The Kisumu Molasses Project

Troon’s second theory that he came to believe was that there had been a dispute between Robert Ouko and Nicholas Biwott over the cancellation of a project to build a Molasses plant at Kisumu in Dr Ouko’s constituency; that Biwott and others, through an intermediary, had sort to extract ‘kickbacks’ from the project; and that Dr Ouko, at the time of his murder, was writing a ‘corruption report’ to go to President Moi exposing the scandal. It could have been in an attempt to stop this exposure, according to Troon, that Dr Ouko was murdered.

The basis for this Troon theory were allegations of corruption made by a Mr Domenic Airaghi and a Ms Marianne Briner-Mattern, directors of BAK International, a company based in Switzerland that had tendered to Dr Ouko when he was Minister for Industry to re-start the ‘Molasses Project’. [1 TFR]

It is again important to note at this stage that Troon’s ‘Molasses Project-Corruption Report’ theory was based almost entirely on the allegations of Airaghi and Briner-Mattern (the ‘BAK Directors’) and documents produced by them.

During the Judicial Inquiry, on November 18th 1991, Troon was pressed by Mr Bernard Chunga to give the basis for his theory. “But by and large, your principal witnesses on the allegations of corruption would be the BAK Directors?” he finally asked Troon, who replied “Yes they are, my Lords”. [2 Judicial Inquiry Transcript, 18 Nov 1991, pages 24-25]

Domenic Airaghi’s and Marianne Briner-Mattern’s alleged that intermediaries on behalf of the Hon. Nicholas Biwott (for himself and for President Moi), the Hon. Prof. George Saitoti, the Hon. Elijah Mwangale and Mr Abraham Kiptanui, asked for bribes in order to facilitate the ‘progress’ of the Molasses Project; that Nicholas Biwott favoured a rival tender for the project from whom he hoped to get a “kickback”; and that when these bribes were not paid, Nicholas Biwott stood in the way of the Project and had Domenico Airaghi expelled from Kenya.

Troon concluded that when, approximately two years after the material events Robert Ouko determined to write a report to President Moi to inform him of these facts based substantially on the ‘evidence’ provided by Marianne Briner-Matter, Nicholas Biwott learned of this fact. This, according to Troon, provided the motive for murder.

Later, it was alleged, Nicholas Biwott tried to replace the ‘BAK Group’ with his own nominated Canadian firm who conducted the study and, it is to be inferred, paid the Nicholas Biwott bribes. This variation on the allegation was made by a James K’Oyoo.


Originally proposed in 1977 by the Madhvani Group as a joint venture with the Kenyan government to create jobs and generate revenue in a poor area, the Molasses Project looked to build a plant near Kisumu to produce alcohol and other products from raw molasses. Work on the project began in 1981 but by 1983 the Kenyan Chemical and Food Corporation, the government’s special purpose vehicle set up to partner the Madhvani Group was insolvent and the Kenyan government was forced to stand by loan guarantees made. By then the cost of the project had reached $119 million against the original total project projected cost of $61.4 million.

Over the next four years various proposals were put forward to revive the project but all required funding from the Kenyan government which had adopted the firm policy that no funds were to be made available and any future revival of the project would have to obtain external financial support.

In 1986 President Moi at a rally in the Moi Stadium, Kisumu, that the Kisumu ‘Molasses Project’ was going to be revived and Dr Ouko, in whose constituency the plant was sited, would be placed in charge of its revival. [13, third witness statement of John Erik Reru]

In 1987 Ouko was appointed Minister of Industry, the Ministry that would take the lead role in managing the plants revival. Troon stated that‘Dr Ouko was primarily concerned in the revitalisation of the project for two reasons. 1. The enhancement of his political career and 2. The increase of approximately 2000 in employment for an area with very high unemployment figures’. [1 TFR para 147]

Under Dr Ouko’s leadership the Kisumu Molasses Project moved on apace.


