Ali says a prominent Kenyan businessman stole $438 million from Kenya's central bank VIDEO CNN's Catherine Bond reports on the corruption scandal involving $1.1 billion missing from Kenya's Central Bank and Treasury. Windows Media 28K 80K

August 28, 1999
Web posted at: 11:03 a.m. EDT (1503 GMT)

From Nairobi Bureau Chief Catherine Bond

NAIROBI, Kenya (CNN) -- The government of Kenya has deported a Canadian businessman as "a threat to national security" in connection with a financial scandal, but the businessman says he's a scapegoat in a massive corruption probe.

Nasir Ibrahim Ali, who also holds a Pakistani passport, denied any financial wrongdoing. He said the charges against him were made to mask the fraudulent business dealings of another financier with close ties to the government of President Daniel arap Moi.

According to Ali, that businessman -- Kamlesh Pattni -- was the key player in what is known in Kenya as the "Goldenberg Scandal," the looting of up to $1.1 billion from Kenya's Central Bank and Treasury.

Ali was deported after he made public a letter linking Moi and other high level officials to Pattni, who has charges pending against him in Kenya. The letter, which he said was written by Moi, named Pattni a special envoy charged with fundraising ahead of Kenya's 1992 elections.

"I am saying it's not possible the president of the Republic of Kenya appointed Mr. Pattni as his Special Envoy to the Middle East on one side, and another side, he says, 'I don't know what happened to Goldenberg,' Ali said.

Ali's latest charges have triggered opposition calls for Moi's resignation. But Kenyan police said Ali is wanted in several countries for fraud. Authorities said Ali also had been convicted of financial malpractice in Dubai, where a two-year jail term is pending.

Nairobi newspapers reported that the United Arab Emirates asked Kenya to arrest Ali last year. But no action was taken until Ali made his charges against Moi.

Scandal ruptures Kenya's ties to IMF

Ali told his story to CNN in an exclusive interview just before he was deported to Dubai. He said his difficulties began a year and a half ago, when a Kenyan judge awarded Pattni the duty-free business that Ali had developed at Kenya's international airports.

Ali said the move was a judicial maneuver to legitimize fraudulent business dealings now under scrutiny.

"Kamlesh Pattni and his associates, he used the name of my company and steal $438 million from Central Bank," Ali said.

The Central Bank of Kenya has pressed charges against Pattni for collecting the equivalent of millions of U.S. dollars from it in 1992 and 1993. When the scandal broke two years ago, it triggered a rupture of Kenya's relations with the International Monetary Fund.

According to published reports in Kenya, Pattni set up a company called "Goldenberg," which he said exported gold and diamonds. Pattni then went to the Central Bank and Treasury to collect payments he said buyers were making to him -- non-existent buyers like Ali's duty-free business.

Ali said Pattni divided the proceeds with top government officials and civil servants, including Kenya's vice president and the then-governor of the central bank.

Ali said he got involved in Kenya in 1988 when he invested $27 million to refurbish the airports' duty-free shops. He has filed a claim of $45 million in the International Court of Justice for his initial investment and is also seeking arbitration with the Kenyan government.