Armenian 'mercenary' saga stirs up Kenyan politics

NAIROBI, March 16 (Reuters) - It was a bizarre twist in Kenya's increasingly chaotic political climate: claims that foreign mercenaries led a police raid on a major media house.

But what began as a minor mystery from one of the most controversial moments in President Mwai Kibaki's three-year-old rule has quickly escalated to convulse local politics and bemuse Kenyans with its theatrical elements.

The story began with the overnight March 2 raid on the Standard Group, and reached a crescendo this week with an opposition leader who first made the mercenary charges trading weighty accusations with the Armenians he named.

"The whole thing looks orchestrated on both sides. It doesn't taste real," security consultant and former Criminal Investigation Department officer Ambrose Murunga, told Reuters. "No one has ever really connected those Armenians to the raid."

Already reeling from graft scandals and a fall in popularity, Kibaki's administration provoked international condemnation when hooded police with assault rifles struck the KTN television station and its sister newspaper the Standard.

Security cameras captured images of masked, light-skinned men. Opposition chief Raila Odinga said that supported his accusation the government had hired eastern European mercenaries to lead the raid and kill opposition politicians.

"These two men were in on the raid and the police have given them Kenya police force certificates," Odinga said.

Odinga, who wants to run for president in 2007, raised the stakes by recording two statements with police and producing copies of passports of two Armenians he said were the guns-for-hire.

Police denied any foreign involvement and are now investigating his charges.

VIP TREATMENT?

The men Odinga named then stepped out of the shadows to hold a press conference on Monday to deny the accusations and level their own against him over business dealings.

The venue of their appearance -- the government VIP lounge of Nairobi's international airport -- raised some eyebrows.

Appearing in dark suits and heavy gold jewelry, the men said they were Armenian brothers from Dubai who had come to invest in Kenya, to complement businesses including trading diamonds and gold from the Democratic Republic of Congo.

One of the men, who identified himself as Artur Margariyan, said they had to counter Odinga's allegations to save their reputations.

"The next thing he was going to say was that we had tails and horns," Margariyan told Reuters in an interview.

He said it was the press who had led him into the VIP lounge.

But the setting of the conference has fuelled speculation the two men have powerful government friends, as did their accusations that Odinga had approached them for money.

Margariyan said the government was not protecting him and until they assured his safety, he would not record a police statement.

He also alleged Odinga and fellow opposition leader Kalonzo Musyoka approached him and his brother for 3 billion Kenya shillings ($41.44 million) to finance a vote of no confidence against Kibaki.

Margariyan said they refused to loan money for political purposes, but gave Odinga $1.5 million in cash - in a plastic bag in a posh Nairobi hotel suite in December - to sort out a domestic problem.

Odinga called the charges against him and Musyoka "hogwash." Musyoka, who recorded a statement with police, has said he met the two briefly last year but never discussed money.

"These people were being kept hidden by the government and these are very dangerous criminals," Odinga told Reuters.

He declined to reveal where he had got their passport copies, saying he needed to protect a source "who was not from the government as such."

Government spokesman Alfred Mutua said Kenya was not protecting the two Armenians. Police are probing all players in the puzzling drama, he said.

"We are investigating these guys. We think there are a lot of politics involved in this," Mutua said.