In early June 1987 Dr Robert Ouko was introduced in Nairobi to a Domenico Airaghi who told him that he was a director of ‘BAK Group’ a company that acted as consultants for private and government projects in Africa. It would seem that the two men discussed the Molasses Project resulting in Dr Ouko asking Airaghi to provide a list of “suitable international companies to carry out the required work at the Molasses plant in Kisumu”.

On 11th June 1987 Airaghi met with Dr Robert Ouko at his office and three days later, together with District Commissioner Mr Ali Sheike visited the Molasses project.

On 29th July 1987Airaghi and Ouko met again, this time with the Permanent Secretary to the Ministry of Industry, Prof. Gacii, Dr Dangami, Director Ministry of Industry and Mr King representing the Attorney General. By the end of the meeting Airaghi had agreed to search for the funding for the Molasses Project, find a reputable international contractor to undertake its completion, and obtain a grant from the Italian Government to fund a study into the status of the plant and assess what needed to be done to complete it.

On 6th August 1987 in a ‘Letter of Intent’ to Domenico Airaghi, Dr Ouko authorised the BAK group, an Italian company, to look for and obtain funding for the project and to nominate companies to undertake its completion. [25]

On 23rd September, 1987, an Inter-ministerial meeting chaired by Dr Ouko agreed to issue a letter of intent to BAK and that “the Italian Company has offered to complete the project and has undertaken to mobilize funds for this purpose.”

On the 3rd November, 1987, the Kenyan Cabinet accepted the recommendation of a sub-committee chaired by Dr Ouko and agreed that the BAK group should complete the Kisumu Molasses complex and BAK’s nominated company Technit be awarded a contract for the study and rehabilitation of the Molasses Project.

It is important to note that the Cabinet meeting of the 3rd November, 1987, having made the final decision to award contracts to BAK and Technit, assigned specific duties to the Ministries of Industry (Ouko), Finance (Saitoti) and the Attorney General. The Cabinet did not assign any further duties in the project to the Ministry of Energy, Planning and Agriculture, Nicholas Biwott in this project. In November 1987 his formal role in the Molasses project effectively came to an end.

Bilateral talks took place in Italy on the 5th and 6th of November attended by Kenya’s Minister of Finance, George Saitoti. The minutes of these talks and the list of delegates show that Biwott did not attend.

On the 15th December, 1987, a letter from the Minister for Industry to the Permanent Secretary at the Ministry for Finance confirmed that Dr Ouko, in the presence of Domenico Airaghi, BAK’s Managing Director, had countersigned an offer from Techint regarding a study of the agro-chemical complex at Kisumu for which a grant of US $ 1M was to be made available by the Italian Government, and the contract for the rehabilitation and completion of the agro-chemical complex at Kisumu for an indicative figure of 25M ECU in respect of which the Italian Government had expressed an interest in providing a soft loan.

The Kisumu Molasses Project seemed set well on course and it would not have escaped the notice of many local people that in February 1988 workers appeared at the site and began to clear the drains, water pump site and mend the factory’s fence. Earlier that month a bank account was opened in the Kenya Commercial Bank, Kisumu, by Domenico Airaghi with the intention to pay workers in Kisumu to clear up the Molasses plant site. At the same time BAK took possession of the Molasses Plant site, employed workers to clear the site and announced that the rehabilitation process had commenced.

Dr Ouko was without question keen that the Kisumu Molasses Project should be revived to bring much needed employment for his constituents and revenue into the area but he was also a politician facing an election in two months time and he was by no means unaware of the electoral benefit to him personally of the announcement of the revival of the Molasses project, the employment of up to 2,000 local people and the prospect of yet more employment to come, would have. And he was not just facing an election with a guaranteed result, he was facing an election in which his victory was by no means certain and against stiff, even vicious, opposition.

In the event, Dr. Ouko was re-elected but the margin of victory was tight, a majority of little more than 2,000 votes.


