When Did The Giant Spencon Come Falling Down?

This is Part 2 of how individuals within ECP coordinated to bring down a once vibrant company, Spencon that was supporting thousands of families in Kenya and the East African region.

At the beginning of the week, we looked at the A Walk Inside The Collapse Of Spencon: Is There Light At The End? We introduced two men in this game, Andrew Ross and Steven Haswell, had been appointed as directors of the company by US investment firm Emerging Capital Partners (ECP), which had in 2006 and 2007 invested a total of $15m (Sh1.6 billion) in Spencon – including $1.5m (of British government aid money designed to boost the Kenyan economy and create jobs).

We Search For Truth Goes On

Both men said all funds received from Sanghani’s sales were accounted for and that the value of the equipment was overstated and banks were kept informed at all times.

“The transactions were recorded in the company accounts and approved by the board,” said Ross. ECP told us it had had “no knowledge of these alleged actions by Mr. Sanghani” and “no interest in having Spencon’s money deposited in other people’s accounts.”

At the end of 2016, PWC pressed Sanghani to hand over his accounts, but he refused to co-operate. According to the administrators, the $1.6 million is still missing.

BBC Africa Eye contacted Sanghani but he declined to respond.

In December 2015, Ross and Haswell’s hopes for saving Spencon were resting partly on a payout the firm was owned by the Kenyan government for work on a sewage treatment plant in Mombasa in 2000 – valued by Spencon at $16.5 million (Sh1.7b).

And there was an added incentive in their contracts: if the payment was approved, Ross would be entitled to a bonus of up to $80,000 (Sh8 million) and Haswell up to $64,000 (Sh6.8m).

The two British bosses were about to enter one of the murkiest chapters in the Spencon saga. Before paying out, the government demanded to see the original certificate to Spencon confirming completion of the works, but there was a problem: Spencon couldn’t find it. They had just 10 days before they had to present the certificate in court.

Spencon’s lawyer Rose Osiemo rushed to Mombasa, where she obtained a letter from the County Secretary authorizing a new certificate. But when she visited the Mombasa government department responsible for issuing it, there was a snag.

WhatsApp messages sent six days later reveal the obstacle – someone was demanding an $80,000 (Sh8 million) cash payment. Haswell put Sanghani on standby and messaged Osiemo to let her know.

“I told him what is happening … He agreed you can ask him to squeeze them if u want???”

But Osiemo said her contact wanted to remain anonymous.

“Want it to remain between me and them lest they are exposed,” she wrote back to Haswell.

If the payment was above board, why was it being paid in cash, and why was Osiemo keeping her contact secret?

Osiemo needed the money before an early-morning flight to Mombasa to meet her contact, setting off a frantic rush to get the cash. Haswell was in Tanzania. “I’m now in the bank getting $80k cash for you,” he messaged Osiemo. He kept Ross in the loop: “Trying to withdraw $80k cash from SCB Tanzania. I will fly back with it tonight.” Haswell flew back and handed two envelopes stuffed with cash to Osiemo, who made her early morning flight to Mombasa carrying the cash in her handbag, accompanied by Sanghani.

“Remember 11 people minimum know that you are traveling with $80k,” Haswell wrote to her. “Stay alert and safe.” Osiemo paid the contact and obtained a letter confirming the work had been completed, as well as a file of background documentation.

But the scheme failed – the money the government owed Spencon wasn’t released. Africa Eye showed evidence of the $80,000 payment to Jeremy Carver, a lawyer who helped draft the UK’s anti-bribery laws. “The payment of $80,000 is pretty well documented in the papers that I have seen,” Carver said. “It looks like a bribe, it smells like a bribe, and it’s paid by people who work for a company who are plainly trying to keep it secret.”

According to UK law, if a British citizen is involved in bribery, it doesn’t matter where in the world that alleged bribe took place.”For the British directors, and indeed anybody involved in the payment, they on the face of it need to be investigated,” said Carver.

Osiemo denied paying any cash bribes to anyone to settle the Mombasa claim. She said the money was a fee paid to an unnamed consultant contracted by Spencon, who hired four independent engineers to inspect the site and write a report confirming the works were complete. It was one of those engineers, she said, who gave her documentation.

A document emailed to Haswell the next day lists the $80,000 payment under expenses, with no contractors named. Ross declined to comment on the expense claim, while Haswell said he had no first-hand knowledge of why the transaction was recorded in this way.

They declined to say who received the $80,000 or why the payment had to be made in cash, saying the money went to debt collection agents. And they strongly denied bribing government officials and said the WhatsApp messages and emails had been taken out of context.

Ross said he and Haswell informed the ECP board of the progress of the expenses claim and the parties it dealt with. ECP said it had no knowledge of how any replacement certificate was obtained.

As they attempted to turn Spencon around for sale, Ross and Haswell needed to make a clean break from the company’s past. But they were hampered by a lawsuit filed against Spencon by the firm’s founding family, the Patels, over the ECP takeover back in 2014.

Pragnesh Patel, whose father founded Spencon in 1979, told Africa Eye that Ross and Haswell called him to a meeting at the Kempinski Hotel in Nairobi in December 2015 and offered to give up Spencon’s share in a piece of valuable development land in return for dropping the suit.

Patel said when he asked what would happen if he refused, the two British bosses dropped a name of a potential purchaser for Spencon’s share of the land-owning company – the Akasha family.

The Akashas are notorious Kenyan gangsters. In August 2019, Batktash Akasha was sentenced to 25 years in jail in the US for running a global drug trafficking operation. In January, his brother Ibrahim got 23 years for the same offense.

Sanghani was one of those who knew the Akashas well. According to evidence given during their court case, the Akashas beat him so badly during a gangland drug turf war in 2014 that Sanghani ended up in a coma.

READ: Africa Eye By BBC Unearths The Reason Behind Spencon’s Bankruptcy

Credits: BBC Africa Eye

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