Background
Similar to most countries, Kenya encourages international trade by granting tax-free status to commercial enterprises involved in the export of goods and sometimes subsidizes these exports. The Goldenberg scandal was based on the fact that exporters who deposited U.S. dollar earnings with the Kenya central bank received in exchange the equivalent in Kenyan shillings plus 20 percent.
However, gold mining represented a tiny portion of Kenya's GDP, with only one operational gold mine (at Kakamega). Goldenberg International therefore developed a scheme of smuggling gold into Kenya from Congo, so that it could legally export it more than the export price from the government.
Read more about this topic: Goldenberg Scandal
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