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Sh600m bribe story haunts Nation Media

Kenya Pipeline Chairman John Ngumi sues Nation Media Group for linking him to bribery scandal in Tanzania



NMG is also at risk of being sued by Standard Chartered Bank which the writer invariably confused for Standard Bank Plc in the article

T  he Nation Media Group has found itself in the spotlight after being sued by Kenya Pipeline Company chairman John Ngumi for an article published in the Sunday Nation and aired on NTV. The case, filed on 27th April, puts NMG in a tight spot for linking Mr Ngumi, a career investment banker, to a fraud in a $600 million transaction facilitated by Standard Bank/Stanbic Bank for the government of Tanzania.

The Sunday Nation, in its report, said Tanzanian officials prosecuting “the Sh600 million bribery scandal relating to the government bond” had started lobbying Kenya to extradite Mr Ngumi, who was in charge of the CFC Stanbic Bank’s East Africa investment arm, and Mr Bashir Awale, who served as Stanbic Tanzania CEO when the bond was floated in 2012, to help in investigations.

Mr Ngumi has named Nation Media Group, the publisher of the Sunday Nation and its reporter Kipchumba Some as well as NTV and its reporter Ken Mijungu as defendants. He accuses them of maliciously publishing the story with intent to injure him and describes the story, published on 22nd April, as sensational, untrue and grossly inaccurate.” The story was aired on NTV on 23rd April on its 9pm news bulletin.

In papers filed at the High Court in Milimani, Mr Ngumi says NTV aired the story despite a letter from Mr Ngumi’s lawyers, LJA Associates, asking NMG to cease defaming him. Mr Ngumi says he had rebutted these claims before, but his side of the story has never been published by the media house.

John-Ngumi-Kenya-Pipeline Sh600m bribe story haunts Nation Media

John Ngumi: Accuses Nation Media of running a malicious campaign.

He says Nation is notorious for targeting him by writing defaming articles about him and the office he holds. Mr Ngumi is seeking general and compensatory damages, aggravated and exemplary damages as well as a retraction of the story on newspaper and TV besides an injunction against NMG from publishing defamatory articles on him.

The story has also set the board against editorial managers. Board chairman Wilfred Kiboro is reported to have written a two long and strongly worded emails to Editor-in-Chief Tom Mshindi, accusing the editorial team of being unprofessional by not fact checking and confirming with any the offices mentioned in the case.


NMG is also at risk of being sued by Standard Chartered Bank which the writer invariably confused for Standard Bank Plc in the article. “Kiboro was absolutely livid at the lack of professionalism shown by such carelessness in confusing banks’ names on such a sensitive issue as money laundering and bribery,” said a Nation insider who saw the communication from the board chairman.

What official documents say

As Ngumi’s lawyers were filing the case at the High Court, Business Today was combing through volumes of documents relating to the matter. It emerges that Mr Ngumi was not actually involved in the transaction and was never even mentioned in the investigations and court case, making the defamation case potentially dangerous.

The case revolves around two financings done for the Government of Tanzania (GoT) by Standard Bank/Stanbic Bank: one for $250 million syndicated loan in 2010 and a private placement note issue for $600 million in 2013.

The GoT needed to raise public funds to support its five-year development plan and to meet key infrastructure requirements.  Standard Bank and Stanbic Tanzania put forward a proposal to raise those funds for the GoT through a sovereign note private placement.


Negotiations began in February 2012 and the transaction was completed in March 2013.  Standard Bank and Stanbic Tanzania acted jointly. Their initial proposal in February 2012 quoted a combined fee of 1.4% of the gross proceeds. However, by August 2012 the deal had lost momentum.

By September 2012 the proposed fee had increased to 2.4% on the basis that an additional 1% (ultimately $6 million, Ksh600 million) would be paid to a “local partner”, a Tanzanian company called Enterprise Growth Markets Advisors Limited (EGMA).

The proposed involvement of this local partner and the increased fee – executed by Stanbic Tanzania CEO Bashir Awale and Head of Corporate and Investment Banking Shose Sinare – was what was disclosed to Standard Bank by Stanbic Tanzania.

John-Ngumi-Kenya-Pipeline Sh600m bribe story haunts Nation Media

Bashir Awale, former Stanbic Tanzania CEO, at the centre of the storm.

“Both (Stanbic Tanzania) ST’s CEO (Bashir Awale) and SS (Shose Sinare) intended this 1% fee promised to EGMA to induce a senior representative or senior representatives of the GoT to perform a relevant function improperly, namely by that representative(s) showing favour to SB and ST in their bid to secure their joint role and fees on the financing transaction,” according to the Statement of Facts on the case reviewed by BUSINESS TODAY.

The deal had earlier stalled but in November 2012, about two months after it emerged the local partner had been engaged and paid the 1%, the government formally granted Standard Bank and Stanbic Tanzania the mandate to raise US$550 million. By the end the transaction, the amount to be raised increased to US$600 million.


In the agreement between the GoT, Standard Bank and Stanbic Tanzania, the local partner was not mentioned and Stanbic Tanzania made the payment to EGMA. No local partner was mentioned in the Mandate Letter signed by the GoT. However, the Lead Manager Fee Letter issued by the GoT did state that ST (Stanbic Tanzania) and SB (Standard Bank) were acting “in collaboration with its partner” but did not name EGMA.

Eventually, this structure allowed US$6 million (Ksh600 million) of Tanzanian public funds to be paid to EGMA, through Stanbic Tanzania.

John Ngumi’s role

The Statement of Facts by the High Court in UK shows the case by Serious Fraud Office against Standard Bank Plc arose out of failure by the bank to prevent bribery by its former sister company, Stanbic Bank Tanzania Limited, by then Chief Executive Officer, Bashir Awale, and Head of Corporate and Investment Banking, Mr Shose Sinare.

Standard Bank self-disclosed the matter to the Serious Fraud Office (SFO) in April 2013 the conduct.

According to information seen by Business Today, Mr Ngumi was fully responsible for initiating the US$250 million syndicated loan and while he did not execute the transaction, he followed it closely since it was the first that had been done for Tanzania.

Mr Ngumi was not involved in the US$600 million private placement note issue, on which Sunday Nation anchored its article. In the approved judgement in the case at the UK High Court, the President of the Queens Bench Division of the High Court in London lauded the fact that Standard Bank reported the matter to the relevant authorities. The whistle-blowing by Standard Bank set off a chain of internal and external investigations that culminated in this judgement.


Business Today is the leading independent online business website in Kenya. Started in 2012 by a veteran business journalist, it has a huge following both in Kenya and abroad. It covers various business and related issues. Email editor at:

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