru and his deputy. “The Kenyatta family would like to have a political stranglehold on Kenya, the way the Bongo family in Gabon has done.” (Ali Bongo, who has ruled Gabon since 2009, took over from his father, Omar Bongo, who was president for 42 uninterrupted years.)

“BBI’s town hall meetings are supposed to culminate in a referendum and this is where the catch is – it’ll not be by popular vote, but by delegates voting by acclamation,” opined the Jubilee MP. “All these supposed town hall meetings are a ruse: BBI knows what it wants, how it wants it…these meetings are dress rehearsals that are supposed to dupe the people to believe that their voices matter. Carefully selected delegates from 24 counties will be assembled at the Bomas of Kenya for a convention in which they will all unanimously agree to pass the tabled resolutions. That’s how it shall come to be.”

Yet, in a carefully worded rejoinder, Mwangi retorted to the contrary: “BBI has no position on whether or not there’ll be a referendum, that’s a matter that will be dependent on the solutions that BBI will recommend to the principals and where the holding of the referendum will take place will be part of those resolutions.”

The referendum is a must, my sources from Raila’s quarters said to me matter-of-factly. “Raila has indicated there’ll be a referendum this year, it must happen, if it could happen before the population census, the better and he is not bluffing…if it doesn’t take place, he walks away…it is a very serious matter to him.” (The Kenya population census is slated for August this year.)

“We welcome the referendum,” said a North Rift Jubilee MP and one of the DP’s close associates. “We’re not afraid of it. We are going to frame the question differently and better and we’ll be asking Kenyans – kama kweli punda amechoka, (if truly the people are overwhelmed, hence, the demand for a reduction of the constitutional stipulated seats), why then expand the executive? This not our first referendum to engage in…we have been there before and we know how to play the game.”

The Ruto factor

The MP observed that the machinations against Ruto by the so-called “Kiambu mafia” will not work. “Ruto is a hardened and seasoned politician, he has passed through many political tribulations and overcome them. Even this one, he’s going to overcome it.”

The MP pointed out to me that during the August 2010 referendum on the new constitution, in which the Greens supported the new constitution, while the Reds opposed it (with Ruto in the Red corner), “Ruto, even without having money to wage a proper campaign, still gave his antagonists a run for their money.”

Recently, William Ruto’s think tank has advised him to travel abroad and seduce Western countries’ audiences. At a Chatham House lecture on 8 February this year, he supposedly talked tough and even alluded to Raila as a professional perennial presidential loser. These presidential losers are the people who cause trouble in Africa, he is said to have told the audience. After the Chatham House engagement, on 12 February, he dropped by at the BBC’s London offices for the first of his planned media charm offensives – an interview with BBC Hard Talk host Stephen Sackur. Sackur was typically blunt and probing, even suggesting that Ruto was known to be among Kenya’s most corrupt people. The charm offensive obviously failed as Ruto struggled to make his case.

But BBI is not the only juggernaut the DP will have to contend with. “Ruto rigged many of the Central and Mount Kenya Jubilee Party MPs that he felt were not on his side, or would be difficult to control, or influence,” said the MP. “He ensured all loyal MPs from his side were handed the certificates easily. That was not the arrangement he had with Uhuru when he was tasked to take charge of the party nomination affairs after the fiasco of the first countrywide nominations trials.”

The MP said that all the former MPs who lost their seats and who are still smarting from their loss loathe Ruto, and are just waiting for the opportune time to strike back. “Yes, they also rail against President Uhuru privately; ‘the man has never been in control of anything.’ They, therefore, have sworn to not support any venture by Ruto. They are adamant they won’t stop saying Ruto rigged them out.”

Among the most hurt of the Mount Kenya politicians who accuse Ruto of rigging them out are: Cecily Mbarire (who ran for the Embu governor seat); Kabando wa Kabando (former MP, Mukurwe-ini in Nyeri County); Martha Karua (who ran for the Kirinyaga County governor’s seat); Mutahi Kagwe (who ran for the senator’s seat in Nyeri County); Ndung’u Gethenji (the former MP for Tetu, Nyeri County); Peter Kenneth (who ran for the Nairobi County governor’s seat); Peter Munya (who ran for the Meru County governor’s seat); Rachel Shebesh (who ran for Women Representative in Nairobi County); and William Kabogo (who ran for the Kiambu County governor’s seat). “Kagwe, Kenneth and Munya are still so angry with Ruto, they won’t even talk to him,” said the MP.

Some of these politicians ran as independents after forming the Kenya Association of Independent Candidates (KAIC) led by Kabogo and deputised by Gethenji. “These are the people who will form the bulwark of opposition to Ruto in the Mount Kenya region. Take it from me, the Jubilee Party, as currently constituted, will not be there in 2022,” said the MP. Hardly surprising in a country where political parties are vehicles for convenience and conveyance and where new parties are formed during every election season.

The Mount Kenya MPs are not only privately accusing President Uhuru of political inaction, “they are also nervous and suspicious of him,” said the MP. “They know President Uhuru, on his own, cannot out-think both Raila and Ruto. They therefore cannot hitch their wagon in his current party. They are also scared of voters’ backlash: it cannot be that the country must be ruled by two communities, passing the presidential race baton to each other, back and forth…that at some point must stop, because it’s unacceptable by all standards.”

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Mr Kahura is a senior writer for The Elephant.

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Black Votes Don’t Matter: The Shrinking Civic Space of African Immigrants in the US

It is a difficult time to be an immigrant in the US. For those of African descent, theirs is a rare combination of challenges, not only in becoming part of a new nation but also in carrying the baggage that comes with being black in America.

