80 KRA managers face probe over claims of tax evasion

Director of Public Prosecutions Noordin Haji, his deputy Dorcas Oduor and Baltimore’s state attorney Marilyn Mosby during a meeting at Great Rift Valley Lodge in Naivasha yesterday. [Antony Gitonga, Standard]

About 80 middle-level and top Kenya Revenue Authority (KRA) managers are under investigation for allegedly abetting fraud that cost the country billions of shillings.

The probe is a follow-up to an earlier one that saw 62 junior KRA officials taken to court on claims of abetting tax evasion. They are yet to resume work.

According to officials, the new probe involves current and former top officials who served between 2014 and 2018.

They have been questioned by a multi-agency team based at the Directorate of Criminal Investigations (DCI) Training School in South C, Nairobi.

It is alleged the top officials aided up to 600 individuals and companies to either avoid paying taxes running into billions of shillings or pay less than is due.

“We have a situation where individuals and companies regarded as large taxpayers decided to evade paying taxes. Under the new order, they must pay,” said an insider aware of the ongoing investigations.

Insiders said a new unit had been formed within KRA to profile individuals and companies and establish if they pay taxes.

It has so far established a number of public figures have never filed their tax returns. These include some governors and a number of top county officials, an insider revealed. Managers of betting companies are also under probe over similar claims.

KRA has been summoning the individuals and companies in question, including top hotels as well as factories, to its Upper Hill offices for grilling and issuance of new tax demands.

Some of the managers so far questioned have claimed their accounts were used without their knowledge to wrongly issue tax compliance certificates and clear the targeted individuals and entities.

The detectives said they had established some cases where data was erased but they had recovered it.

Those questioned claimed their seniors authorised them to illegally waive taxes of some big companies, and thereafter delete their records from the system.

The fresh probe, which is said to have the consent of the President, is undertaken by officers from a multi-agency team led by those from KRA.

KRA has been experiencing difficulties in meeting its revenue targets. For instance, while in the last financial year KRA collected Sh1.44 trillion, which was Sh100 billion more than the previous year, it failed to meet its target. The poor performance has been blamed on tax evasion.

National Treasury had projected to collect Sh1.605 trillion, a threshold that has been revised downwards from Sh1.69 trillion.

“Investigations have revealed that there is major tax evasion and we shall charge senior KRA managers and all those involved regardless of their status,” Director of Public Prosecutions (DPP) Noordin Haji said yesterday.

KRA Commissioner General James Mburu confirmed the probe, saying it was at an advanced stage.

He, however, did not reveal details of those targeted, saying only detectives have that information.

“I can confirm the probe is at an advanced stage but can’t tell you who is a suspect or witness. Since this is an external and active investigation, I will rather the DCI gives you those details,” he said.

Mburu said his office had sought the support of the DCI in ensuring that all KRA staff who aid tax evasion are promptly investigated and their cases forwarded to the DPP.

“We have set up mechanisms for identifying and investigating staff who aid tax evasion and we are subjecting them to our internal disciplinary processes. We are also working with other law enforcement agencies in ensuring that our staff who aid tax evasion are prosecuted jointly with the taxpayers they have aided,” Mburu said.

He said his office will also share information on those who have wealth that is not consistent with their known sources of income with the Asset Recovery Agency (ARA) and the Ethics and Anti-Corruption Commission (EACC) for appropriate action.

Haji said, “The Office of the DPP is awaiting conclusion of investigations and shall take appropriate action in due course.”

KRA has also decided to independently probe their cases and make recommendations to the DPP for action.

The fraud probe is headed by Mburu, who denied claims they are wrongly targeting individuals and companies. 

Expressed fears

As part of efforts to support the KRA staff, acting National Treasury Cabinet Secretary Ukur Yatani met them last week and assured them of a fair probe.

He held a meeting with the staff who reportedly expressed fears over what they termed as unfair and biased probe.

In May this year, at least 80 KRA staff were arrested over tax evasion and money laundering claims.

Out of the officers who were arrested, 62 were from the Domestic Taxes Department and 18 were from the Customs and Border Control Department.

Mburu said KRA is not fighting any individual or business but rather seeking to ensure tax compliance by all Kenyans.

“Kenyans should reject the narrative that KRA is fighting any individual or business. On the contrary, KRA has the additional responsibility of trade facilitation under which we support a business environment that is conducive for growth of business, which further results in increased taxes,” said the taxman.

“It is our intention to ensure that all persons who are required to pay taxes do so for the good of this country. We will treat all taxpayers with respect and afford them the desired level of services.”

The authority said it is pursuing those who have deliberately chosen to evade taxes through various practices, including failure to disclose fully the income they have earned or misstatement of expenses to reduce the taxable income and therefore evade taxes.

The taxman is also targeting individuals or businesses that have failed to pay the correct import taxes through concealment of goods, misdeclarations and undervaluation among other schemes as well as failed to withhold and remit taxes as required by law.

“All we desire is that all eligible taxpayers make every effort to pay their rightful share of taxes. We must all contribute in an equitable manner to the development of our country,” he said.