Taxpayers to lose Sh2.5b as KRA terminates Swiss firm contract

Documents tabled before the committee indicate that in 2015, KRA used taxpayers' money to procure the Excisable Goods Management system for Sh2 billion from SICPA for a five-year period.

Under the contract, SICPA was to operate the system until June 2024 when the taxman would takeover operations.

According to a 2021 addendum to the contract, the firm would also undertake equipment maintenance work for a further one year period during which the firm would provide the stamps at half the current price from July 2024.

The push by KRA to terminate the contract in favour of another supplier- through an expression of interest in April- however caught the attention of the watchdog committee which commenced probe into the matter.

SICPA management told the committee said that billions of shillings risk being lost should KRA proceed with termination of the contract.

"We are not sure why KRA advertised for an expression of interest. As far as we are concerned we have adhered to the contract and executed the contract lawfully," said SICPA Chief Commercial Officer Gianni Santoro.

The David Pkosing-led committee however sought to know whether the firm had been presented with an evaluation report showing existing gaps which could have led to the taxman pulling the plug on their contract following a ten- year stint.

"Did KRA find a gap in your system to warrant their actions? Have they conducted any assessment and presented you with the findings to show why they opted for a new system?" Posed Pkosing.

To which SICPA said that they had not received any complaint from KRA over their implementation of the contract and neither had they been presented an evaluation reported proving their unsuitability for the job.

The committee further heard that despite a clause dictating that the system would be handed over to the taxman after lapse of the contract period, KRA did not have the capacity to run the same.

This prompted the MPs to find faults in the contract with Laikipia East MP, Mwangi Kiunjuri seeking to know how KRA was expected to operate the system once it was handed over.

"How can you own something that if you leave it with me I can not be able to use it tomorrow? So what happens if KRA does not renew the contract?" Posed Kiunjuri.

Kasarani MP Donald Karauri sought to know whether SICPA had won the tender through political patronage further insinuating that the firm had held KRA hostage to ensure that it could only be awarded the tender.

"The equipment servicing will be done by us as required by technicalities of our security contract even after our contract has been discontinue," replied Santoro further emphasizing that no reason had been found to force a cancellation of the contract.

The Chief commercial officer also warned that should KRA proceed and terminate the contract, taxpayers would would pay more for the purchase of a new system.

"The cost of acquiring another system would definitely be higher because we have taken time over the years to create the systems and offer solutions," he said.

The committee now suspects that tender wars could be behind the move to cancel the excise duty stamps tender and summoned on KRA to appear before it for grilling.

"There is a possibility that a competing firm is trying to get SICPA services terminated so that it can rip off Kenyans.I however feel we need a comparison in service provision so Kenyans can make an informed decision," said Pkosing.