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Black Votes Don’t Matter: The Shrinking Civic Space of African Immigrants in the US
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The United States of America has excelled in projecting an extraordinary image of itself as a free nation with a thriving democracy, where anyone can come and work their way towards a better life through civic participation. However, what the past few years in particular have peeled away betrays a somewhat different truth: that voting in the United States is hard and getting steadily more so. And there’s one group of people who face a particular set of difficulties when seeking to cast their ballot: African immigrants.

Some historic context is needed regarding voting issues within the US. First and foremost, there is a historic precedent of voter suppression in the US that is unequaled within the modern Western world. Much of the targeting of such efforts has directly affected African Americans and people of colour. After slavery was abolished, states would go to incredible lengths to suppress the black vote, including implementing taxes on voting, forcing black people to produce extraneous forms of personal and family identification and making would-be black voters pass vaguely worded and lengthy “literacy tests” in order to cast their ballot. These systems, a part of the infamous Jim Crow laws, were struck down as illegal in 1965 when the country passed the Voting Rights Act.

In the years that followed, those who sought to seek the vote sought out ways to circumvent the law and keep the voter turnout low. Since the latter half of the 20th century, high voter turnout translated to a more liberal result. Take, for example, that a Republican presidential candidate has won the popular vote once since 1988 (George W. Bush in 2004). In the cases of the victories of Donald J. Trump in 2016 and George W. Bush, they skated to victory through the electoral college; a system that traces its roots to suppress the popular vote.

When looking at US politics, it isn’t as much a matter of high voter turnout as it is who comprise the voters that are showing up to vote. The most telling demographic, the group with the highest disparity of aligning with Democrats over Republicans, is African Americans. Hillary Clinton carried the black vote by an 80 point margin – 88 per cent to 8 per cent over Trump in the 2016 election. This margin, coupled with the United States becoming more, not less, diverse has left those seeking to suppress the vote scrambling for answers.

In 2013, efforts to suppress voters gained a major boost when the US Supreme Court overturned section 4(b) of the Voting Rights Act, which outlined that states and districts that had previously been involved in voting discrimination needed pre-clearance of the validity of their electoral processes. The conservative judges ruled this as unconstitutional, that the section “punished” states for past mistakes, not for possible future successes. Justice Ruth Bader Ginsberg dissented strongly, stating that “throwing out preclearance when it has worked and is continuing to work to stop discriminatory changes is like throwing away your umbrella in a rainstorm because you are not getting wet.”

The Voting Rights Act had been brought before court in the wake of a series of issues across the US, primarily having to do with controversial voting ID laws, reports of voter suppression and other forms of disenfranchisement. In a theme that runs across America’s election process, the black community was disproportionately affected.

This brings the issue to focus on African immigrants in the United States. The issue of immigration in the United States has currently brought the federal government to a shutdown for over a month. There is constant rhetoric from the Trump administration targeting illegal immigrants as a major obstacle to the security and economic future of the United States. The issues of building a border wall with Mexico and continuing to provide guaranteed safeties (such as the Deferred Action for Childhood Arrivals programme, which offers protections to the children of illegal immigrants into the US) are being used as bargaining chips at the government level.

A difficult time

It is a difficult time to be an immigrant in the US. For those of African descent, theirs is a rare combination of challenges, not only in becoming part of a new nation, but also in carrying the baggage that comes with being black in America.

African immigrants in the US are a small but rapidly rising group. The increase has been marked since 1970, especially amongst sub-Saharan Africans. According to the Pew Research Center, the number of African-born individuals heading to the US increased nearly 250 per cent between 2000 and 2015, from 881,000 up to 2,060,000. Africans are also the fastest growing demographic among black immigrants, increasing by 137 per cent between 2000 and 2013.

It is a difficult time to be an immigrant in the US. For those of African descent, theirs is a rare combination of challenges, not only in becoming part of a new nation, but also in carrying the baggage that comes with being black in America.

In the US, a major aspect of any voting rights issue is where in the US you’re living. Different states hold different standards, different regulations and varying requirements. When examining how voting standards impacts African immigrants, there needs to be a brief examination of where African immigrants live.

The five states with the highest African immigrant population are California, New York, Texas, Maryland and Virginia. Cities such as Atlanta, Georgia and Minneapolis also have high numbers of such migrants. This is where context becomes even more important; California and New York are known as more immigrant-friendly destinations, and their major metropolitan areas are regarded as “sanctuary cities” for illegal immigrants. New York and Minnesota don’t require a photo ID whereas California may require one for a first-time voter (newly-naturalised US citizens are always first-time voters). Maryland holds a similar policy.

Texas, Virginia and Georgia, on the other hand, are a different matter entirely. Virginia requires a valid photo ID in order for an individual to vote in person. Texas and Georgia are both mired in controversy over the stringent regulations put in place regarding the standards for voter IDs. The state of Texas is currently mired in litigation over the voter ID laws, with opponents arguing that it disproportionately impacts minorities.

In Georgia, where over 70,000 African immigrants reside in the Atlanta metropolitan area, the man who was presiding as the Secretary of State (the office which controls the conducting of elections, a possible conflict of interest) won narrowly and controversially over Stacey Abrams, who would have been the first black woman elected to be a state governor in the US. Abrams repeatedly made claims that there was voter interference, particularly amongst black precincts, where electronic voting was in disarray and reports of voter suppression were rampant. These claims had much of their basis in and around Atlanta, Georgia.

