A Kenya-born Indian business tycoon is facing more than a decade in jail after fleecing another Indian-origin investor out of millions of pounds by boasting that he was a close associate of the Hinduja brothers, the richest Indians in the UK.
Ketan Somaia reportedly defrauded a number investors with parties and luxury trips to Dubai, Kenya and South Africa, managing to defraud one – Murli Mirchandani – of a staggering £13.5 million between June 1999 and May 2000.
The Old Bailey in London heard that Somaia, 52, owned an office in the capital’s upscale Mayfair district as well as a mansion in the North London suburb of Hadley Wood where he entertained guests with expensive champagne and boasted of his “close friendship” with the Hinduja brothers.
Born to Indian parents in Kenya, Somaia made a fortune in Africa in the 1980’s and 1990’s importing cars and running a string of luxury hotels.
At its height, his Dolphin business group was chaired by Lord Parkinson, the one-time chairman of the Conservative Party.
Dolphin also once sponsored the Miss World beauty pageant with Somaia presiding as a judge.
By the early 2000’s however, Somaia had begun losing control of many of his commercial interests, prompting him to set up his scam in London, the court heard.
Somaia was able to charm investors who willingly accepted his personal guarantees at face value.
Prosecutor William Boyce QC said that Mr Mirchandani had become “bewitched” of Somaia’s business acumen after the two met at a cocktail party in London in 1999.
Somaia subsequently treated Mr Mirchandani to dinners at the exclusive Annabel’s nightclub in Central London and all expenses paid trips to Dubai and South Africa before embarking on his scam, at first asking Mr Mirchandani for a short term loan of $865,000 to buy shares in Delphis Bank, a Mauritius-based company which had once been controlled by Somaia.
Days later Somaia convinced Mr Mirchandani to hand over £4.42million to buy a ten per cent stake in the bank.
In July Mr Mirchandani transferred another £1.47million to buy a stake in another company which Somaia claimed would double in value within three years.
The following month Mr Mirchandani thought he was paying $2.775million for a 50 per cent interest in a mining company in Liberia, which Somaia claimed would treble in value within nine months.
Two weeks later Mr Mirchandani transferred another $3million to Somaia to help purchase a bank in Tanzania with a guaranteed profit of 20 per cent and full repayment within 120 days at 15 per cent interest.
Somaia built up a feeling of ‘fevered excitement’ in his victim with false opportunities of being his business partner, said prosecutor William Boyce QC.
In October 1999 Somaia invited Mr Mirchandani to a meeting at his office in Brook Street, Mayfair and offered him the chance to invest in a hotel group in South Africa.
Mr Mirchandani paid $1.85 million for a 50 per cent interest in the deal but never received any paper work confirming his investment.
The duped businessman became increasingly worried about his investments after Somaia asked for two loans of £1million at 15 per cent interest and £800,000 at 18 per cent interest in November 1999.
Somaia claimed he was having ‘cash flow problems’ but would personally guarantee the loans.
The following month he invited Mr Mirchandani on another ‘no expenses spared’ trip to South Africa in December. Mr Mirchandani told the court that he felt “obliged” to Somaia because of his “generosity”.
After two further loans went unpaid, Mr Mirchandani launched his prosecution in the autumn of 2011.
Even as the trial began reports emerged that Somaia had backed Lyca Media’s takeover of several radio licenses from Avtar Litt’s embattled Lodnon-based Sunrise Radio group although Lyca Media said the businessman had merely been an “advisor” in the deal.
Somaia faces up to 12 years in prison and will be sentenced later this month once a report on his medical condition is prepared.
Judge Richard Hone QC said:”This case has been exceptional for a number of reasons – the sums involved, the extraordinary lifestyles, the famous names, the world of international businessmen and the outpouring of millions of pounds simply relying on the concept of “My word is my bond”.’