Kenya Seeks Businessman`s Arrest Over Oil Scandal

Following police accusations of theft of over $12 million, Nairobi Chief Magistrate's Court ordered the detention of Yagnesh Devani

Kenya issued an arrest warrant on Wednesday for the businessman at the centre of an oil scandal that has engulfed the government in more graft accusations and threatened fuel supplies to east Africa's biggest economy.

Following police accusations of theft of over $12 million, Nairobi Chief Magistrate's Court ordered the detention of Yagnesh Devani, the flamboyant 43-year-old head of local oil marketing firm Triton Petroleum Ltd.

Devani could not be reached for comment. Local media say he left for India in December.

Last week, the boss of the state-owned Kenya Pipeline Company (KPC) was fired over the irregular release to Triton of reserves worth nearly $100 million.

The Kenyan authorities accuse KPC officials of providing Triton with 126 million litres of petroleum products -- without the knowledge of several financiers that had funded the imports for Triton and were the legal owners of the reserves.

"We have seen heads roll at KPC, but that is of no interest to the lenders," an industry expert told Reuters on Wednesday.

"If there is no trust in the system, then I think it is unlikely that the banks will have any confidence in funding oil imports to the country in the future."

Police accuse Devani of stealing $12.2 million from local Kenya Commercial Bank (KCB) and $195,000 worth of oil products entrusted to him by the institution.

The claims of graft are just the latest to hit the fractious coalition government, formed in April 2008 to end ethnic and political violence that killed 1,300 people and drove 300,000 from their homes after a disputed presidential election.

In the first blow, Finance Minister Amos Kimunya stepped down last July to allow an investigation into his department's role in the sale of a luxury Nairobi hotel. An official enquiry later cleared him of any wrongdoing.

MAIZE ACCUSATION

Last week, Justice Minister Martha Karua accused officials in the Agriculture Ministry of profiting from a current shortage of Kenya's staple food, maize. Agriculture Minister William Ruto rejected that and blamed last year's post-election turmoil.

Karua is an ally of President Mwai Kibaki, while Ruto is an ally of former opposition leader Raila Odinga, who became Kenya's prime minister under last year's power-sharing deal.

No claims of corruption were levelled against Ruto himself.

Adding to local dismay, the boss of the Kenya Tourist Board was also sacked last week amid more graft allegations.

The Triton claims are particularly embarrassing, given Devani's high profile links. Wednesday's Daily Nation published pictures of Odinga, the former vice-president, and a minister toasting Devani at a party in 2006 when he launched his company.

It also outlined his lavish lifestyle of fast cars, sharp suits and big parties.

Energy Minister Kiraitu Murungi told reporters the government had asked Interpol to help have him extradited.

Among the financiers whom local media, citing company documents, have named as facing possible losses over the saga are KCB, Glencore, Emirates National Oil Company and Fortis Bank.

The latest scandals have fuelled public skepticism and donor disillusionment with the coalition government, which is supposed to be making major political reforms to stamp out corruption and prevent a repeat of 2008's post-election crisis.

"The nexus between political power and corruption appears to be a common thread in both the fuel and the maize scandal," local graft watchdog Transparency International Kenya said.