Why does voter ID matter and how does it affect Africans living in America? For starters, the path to US citizenship (which is needed to vote in America) is extremely arduous, long and difficult. The paperwork hoops to jump through are staggering. On average, it takes an immigrant a minimum of five years of continuous residency to become a naturalised US citizen. In cases that need further legal counsel, it can take even longer as the legal side of American immigration courts have become steadily more choked and congested in the new millennium.

Why does voter ID matter and how does it affect Africans living in America? For starters, the path to US citizenship (which is needed to vote in America) is extremely arduous, long and difficult.

For immigrants, the issues surrounding voter ID can often be much murkier. For instance, immigrants can gain driver’s licenses within the United States, which is one of the key forms of identification needed in states with more stringent regulations. This doesn’t mean that immigrants have the appropriate information explained to them regarding the IDs being obtained. The African Advocacy Network of California notes that although driver’s licenses are applied for successfully by immigrants who aren’t naturalised, the fact that they are still unable to vote due to their status isn’t explained to them. This can lead to immigrants attempting to vote, unknowingly engaging in an illegal act of fraud. The penalties for such fraud in the US are harsh. Both illegal and legal immigrants can face deportation if found to be involved in fraudulent voting. Cases of actual voter fraud involving illegal immigrants are incredibly rare, but that doesn’t stop Trump from repeatedly claiming that Hillary Clinton won the popular vote because of millions of “illegals” somehow managing to cast ballots.

Illegal immigrants in Trump’s America

The Obama administration was noted for its strict approach to illegal immigration, deporting hundreds of thousands between 2009 and 2017. That same administration, however, did focus on expanding a programme called the H1-B visa, which encouraged workers from outside of the United States to enter the country to work. Many prominent corporations, including Amazon, Google and Microsoft, heavily leaned on the programme as it eased the transition for professionals to gain a foothold in the US workforce. In addition, the H1-B programme made the path to a Green Card visa (an initial step towards US citizenship) markedly smoother, encouraging immigrants to engage in the process of becoming a citizen.

The Trump administration, on the other hand, has taken a significantly different approach. The current White House passed an executive order titled “Buy American, Hire American” that directly encourages American companies to hire only the most skilled workers from outside of the United States. This will have a long-term impact on the number of H-1B applicants who can head down the path of gaining citizenship.

The Obama administration had an unfortunate track record of harshness regarding immigration, including reopening and examining case files of naturalised citizens (immigrants who gained their citizenship in the US). The Trump White House has, of course, seized on this idea and expanded it. Under this administration, the U.S. Citizenship and Immigration Service (U.S.C.I.S.) has created a new task force to look into cases and possibly “denaturalise” citizens for often muddied reasons, such as making a clerical mistake on a form. In essence, this leaves millions of naturalised United States citizens’ status at the discretion of officials appointed under the Trump administration, one noted for its blatantly anti-immigrant rhetoric.

A prominent path to Green Card visas for African immigrants is the Diversity Lottery programme, which grants visas to citizens from all over the world. Given the administration’s track record, it comes as little surprise that the White House has looked repeatedly into cutting the programme entirely. As egregious as this is, perhaps the repeated ransom holding of the so-called “dreamers” (children of illegal immigrants born in the United States and granted legal protections) is even more insidious. Trump has made a repeated talking point of ending protections for the dreamers, even going so far as to offer continued protection as a bargaining chip for $5.7 billion of funding for a border wall in January of this year.

The Obama administration had an unfortunate track record of harshness regarding immigration, including reopening and examining case files of naturalised citizens (immigrants who gained their citizenship in the US). The Trump White House has, of course, seized on this idea and expanded it.

So how does this apply to African immigrants, specifically? The numbers indicate that immigrants from sub-Saharan Africa are the fastest growing group, and that the vast majority of this immigration has occurred after 1960. This translates into African immigrants having less of an established civic network than other immigrant groups in the US.

Less civic engagement

Less network means less community engagement and less protection for Africans now calling the US their home. This, in turn, translates into issues surrounding social integration facing Africans in America. Those in questionable status are likely to eschew anything to do with getting on the record, including engaging in civic discourse. One example saw the city of San Francisco engaging with members of the African immigrant community to get involved with the local school board elections, despite many holding illegal immigrant status. Illegal immigrants worry about what will happen to their information and whether it will end up in the hands of Immigration and Customs Enforcement (ICE).

This is compounded by the constant shifting and swirling of regulations surrounding immigration within the US. Frankly put, in America, thing currently seem extremely uncertain. Those who would have gained the path to citizenship by being granted immigration visas are suddenly on the outside looking in. Immigrants from Libya, Sudan and Somalia (the three African nations affected under the Trump administration’s travel ban targeting Muslim-majority nations) are suddenly unsure of their status.

Noticeably, despite all of his talk of walls and increased military presence, Trump has not issued a travel ban to a Latin American country. The current administration is seemingly preoccupied with all things immigration, how to stop it, how to grandstand from it, how to flex political muscle by stopping it. In fact, in 2017, despite overall numbers of deportations falling, ICE deported a record number of African immigrants, more than double of the total from 2016. There were reported instances of poor treatment and abuse of deportees by ICE agents. While the numbers are comparatively small, increases in deportation can push African immigrant communities even farther outside of the democratic process. What was the number one country for African immigrant deportations from the US? Somalia.

Less network means less community engagement and less protection for Africans now calling the US their home. This, in turn, translates into issues surrounding social integration facing Africans in America. Those in questionable status are likely to eschew anything to do with getting on the record, including engaging in civic discourse.