The Kenyan Cabinet had awarded the contract for carrying out the study and rehabilitation of the project to Techint and not to BAK.  According to this contract the study was to establish the viability of the project before any rehabilitation work could begin. Neither BAK nor Techint had procured a grant from the Italian Government to finance the feasibility study and Techint had not come to the site to commence the feasibility study.

A letter dated 9th February, 1988, from Techint to the Minister for Industry, Dr Ouko, Techint stated that it had been informed by the Italian Government that the procedure to obtain a grant to finance the study would take several months and that therefore due to the urgency of the project, Techint proposed that the Kenya Government should meet the cost of the first part of the study and requested the sum of US $ 500,000 to be paid by way Letter of Credit.

Following the general election in March 1988, Dalmas Otieno replaced Dr Ouko as Minister for Industry on 19th March, and thus took over responsibility for the Molasses Project.

In June 1988 Technit withdrew from the contract and BAK selected an Italian company, Tecnomasio Italiano/Brown Boveri (TIBB), to replace them.

In a Telex dated 12th July, 1988, the Permanent Secretary, Ministry of Industry asked the Permanent Secretary of Ministry of Foreign Affairs to inform BAK that a contract made with Techint was not transferable.

On 20th July, 1988, the Italian firm ABB Tecnomasio SpA (ABB) confirmed in a letter addressed to Dalmas Otieno, Minister of Industry and copied to the relevant ministries, that ABB had been visited by Airaghi of BAK Group who presented to them several projects foreseen in Kenya by BAK. ABB confirmed their acceptance of the nomination by BAK as project leader in the rehabilitation of the Molasses Project Complex in Kisumu.

ABB also informed the Kenya Government that the existing regulations in Italy did not allow the award of the contract for the study and rehabilitation to the same company if both activities were to be funded by a grant from Italian Government.

On 26th July, 1988 BAK wrote to the Ministry of Industry confirming that the existing regulations in Italy for co-operation projects, which were financed by a soft loan, would not allow the same company to undertake the study and the implementation; that BAK had nominated TIBB to undertake the study; that TIBB had calculated the cost of the study at US$200,000.00 and had agreed to meet two thirds of this costs and that the Kenya Government would be required to meet the remaining on third of the cost.

BAK made a further request to the Minister for Industry by Telex on the 18th August, 1988, requesting for payment of the deposit of US$50,000.00 (Kshs.900,000.00).

In a letter to the US Ambassador in Kenya from Ministry of Industry on the 27th September, 1988, it was confirmed that there had been a meeting between the Minister for Industry, Dalmas Otieno, and the Director of Trade and Development (USAID), and representative of the US Embassy, and that the Kenya Government had selected a US company known as F C Schaffer & Associates to undertake a study of the Kisumu Molasses Project.

On the 17th October, 1988, BAK stated in a letter to the Permanent Secretary and Secretary to the Cabinet, copied to the Minister for Industry that it had decided to carry out the feasibility study for free, (notwithstanding that it had already spent Ksh.1M).

A month later on November 17th, 1988, TIBB wrote to Minister for Industry declaring that it was willing to advance to the Kenya Government the cost of the study. The condition of the advance was to be that if either the Kenya Government decided not to implement the project after study or if there is delay in receiving from the Italian Government the grant or the soft loan, the Kenya Government would refund to TIBB US$200,000.00

TIBB’s letter of the 17th also stated that TIBB and BAK had nominated another Italian company known as Societa Montagi Industriali (S.M.I) to carry out the study.

On the 23rd November, 1988, the Minister for Industry, Dalmas Otieno, told Parliament that BAK was of doubtful integrity.

In his witness statement dated 21st May 1990, Dalmas Otieno succinctly gave one of his reasons for removing BAK and its ‘directors’ from the Molasses Project. He stated ‘I personally interviewed Mr Airaghi and I considered he was not competent to handle the project and knew nothing about molasses. He initially asked for one million US dollars for the feasibility study, he then halved this sum, and eventually settled for 300,000 dollars’. [39, Dalmas Otieno witness statement 21 May 1990]

On the 15th March 1989, Domenico Airaghi was arrested at the Hilton Hotel in Nairobi by immigration officers whilst on a business trip to Kenya and expelled from the country for alleged ‘interference with Government matters’.

