Vimal Shah Forex Deal Dispute Kenya: Sh102.4M Loss, Nesbitt, Crypto

• Bidco Africa Chairperson Vimal Shah reported losing Sh102.4 million in an unfulfilled foreign exchange deal in 2023.
• The transaction involved Nicholas Nesbitt, a business associate, who introduced Bulent Boytorun, an alleged cryptocurrency expert, to facilitate dollar acquisition during a Kenya dollar shortage.
• Shah proceeded with the deal primarily due to his 15-20 year trust in Nesbitt, despite initially not trusting Boytorun.
• An agreed rate of Sh137.5 per US dollar was set, with $745,000 expected to arrive in Bidco's account by May 24, 2023, but the funds were never delivered.
• The unfulfilled cryptocurrency forex transaction threatened Bidco's raw material imports and factory operations, leading to a significant Bidco Africa forex loss.

This case serves as a cautionary tale for lawyers advising clients on foreign exchange transactions in Kenya, particularly during periods of currency scarcity.

A significant commercial dispute has emerged in Kenya, centered around Bidco Africa Chairperson Vimal Shah's reported loss of approximately Sh102.4 million in an unfulfilled foreign exchange transaction. The incident unfolded in 2023 amidst a severe dollar shortage in the country, when Bidco Africa was actively seeking US dollars to facilitate essential raw material imports for its operations.

The narrative began when Nicholas (Nik) Nesbitt, a long-standing friend and business associate of Shah, offered to assist Bidco in acquiring the scarce currency. Shah recounted that two prior attempts to secure dollars through Nesbitt in March and April 2023 proved unsuccessful, with Nesbitt returning the shillings for the uncompleted exchanges. However, on May 18, 2023, Nesbitt approached Shah again, claiming to have identified a reliable source capable of delivering dollars within 24 hours of receiving the equivalent shillings.

Nesbitt subsequently introduced Shah to Bulent Boytorun, whom he presented as his 50/50 business partner and an expert in cryptocurrency. Shah was informed that Boytorun possessed the specialized knowledge for converting foreign currency using stablecoins and other cryptocurrencies, assuring him of the legitimacy and regularity of such transactions and promising swift dollar delivery.

Shah's decision to proceed with the proposed transaction was heavily influenced by his extensive personal and professional relationship with Nesbitt, spanning 15 to 20 years. Their shared history included working together at IBM and collaborating within prominent business organizations such as the Kenya Private Sector Alliance (KEPSA) and the East African Business Council. Shah explicitly stated in court that Nesbitt's prior professional roles and established business connections instilled confidence in the arrangement.

Despite this trust in Nesbitt, Shah admitted to initially having no knowledge of or trust in Bulent Boytorun. His confidence was, however, bolstered when Nesbitt mentioned that both parties utilized Standard Chartered Bank. Shah took the step of contacting a bank official, who confirmed that Nesbitt was indeed a customer and that BNB Kenya Limited maintained an account with the institution. Ultimately, Shah emphasized that his trust in Nesbitt, rather than in Boytorun, was the primary factor driving his agreement to the deal.

This case serves as a cautionary tale for lawyers advising clients on foreign exchange transactions in Kenya, particularly during periods of currency scarcity. It highlights the significant risks associated with informal channels and reliance on personal trust over formal due diligence, even with long-standing business associates.

Following the agreement, which stipulated an exchange rate of Sh137.5 per US dollar, the funds were contractually obligated to arrive in Bidco's account on May 24, 2023. The agreement specified that the full amount of $745,000 would be deposited into Bidco's dollar account by that date, provided the contract was signed on May 23. However, the anticipated funds never materialized, leaving Bidco with a substantial financial shortfall.

Shah underscored the critical urgency of the transaction, explaining that Bidco's daily operations depended on these payments for raw materials, a fact Nesbitt was reportedly aware of. The non-delivery of the dollars threatened to halt the company's factory operations, illustrating the severe operational impact of the unfulfilled agreement. The dispute, which now involves allegations surrounding the transaction, underscores the potential for high-value commercial disputes involving the use of unregulated methods like cryptocurrency for forex during a Kenya dollar shortage.

This incident highlights the complexities and potential pitfalls of cryptocurrency forex transactions in Kenya, especially when combined with personal assurances rather than robust contractual safeguards. The Bidco Africa forex loss represents a significant financial blow stemming from a deal that relied heavily on personal connections rather than stringent formal processes.

This case serves as a cautionary tale for lawyers advising clients on foreign exchange transactions in Kenya, particularly during periods of currency scarcity. It highlights the significant risks associated with informal channels and reliance on personal trust over formal due diligence, even with long-standing business associates, and the potential for high-value commercial disputes involving allegations of fraud and the use of unregulated methods like cryptocurrency for forex.

Source: Original reporting via Capital FM