Ilhan Omar, herself a Somali immigrant to the US, is now a first-term Congresswoman from Minneapolis, Minnesota. Her election is an indication of a potential future of US politics: that African immigrants can find a voice in politics, in part due to the rallying of their communities. She’s become an outspoken advocate for the Somali community in Minnesota while continually deriding the Trump administration’s anti-immigration policies.

Since her election, Omar has been a frequent target of scathing criticism from the conservative media and the Republican Party, who have even claimed that some of her pro-Palestine comments are blatantly anti-Semitic. While her election to the US Congress is historically significant (she’s the first African-born refugee in the history of the United States Congress), Omar is still just one member of Congress, one voice for an ever-growing population that seems ever-more targeted by executive orders of the Trump administration. Think of it this way: Omar wouldn’t be able to enter the US under the travel ban of Muslim majority countries passed down by Trump.

In essence, this message to newcomers to the US is: DON’T BOTHER GETTING ENGAGED BECAUSE THE CONSEQUENCES COULD OUTWEIGH YOUR EFFORTS. To those emigrating to the US from Africa, this messaging can appear even more insidious, as Adoubou Traore (who himself emigrated from the Ivory Coast), the director of the African Advocacy Network in San Francisco outlines: “Many Africans have inherent doubts about the legitimacy of elections, they’re a headache, their experience makes them not believe that their voices matter. When there is no guarantee that their information won’t be subject to being exploited, from their view: what’s the point?” There isn’t much that would prevent them from holding such views in America. It becomes a community question of why organise if doing so can only lead to more headache?

With issues surrounding racism against black people in America being dissected and moved further towards prominence in national dialogue, it would, at least on the surface, seem as though the communities of African Americans would provide a steady ally for Africans adjusting to life in America. Unfortunately, this is often not the case. There is a noted divide between Africans and black Americans, one that many coming to the US find difficult to bridge. Some of this gap is historically entrenched, some of it is due to the truly lacking breadth of coverage in the US education system regarding African history and culture. The awkward truth is: Africa as a topic in the US is regarded as a monolithic punch line to a bad joke, and is hardly rendered an after-thought in terms of democratic engagement.

In terms of vulnerability to less-than-democratic interests, there are myriad of groups in the United States that could use additional legal and outreach protections. Practically anywhere in America that can’t be categorised as white and suburban finds itself victim to voter suppression efforts. In the US context, the black community is systematically targeted the most.

Laws are seemingly rolled out in force yearly in dozens of states, implementing further restrictions and using scare tactics, lies and intimidation to influence local and national elections with a conservative slant.

The unavoidable truth is that Africans in the US find themselves at an ugly modern crossroads: the centuries of subversive efforts to reduce the so-called “urban” vote at a crossroads with the modern iteration of all-American xenophobic fervour. Though growing fast in population, the democratic influence has not kept stride.

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Death in Vienna: The Death of Erich Rebasso

In the last days of 2008, Erich Rebasso, an Austrian lawyer, sent a letter to the main Vienna headquarters of the Federal Criminal Police, the country’s top law enforcement agency. Its purpose was unusual — the father of four young children was blowing the whistle on himself.

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In the last days of 2008, Erich Rebasso, an Austrian lawyer, sent a letter to the main Vienna headquarters of the Federal Criminal Police, the country’s top law enforcement agency.

Its purpose was unusual — the father of four young children was blowing the whistle on himself.

“I deeply regret having been used for criminal purposes and I am willing to submit the matter to the required criminal review,” Rebasso’s five-page confession concluded.

But it had all come apart. Rebasso admitted he had been used to launder tens of millions of dollars. He explained that, for over a year, he had been accepting payments from Russian criminals and had sent the funds to other bank accounts at their instruction. Then 45, Rebasso specialized in advising Russian clients on how to do business in the West. He had an excellent reputation as a fast, reliable, and discreet partner, and he spoke Russian fluently.

As it turns out, those criminals were using companies that were part of the Troika Laundromat. The massive financial scheme revealed in OCCRP’s latest Laundromat investigation had been put together by Troika Dialog, then Russia’s largest private investment bank. Some of the accounts Rebasso wired to belonged to two of the system’s core offshore companies: Industrial Trade Corp. and Nixford Capital Corp.

Between December 2006 and February 2008, Rebasso used 150 individual transactions to send almost US$ 96 million to laundromat accounts at Ukio Bankas, a Lithuanian bank.

Many of the reasons specified for the transfers made little sense for a law firm. Along with trades involving “fruits and vegetables,” “consumer goods,” and “electronic goods,” Rebasso is even listed as buying “frozen herring” from companies with Ukio bank accounts. More likely, the description was a red herring aimed at Ukio’s compliance department.

Rebasso’s own Austrian bank accounts were held at Raiffeisenlandesbank Niederösterreich-Wien (RLB). Though the bank investigated his large transfers, it appeared to take no further action for two years — at which point it finally pressed him to stop.

The massive financial scheme revealed in OCCRP’s latest Laundromat investigation had been put together by Troika Dialog, then Russia’s largest private investment bank

Rebasso’s confessional letter had little effect. While police looked into the matter, it was two years later when they informed him that they had stopped the proceedings because they believed any potential crime had happened outside their jurisdiction and been committed by foreigners.

Two years after that, Rebasso was dead.

The Sheremetyevo Fraud

According to his statement, Rebasso’s involvement in the money laundering scheme began on a visit to Moscow in November 2006 where he was introduced to Viatcheslav Dremin, a Russian businessman. Dremin told him that he provided financial services to Russians who needed to transfer funds abroad. But the official system for sending money across borders was very bureaucratic, he said, and he needed to speed up the process. He wanted Rebasso to act as his trustee in Vienna to help him move the money faster.