One of the many myths arising from the investigations and the subsequent the re-telling of the story is that Domenico Airaghi was thrown out of Kenya by Nicholas Biwott, the Energy Minister. There appears to be no evidence for this.

Troon stated the allegation at paragraph 175 of his ‘Final Report’: ‘He [Airaghi] alleges that Mr Biwott was instrumental in authorising his expulsion’. But in a long letter to Dalmas Otieno dated 15th March 1989, Domenico Airaghi did not mention Biwott and he was clear who he blamed for his expulsion. He wrote, ‘I have been informed that upon your request [Airaghi’s underlining] on March 15th, I have been asked to leave Kenya, for “Interference in Government matters, regarding the Kisumu Molasses Rehabilitiation”…’. [76 Letter to Dalmas Otieno from Domenico Airaghi]. Airaghi’s ten page witness statement made on the 9th may 1990 also does not name Biwott in connection with his expulsion and nor does the witness statement of Marianne Briner-Mattern made on the 22 March. Troon’s summary of the evidence, by no means for first time, was wrong.

In its interim report dated 17th October, 1989, on the Kisumu Molasses Project and delivered to Minister for Industry, Dalmas Otieno, FC Schaffer stated that they did not find the project viable.  The revival efforts by which had commenced in June 1987 by the Government of Kenya finally ended there.

[The Kisumu Molasses plant was subsequently purchased from the Kenyan state in 2001 (1996?) by Spectre International Ltd, a company owned by the family of Raila Odinga, currently Prime Minister of Kenya.]


Ultimately, the evidence suggests, the ‘BAK Group’, its ‘directors’ Airaghi and Briner-Mattern and their nominee companies were ejected from the ‘Molasses Project’ by the Minister of Industry, Dalmas Otieno, because they had not raised the money from Italy for the rehabilitation of the Kisumu site; they asked for various levels of substantial payments that were not in the original agreement; and they were not ‘competent’.

It is difficult to see how the ‘Molasses Project-Corruption’ theory gained the currency it did and continues to do so to this day. Again the information and evidence that disproves has been available for at least 20 years and even some of those who ascribed to the theory and in their investigations or through testimony helped to propagate came to admit that it had little or no basis in fact. It is difficult as result to see how it could have provided a motive for Dr. Ouko’s murder in February 1990.

The timing of the key events in the end game of the Molasses Project makes it extremely unlikely that it was a factor in Ouko’s murder.

The project was effectively put on hold by Dalmas Otieno in March 1988, nearly two years before the murder and Biwott’s official involvement ended at the Cabinet meeting of the 3rd November, 1987 when specific duties for the project were handed to the Ministries of Industry, Finance, and the Attorney General and not to Biwott’s Ministry of Energy, Planning and Agriculture.

A multitude of official papers and correspondence also go against the theory.

The Cabinet papers, Dr Ouko’s own correspondence and other evidence prove that all decisions relating to the Kisumu Molasses Project were ultimately taken by the Cabinet. These were contained in the Kenya Government’s ‘Molasses File’ that were available in 1990. The British detective John Troon, however, did not ask to see the file, nor it seems did he ask Dalmas Otieno any questions about the Kisumu Molasses Project as the British detective John Troon accepted at the Judicial Inquiry, where the following exchange with lawyer Ishan Kapila took place:

Kapila:    “Mr Troon… you took a statement from Mr Dalmas Otieno, did you not? The Minister of   Industry?

Troon:    “I did my Lords”

Kapila:    “Did you ascertain any of these facts from him? [about the Molasses Project].

Troon:    “I could have done it in conversation, but I don’t think it is included in his statement. It is possible I did ask whether there was a file in existence and he said there was but not readily available, and that is my recollection my Lords.”

