Firm Linked To Israeli Tycoon Shari Arison Entangled In A Web Of Corruption In Kenya

In the shadowy world of tendering processes, where big money is at stake, clandestine dealings often lurk beneath the surface, hidden by a web of deception.

Such was the case in Kenya, where a web of corrupt dealings involving Israel’s largest construction firm, Shikun & Binui Ltd., and state officials was woven to win local tenders.

According to the police, Shikun & Binui Ltd., previously owned by billionaire Shari Arison – Israel’s richest woman, engaged in a Sh15 billion bribery scheme to secure road contracts worth billions of shillings by bribing Kenyan officials.

In May 2019, the Lahav 443 Unit, which deals with fraud investigations, stated that after a year-long investigation they had gathered sufficient evidence of wrongdoing to recommend prosecution on bribery charges against the company and Ms Arison.

“There is substantial evidence against Shikun & Binui Company Ltd. and against a number of senior employees,” a police statement said.

The company is said to have paid the bribes directly or through other companies, including AG SBI, a Swiss private company owned by Shikun & Binui Ltd.

The police suspected that between 2008 and 2016, the company paid bribes to foreign public employees in Africa in an organized fashion, to increase its profits.

Seized documents

The investigation began in February 2018.

Several senior employees of Shikun & Binui, including those who had left the company, were detained while the police searched offices, and seized documents and computer materials.

The police noted that the investigation was extensive and complex and involved hundreds of investigative activities in Israel and around the world.

A total of 50 suspects were questioned, and the testimonies of 34 witnesses were taken.

Parallel to the investigation, Kenya’s anti-corruption authority and the Israeli police conducted two investigations, which culminated with the arrests of 19 Kenyan public workers.

Ms Arison, who sold her controlling stake in Shikun & Binui in 2018, underwent nine hours of police questioning regarding her involvement in the scheme.

She and one of her senior advisers were prohibited from leaving Israel or contacting anyone connected to the investigation.

The interrogation came just two months after Ms Arison sold her stake to US-Israeli real estate investor Naty Saidoff for $307 million – a price 14% lower than the stock value, which analysts attributed to the bribery suspicions.

The billionaire, however, stated that the sale aimed to diversify investments.

Shares of Shikun & Binui declined 23% in the 12 months before the sale as the company contended with the bribery investigation.

Millions of shekels

According to the evidence collected, in Kenya alone, where the investigation focused, bribes totalling tens of millions of shekels were paid.

After the investigation, the police found evidence implicating several workers in bribery, falsification of corporate documents, conspiracy to commit a crime, obstruction of legal proceedings, money laundering, and misleading reporting under the Securities Law.

The investigation file was then forwarded to the State Attorney’s Office for review.

After more than two years, in November 2021, the State Attorney decided not to indict Ms Arison in the bribery affair, stating that there was no evidence that she was aware of such bribery offences being committed by her company officials.

Shikun & Binui and its executives were, however, found guilty of the offences.

Subsequently, it was reported that the company was engaged in advanced talks with the State Attorney’s office to negotiate a deal regarding the offences.

Under the deal, Shikun & Binui was to pay a huge fine on condition that the bribery charges were withdrawn. Sources indicated the fine would amount to a record $54 million.

No further details of the case were ever disclosed.