The lawyer accepted. Soon, two Vienna bank accounts belonging to his Austrian company, Schulhof Investigation (later renamed Sostegno), began receiving large sums from companies Dremin represented, along with instructions on where to send them. In every instance, he received his directions via an anonymized email address.

Rebasso worked on behalf of three insurance companies registered in Dagestan, a troubled North Caucasus republic within the Russian Federation.

At least some of the money appeared to be of criminal origin.

One of the companies Dremin represented, National Insurance, was directed by Russian businessman Maxim Vedenin. In 2011, Vedenin would be sentenced to 19 years in prison for robbery and the murders of two prostitutes.

Prior to that, Vedenin’s company had received money from a widely-known fraudulent scheme involving fuel at Moscow’s Sheremetyevo airport that OCCRP uncovered in 2012.

Between 2003 and 2008, Moscow’s busiest airport bought fuel through a long chain of intermediaries that grossly inflated its cost. According to court documents, phantom companies earned at least $200 million in unnecessary markups in 2006 and 2007 alone. The Russian government lost more than 1 billion rubles ($40 million) in tax revenue from the scheme. The higher fuel costs also meant higher airplane ticket prices for the travelling public.

A portion of the money generated by the scheme was laundered through the Troika Laundromat. Vedenin’s company, National Insurance, received some of the proceeds, and then sent them on to Rebasso’s company.

The Austrian lawyer then sent the funds into the Troika Laundromat, using it as a money laundering system. Over the same period, between December 2006 and March 2007, he sent $19.4 million to the accounts of Nixford and Industrial Trade Corp. To justify the transfers to the bank, he provided false invoices indicating he had bought “consumer goods” from the Troika Laundromat companies, or was simply paying “for bills.”

All but one of Dremin’s companies have been dissolved, and he couldn’t be reached for comment.

Raiffeisen Looks In

Despite Rebasso’s efforts to mask his money transfers as legitimate trade deals, his own bank began to investigate the financial activity in the spring of 2007.

On March 15, Rebasso’s office received a letter from his bank’s legal department inquiring about a “sharp increase in transaction amounts” on one of his accounts. The bank wanted to know on whose behalf Rebasso was acting.

A few days later, Rebasso responded in a letter, explaining that he was handling “foreign payments” for three Russian insurance companies. He also provided their names, their information from the Russian commercial register, and evidence of his business relationship with them.

The bank appears to have been satisfied with Rebasso’s explanation, because afterward, his transfers continued.

(A representative of RLB said the bank could not comment on its clients and that it had complied with all anti-money-laundering obligations.)

A Last Client

In mid-2007, Rebasso’s statement to police says, Alfis Mirgunov, one of the Russian partners in his arrangement with Dremin, got in touch. Mirgunov planned to start his own financial enterprise and wanted Rebasso to open bank accounts in Austria on his behalf. Once again, the lawyer agreed.

He opened three new RLB accounts for his company, Schulhof, to handle the anticipated load. The accounts were denominated in U.S. dollars, euros, and Russian rubles and soon, more money started to pour in. Once again, Rebasso received his instructions from an anonymous e-mail address, this time identified only by a sequence of digits.

In mid-2007, Rebasso’s statement to police says, Alfis Mirgunov, one of the Russian partners in his arrangement with Dremin, got in touch. Mirgunov planned to start his own financial enterprise and wanted Rebasso to open bank accounts in Austria on his behalf. Once again, the lawyer agreed.

Over two months near the beginning of 2008, Rebasso wired $68.3 million in 106 individual transfers to a bank account owned by Vantrel Invest Ltd., a New Zealand–registered shelf company.

Vantrel doesn’t appear to be a Troika Laundromat company; rather it is an intermediary that sent millions on to the Laundromat. (Vantrel’s bank account was held at Ukio Bankas, where many Laundromat companies held their accounts.) Documents related to the transactions said they were to buy mobile phones, though this explanation is almost certainly another fiction.

In his confessional letter, Rebasso told the Austrian police that he stopped working for the Russians in 2008. It isn’t known how much money he took for his services.

“I ended this activity at the end of February,” he wrote. “Among other reasons, primarily because the scope overwhelmed my control options.”

His hesitation appeared to be only part of the truth.

In fact, that month, Rebasso’s Austrian bank, RLB, had had enough. His transactions had apparently triggered another serious review, and senior executives told Rebasso he would need his own banking license to continue such large transfers.

The Finlist Fraud

Though he had stopped working with his Russian partners, Rebasso’s troubles were just beginning. He appeared to have become an unwitting facilitator of a fraudulent investment scheme.

According to his letter, in June 2008, Rebasso started receiving emailed complaints from ordinary Russians who said their savings had been stolen.

Rebasso described the correspondents as “rather simple-minded, not very wealthy people who were baited with internet ads.”

Apparently, the victims of the scheme had been offered what appeared to be lucrative investment opportunities through a platform called Finlist Forex Found. Then, without Rebasso’s knowledge, they were instructed to send their money to the accounts of his Austrian company, Sostegno.

Rebasso said the Russian fraudsters provided the investors with fake documents bearing his forged signature (some of these were shared with him by the angry correspondents). When the money arrived in his accounts, Rebasso sent it on without being aware of its origins.

Now the victims were furious, demanding repayment of money he had already sent on to the Laundromat.