Kapila:    “Did you make arrangements for the provision of this file to you after that meeting?”

Troon:    “Not that I am aware of my Lords, no.”

[4 Judicial Inquiry transcript, 21 November 1991, pages 7-8]

Troon, in effect, rejected Dalmas Otieno’s evidence without ever asking for or looking at the Government Molasses File.

If Troon had have read the file, or even have asked those in a position to know about the Molasses Project, it is hard to believe that he would ever have put forward his theory.

The critical piece of evidence overlooked by Troon was that the two Italian firms involved with the Molasses Project, Asea Brown Boveri (ABB) Tecnomassio SpA and Tecnomasio Italiano/Brown Boveri, were both introduced by Domenico Airgahi to Minister Dalmas Otieno [14 Domenico Airaghi’s witness  statement, 9 May 1990] and were part of the same multinational group. So there was no ‘rival tender’ and logically no bribe would have been asked of, or paid by a company to win a tender against itself.

The allegation by Marianne Briner-Mattern and to a certain extent Domenico Airaghi, which had been fully accepted by Troon and later given credence by Dorothy Randiak’s testimony (but not mentioned in her first two witness statements), had been that Biwott, Saitoti and others, working through an intermediary, had sought to get a ‘kickback’ for one company to get the contract over the other.

Dorothy Randiak, Dr Ouko’s sister, however accepted under cross examination at the Judicial Inquiry on 12th August, 1990 that there could have been no rivalry between the two companies. Her exchanges with lawyer Kaplia are revealing.

Kapila:        “Can you tell us, to the best of your knowledge, can you identify the rival group supported by Mr Biwott?”

Randiak:    “My Lords, as I was told by the late Minister, the other group was Asea Brown Boveri.”

Kapila:        “And your evidence is that at some stage Mr Biwott received a bribe from the Brown Boveri Group?”

Randiak:    “That was what I was told My Lords…”

Kapila:        “Did Mr Airaghi have anything to do with the Brown Boveri Group?”

Randiak:    “he did not tell me anything about that my Lords.”

Kapila:    “But your evidence is that the Brown Boveri Group came into the picture after the rejection of Airaghi’s group of companies, is that correct?”

Randiak:    “That’s what I was told My Lords”.

Kapila:        “And it is also your evidence that because of the pressure exerted by Mr Biwott, the contract was given to Brown Boveri as opposed to the Airaghi Group?”

Randiak:    “Yes my Lords”

Later in the cross-examination Dorothy Randiak stated, “As a result of rejection of that group, Airaghi

was deported from the country. As a result of the pressure put by Biwott and the rejection of that group,

Airaghi was deported from the country in the course of that year”.

However, after being shown a letter from Asea Brown Boveri Group addressed to Dalmas Otieno, the

Minister of Industry that showed  Domenico Airaghi had introduced Technomasio (which fully belonged

to the multinational, Asea Brown Boveri Group) to the Kenyan Government, Dorothy Randiak was

asked, “How can they be rival groups?” She replied:

“My Lords my piece of information is based on the conversation and discussions between me and my brother and not on the documents tabled. But on the strength of the documents that you have read, that I have followed, it would appear that there was no rivalry.” [96 Judicial Inquiry transcript, pages 31-33 and 39]

And finally, Domenico Airaghi’s documentation proves beyond doubt that he introduced Asea Brown Boveri. In a letter dated 30th August 1988, , Airaghi and Briner-Mattern wrote to an Italian company, stating: ‘To answer all your questions regarding BAK’s position in Kenya, we can inform you that ASEA-BROWN BOVERI/TECNOMASIO has signed with us an irrevocable cooperation agreement on an exclusive basis for Kenya for government and private projects…’ [97 letter to Fiera di Trieste from BAK]


The evidence to date provides no credible support for Troon’s theory based on Briner-Mattern’s and Airaghi’s testimony that the primary motive for the murder of Dr Robert Ouko was the Molasses Project. All of the available evidence is against it.

Next Chapter: The Corruption Report