Triton has a long history of close ties with powerful figures

Until the forensic audits are completed, it will be difficult to determine the net liability in the Sh7.6 billion ($98.7 million) Triton Petroleum saga.

The Kenya Pipeline Company’s exposure — and indeed the government of Kenya’s — remains limited considering that KPC does not sign agreements with entities that finance petroleum imports.

The stocks in question did not evaporate or disappear into thin air. They were sold to various oil marketing companies operating in Kenya by Triton and KPC can produce the paper trail to show where the oil went.

However, the international financiers remain exposed especially if it turns out that Triton has a huge gap in its finances. So far, all indications point to a huge net insolvency amount.

Triton was dealing with multiple financiers. Having discovered loopholes in KPC’s collateral financing agreement system, the company was in a position where it could mask its shortcomings by endlessly borrowing from Peter to pay Paul.

What Triton was doing more or less amounts to a variation on cheque-kiting.

Whichever way one looks at it, the scandal has dealt a major blow to the integrity of KPC’s collateral agreement system.

Introduced in July 2004, the system is what has allowed small players who cannot import large quantities to participate in oil marketing.

The agreements have helped oil companies raise letters of credit to their overseas suppliers for large oil imports.

Indeed, it is this system that has allowed Triton to become a major importer within a very short period of time.

Also at risk is the so-called Open Tender System. Introduced in 2003, all marketers compete to be allowed to bring in products that are then sold to the rest.

Some 80 per cent of imports come into the country in this manner. The winner of the Open Tender brings the oil in and then sells it to the rest, who pick up what they have paid for from KPC.

With the Triton saga, it is unlikely that international creditors will agree to deal with local companies of the ilk of Triton.

Who is Yagnesh Devani? An influential businessman, he is a man who thrives on cultivating friends in high places.

Last year, a ceremony to open Triton’s LPG depot was attended by political bigwigs, including Vice President Kalonzo Musyoka, Prime Minister Raila Odinga, a total of eight Cabinet ministers and several permanent secretaries.

A photograph of these dignitaries posing with Devani appeared prominently in the newspapers. In May 2006, he confounded friend and foe when he bid to purchase the local assets of the multinational British Petroleum.

BP Africa had announced that its shares in Shell BP — a joint venture with Dutch company Shell —was on sale. BP Africa was about to seal the deal with Triton when Shell exercised its pre-emptive rights and matched the $50 million offer by Triton.

Pundits pointed to Triton’s influence in government when the latter suddenly moved to block the deal ostensibly on the grounds of a breach of anti-trust laws.

The UK finance company Glencore has had a long relationship with Triton. Indeed, there was a time when oil companies believed that Triton was merely importing oil into Kenya on behalf of Glencore.

In early 2006, a major controversy erupted when oil majors accused Triton and Glencore of hoarding ullage space in KPC’s storage tanks at the expense of others — breaching the rule that says that ullage must be allocated according to market share.

Industry players alleged that Triton was using political muscle to influence Kenya Pipeline to give it preferential treatment in the allocation of storage space to store products for speculation.

During the regime of President Daniel arap Moi, Triton several times clinched the lucrative contract to supply petroleum products to the Kenya Power and Lighting Company.