Rebasso said the Russian fraudsters provided the investors with fake documents bearing his forged signature (some of these were shared with him by the angry correspondents). When the money arrived in his accounts, Rebasso sent it on without being aware of its origins

Rebasso got in touch with Mirgunov and asked what was happening. The Russian told him he would fix the problem and reimburse anyone who had lost money. But he never did, and by the end of the year, Rebasso sent his letter to the Federal Criminal police.

The Beginning of the End

The police forwarded the case to the public prosecutor’s office in Vienna. Nothing appeared to happen. On Dec. 3, 2010, two years after his complaint, Rebasso was notified that police had ended their case. It had been dismissed because the public prosecutor decided the case was outside Austrian jurisdiction. “Foreign acts of foreigners,” the statement read.

Rebasso’s own story was nearing its end.

In late July 2012, as he walked from his office to his Mercedes SUV in an underground parking lot, he was ambushed by two men. His car was later found empty in a different location, and shortly after his disappearance, his family received a demand: The kidnappers wanted a 435,000–euro ransom. After no deal was reached, Rebasso’s body was found three weeks later in a forest near Vienna. Austrian authorities concluded that he had been suffocated, probably while he was taken into a headlock.

Soon afterward, two former Moscow police officers were arrested and charged in connection with the ransom demand — but not for Rebasso’s kidnapping and murder. They were sentenced to eight and nine years in prison, respectively.

It’s still unclear who ordered Rebasso’s murder and why, though media and police speculated that victims of the investment fraud had hired the officers to recover the money.

More than six years later, the exact circumstances of Rebasso’s death are still unclear.

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The Troika Laundromat: How Vast Offshore Network Moved Billions With Help From Major Russian Bank

The Laundromat wasn’t just a money laundering system. It was also a hidden investment vehicle, a slush fund, a tax evasion scheme, and much more.

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The Troika Laundromat: How Vast Offshore Network Moved Billions With Help From Major Russian Bank
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At first blush, Ruben Vardanyan and Armen Ustyan have nothing in common beyond their Armenian roots.

Vardanyan is a wealthy Russian banker who once led Troika Dialog, the country’s largest private investment bank. He’s spoken at the World Economic Forum in Davos and spent tens of millions of dollars on philanthropic projects in his native Armenia. Ustyan is a seasonal construction worker who shares a chilly apartment with his wife and parents in northern Armenia when he isn’t renovating flats in Moscow.

Ustyan’s name and a copy of his passport appear in the bank documents for an offshore shell company that played a role in Troika’s system. The company was one of at least 75 that formed the complex financial web, which functioned from 2006 to early 2013. Over that period, Troika enabled the flow of US$ 4.6 billion into the system and directed the flow of $4.8 billion out. Among the counterparties on these transactions were major Western banks such as Citigroup Inc., Raiffeisen, and Deutsche Bank. The dozens of companies in the system also generated $8.8 billion of internal transactions to obscure the origin of the cash.But Ustyan’s signatures on documents he says he’s never seen draw a direct line to Troika — and to a financial Laundromat that shuffled billions of dollars through offshore companies on behalf of the bank’s clients, many of whom were members of Russia’s elite. The system enabled people to channel money out of Russia, sidestep restrictions in place at the time, hide their assets abroad, and launder money. It also supplied cash to Russian President Vladimir Putin’s friends and powerful oligarchs, and enabled criminals to mask the illicit origins of their cash.

(Citigroup didn’t respond to a request for comment on this story; Raiffeisen declined to comment, citing client confidentiality; and Deutsche Bank said it had “limited access” to information about Troika client transactions and couldn’t comment on specific businesses for legal reasons.)

At the time, Vardanyan was Troika’s president, chief executive officer, and principal partner. He enjoyed a reputation as a Western-friendly representative of Russian capitalism, known for working to improve the country’s business environment and for co-founding the Moscow School of Management Skolko

As with the previous Laundromats, many of the large transactions were made on the back of fictitious trade deals. The bogus deals were invoiced variously as “goods,” “food goods,” “metal goods,” “bills,” and “auto parts.” All the invoices included in the leak were signed by proxies and sent from Troika.ru email addresses. Meanwhile, employees at Troika were setting up the opaque financial system — dubbed here the Troika Laundromat because of its resemblance to previous money laundering schemes uncovered by OCCRP.

This portrait of the operation emerges from a trove of leaked banking transactions and other documents obtained by OCCRP and the Lithuanian news site 15min.lt, and shared with 21 media partners.

As a whole, the data set includes over 1.3 million banking transactions from 238,000 companies and people, as well as thousands of emails, contracts, and company registration forms. This analysis of Troika’s network is based on a subset of the data.

In an interview, Vardanyan said his bank did nothing wrong and that it acted as other investment banks did at the time. He stressed that he couldn’t have known about every deal his enormous bank facilitated for its clients. Reporters found no evidence that he was ever investigated or accused of any wrongdoing by authorities. His signature was found on only one document in the entire scheme, in which he gives a loan to a Troika Laundromat company.

Vardanyan described the system as a private wealth management service.

Referring to the constellation of offshore companies that comprised the Laundromat, he said: “Those are technical service companies of Troika Dialog clients, among them, mine.”

“It could be called a ‘multi-family office,’” he said. “A similar practice still exists at foreign banks. Most of their clients work through international companies. I repeat: We always acted according to the rules of the world financial market of that time … Obviously, rules change, but measuring a market in the past by today’s laws is like applying modern compliance standards to the time of the Great Depression. You’ll agree that this distorts the true situation.”

Asked about the fictitious trade deals, Vardanyan said Troika Dialog’s revenue topped 2 trillion rubles from 2006–2010 ($63–85 billion, depending on currency fluctuations) and that he “couldn’t possibly know about all the deals in a company of this size.”

Though such practices were considered business as usual in Russia at the time, specialists note that systems like the Troika Laundromat can have serious repercussions.

The schemes stunt national economic development, undermine human security, and diminish the quality of life for people left behind, said Louise Shelley, director and founder of George Mason University’s Terrorism, Transnational Crime, and Corruption Center and author of the book “Dark Commerce.”

“Money laundering countries, particularly in the developing world, are losing enormous amounts of capital that are needed for infrastructure development, education, health, [and] the development of new businesses, of entrepreneurship,” Shelley said. “With this much money lying overseas, you can do all sorts of malicious things. You can interfere in electoral processes. You can help pay for fake news.”

Criminal Services

The Laundromat wasn’t just a money laundering system. It was also a hidden investment vehicle, a slush fund, a tax evasion scheme, and much more.

Troika’s clients also used it to buy properties in Great Britain, Spain, and Montenegro; to acquire luxury yachts and artwork; to pay for medical services and World Cup tickets; to cover tuition at prestigious Western schools for their children, and even to make donations to churches.

In addition, the Troika Laundromat enabled organized criminal groups and fraudsters to launder the proceeds of their crimes. OCCRP and partners have identified several high-level frauds perpetrated in Russia that used Laundromat companies to hide the origins of their money.

Troika’s clients also used it to buy properties in Great Britain, Spain, and Montenegro; to acquire luxury yachts and artwork; to pay for medical services and World Cup tickets; to cover tuition at prestigious Western schools for their children, and even to make donations to churches.

One of these schemes, known as the Sheremetyevo Airport fuel fraud, took place from 2003 to 2008 and artificially inflated aviation fuel prices while depriving the Russian state of more than $40 million in tax revenue. The scheme led to a hike in plane ticket prices. More than $27 million was sent by companies involved in the fraud to Troika Laundromat accounts. Vardanyan has not been implicated in the scheme and said he had no knowledge of it. In 2010, two years after the fraud ended, Troika Dialog began consulting for the airport along with Credit Suisse.

A second significant criminal inquiry tied to the Laundromat, from which $17 million ended up in the system, involves a tax avoidance scheme allegedly perpetrated by several Russian insurance companies. A man named Sergei Tikhomirov was accused of concluding false service contracts with the insurers as a pretext for having them send him large sums of money, which his accusers say he cycled through several accounts before depositing it abroad or cashing in. A portion of the money ended up in the Laundromat. (Tikhomirov did not respond to phone calls seeking comment.)

Roldugin didn’t respond to an email requesting comment, and Vardanyan said that he knew of the cellist, but was not aware that he had any business dealings with Troika.In a third case, at least $69 million went to companies associated with Sergei Roldugin, a Russian cellist and one of Putin’s best friends, who became famous after his vast unexplained wealth was revealed by OCCRP, the International Consortium of Investigative Journalists, and other media partners in the Panama Papers project. Some of the money that Roldugin’s companies received from the Laundromat originated in a massive Russian tax fraud exposed by Sergei Magnitsky, a Russian lawyer who died in jail after revealing it.

The Troika Laundromat enabled organized criminal groups and fraudsters to launder the proceeds of their crimes. OCCRP and partners have identified several high-level frauds perpetrated in Russia that used Laundromat companies to hide the origins of their money.

Companies involved in the fraud exposed by Magnitsky moved more than $130 million through the Troika Laundromat. In fact, hundreds of millions of dollars went into and out of the Laundromat for unknown purposes.

Vardanyan said he was not aware of any of these transactions.

“Understand, I’m no angel,” he said. “In Russia, you have three paths: Be a revolutionary, leave the country, or be a conformist. So I’m a conformist. But I have my own internal restraints: I never participated in loans-for-shares schemes, I never worked with criminals, I’m not a member of any political party. That’s why, even in the ’90s, I went around with no security guards. … I’m trying to preserve myself and my principles.”

Vardanyan and his family were among those who received money from the Laundromat. More than $3.2 million was used to pay for his American Express card, went to accounts belonging to his wife and family, and paid school fees for his three children in Great Britain.

Asked about these sums, Vardanyan said the offshore companies Troika created serviced his own companies in addition to the bank’s clients.

Troika as Capstone

The Troika Laundromat is unique among the Laundromats that have been uncovered in recent years in that it was created by a prestigious financial institution.

Like all investment banks, Troika handled stock and bond issuance, initial public offerings, and acted as an underwriting agent. It also had a strong relationship with the local office of Citibank Inc., with up to 20 percent of Troika’s new investors coming via the American behemoth. That made New York-based Citibank Troika’s biggest “external agent,” according to a 2006 interview with Troika co-founder Pavel Teplukhin. (Citibank didn’t respond to requests for comment.)Established in the early 1990s, Troika Dialog became Russia’s largest private investment bank. It operated under Vardanyan’s leadership until 2012, when it was purchased by Sberbank, the nation’s largest state-owned lender.

The Troika Laundromat is unique among the Laundromats that have been uncovered in recent years in that it was created by a prestigious financial institution.

Other major international banks, including Credit Suisse and Standard Bank Group, did significant business with Troika as well.

Starting in 2006, Troika employees began putting together the pieces of the Troika Laundromat.

Four essential elements are needed to build a functioning Laundromat: a bank with low anti-money laundering compliance standards; a maze of secretive offshore companies to hold accounts at the bank; proxy directors and shareholders for both the companies and the accounts; and the so-called formation agents that can quickly create, maintain, and dissolve the offshore companies as needed.

The bank orchestrated all of these components of the Troika Laundromat, in addition to directing the money flows and fake trade deals that made up its operations.

The pivotal mechanism was based on trade: Shell companies created bogus invoices for non-existent goods and services to be purchased by other companies in the system. The practice provides a fig leaf of legitimate economic activity that makes the transactions appear less suspicious to regulators.

Al-Qaida founder Osama bin Laden used a similar system to move money around the Middle East, she said.“You’re disguising an illegal payment by pretending that it is linked to a shipment of goods,” said Shelley, the George Mason corruption expert. “The trade-based system is one of the most central parts of money laundering in the world today.”

If Troika was the capstone of the Laundromat, its cornerstones were three British Virgin Islands-based shell companies: Brightwell Capital Inc., Gotland Industrial Inc., and Quantus Division Ltd. Brightwell’s first known transaction was on April 12, 2005. Gotland was established on Feb. 17, 2006, and Quantus followed six months later on Aug. 23.

An analysis of these companies’ banking records reveals how they put the Laundromat together: Starting in 2006, they made numerous small payments to a formation agent called IOS Group Inc. to create the dozens of companies that comprised the complete Laundromat. IOS didn’t respond to requests for comment.

The three cornerstone companies then continued making payments to IOS ranging from 40 to almost 5,000 euros over almost six years to keep the entire network operating. Over that span, the total reached over 143,000 euros.

Quantus, for example, paid formation and maintenance fees for the British Virgin Islands-based Kentway SA. This company was later used, among many others, to send millions of dollars to Sandalwood Continental Ltd., a company connected to Sergei Roldugin, the cellist, and one of Vladimir Putin’s oldest friends.

Quantus’ involvement with Kentway demonstrates the many ways in which the Laundromat companies were interconnected. In this case, after first helping establish Kentway, Quantus then funded it with money that Kentway forwarded to Roldugin’s company.

The Bank

To direct the flow of funds through the Laundromat, Troika needed a commercial bank to host accounts for the companies involved. And it needed that bank to avoid looking too closely at the contracts and trades Laundromat businesses used to justify moving money from one offshore company to another.

Troika chose Lithuania’s Ukio Bankas for the job. (The Lithuanian lender would later be seized by the country’s National Bank in 2013 for engaging in risky deals and failing to follow regulators’ orders.) Ukio is known to have set up accounts for 35 companies used in the Troika Laundromat, and likely more.

Because Lithuania wasn’t yet using the euro, Ukio needed correspondent accounts at European banks, such as the Austrian Raiffeisen or the German Commerzbank AG, to handle euro-denominated transactions. Those two lenders and many other large European and U.S. financial institutions accepted Laundromat money, though they did sporadically inquire about the nature of some transactions. After prodding by one of the correspondent banks, for example, some Ukio compliance officers made inquiries about Laundromat payments that didn’t make commercial sense.

“What is the essence of this transaction? We have a contract (attached), but to be honest, I don’t really get what’s happening,” one officer wrote, adding an unhappy face, in relation to a payment that went to a company associated with Roldugin.

By this point, the money had already left Ukio’s accounts.

Asked why Ukio was chosen as the banker for the offshore companies Troika created, Vardanyan said it was just one of about 20 banks Troika used around the world.

The Armenian Proxies

A central figure in many of the transactions involving the Laundromat companies was Armen Ustyan. Far from being an investment banker, Ustyan, 34, works seasonally as a construction worker in Moscow.

Ustyan said he had never heard of Dino Capital SA, the Panama-based Laundromat company whose Ukio bank account was registered using his signature. A copy of his passport was attached, but Ustyan insisted he had no idea how it got there. Ustyan’s signature can be found on contracts and banking paperwork in the Troika Laundromat along with those of a few other Armenians. Wearing an old military jacket and hat, he sat down with reporters this January in his cold living room to answer questions about high finance.

At his mother’s request, he wrote his signature on a piece of paper and concluded that the one associated with Dino Capital had probably been forged.

The Armenian said he knew none of this, though he did recall a slim connection to Troika Dialog: While in Moscow looking for work, Ustyan stayed with a Russian Armenian whose brother he said worked for the investment bank and helped him find employment. In addition to having his signature associated with Dino Capital’s bank account, Ustyan is also listed as an attorney authorized to sign contracts on the company’s behalf, and his signature appears on at least $70 million worth of financial agreements.

The Moscow address is indeed that of Nerses Vagradyan, a Russian citizen of Armenian descent. Nerses’ brother, Samvel Vagradyan, is a director of a Russian company that received millions of dollars from Brightwell, a core Laundromat company. A Samvel Vagradyan is also mentioned on Vardanyan’s website as a donor to the banker’s charitable causes. It’s unknown whether Samvel really worked for Troika.

Neither of the Vagradyan brothers could be reached for comment. Ustyan said he doesn’t believe they used his identity.

Another Armenian front man in the Laundromat appears to be Edik Yeritsyan. His identity was used to register an account at Ukio for the Cyprus-based Popat Holdings Ltd. This company was involved in Laundromat transactions worth millions of dollars.

Yeritsyan told OCCRP that he lost his memory three years ago after a car accident and doesn’t remember some parts of his life. However, Ustyan said that he and Yeritsyan lived together in the same flat they were renovating in Moscow.

This article was first published by The Organized Crime and Corruption Reporting Project (OCCRP) a global network of investigative journalists.

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