Two ministers in battle to control Sh12b betting tax

Treasury CS. Henry Rotich leave after meeting National Assembly Speaker Justin Muturi on the controversial finance bill at Parliament on Thursday 06/09/18. [Boniface Okendo,Standard]

The battle to control up to Sh12 billion accruing from gaming and betting taxes has set the Sports and Finance ministries on a collision path.

National Treasury Cabinet Secretary Henry Rotich has already fired the first shot by creating a parallel fund to be called Sports, Arts and Social Development Fund, with a copy-and-paste mandate as specified in the Sports Act 2013, which established the initial National Sports Fund.

Sources have revealed to The Standard that Sports Cabinet Secretary Rashid Echesa is an isolated man, as Mr Rotich has taken the principal secretaries from his ministry (Treasury) to sit on the oversight board of the new fund.

In Legislative Supplement Number 58 made on July 23 and published in a special issue of the Kenya Gazette on August 10, the Treasury CS decreed that: “In exercise of the powers conferred by Section 24(4) of the Public Finance Management Act, the Cabinet Secretary for the National Treasury and Planning makes the following Regulations: The Public Finance Management (Sports, Arts And Social Development Fund) Regulations, 2018.”

Legal notice

Rotich’s legal notice also said: “There is established a fund to be known as the Sports, Arts and Establishment of Social Development Fund.”

It went on to specify the sources of the fund: “The fund shall consist of all the proceeds required to be paid into the fund under the Betting, Lotteries and Gaming Act; Cap 131 and all the proceeds required to be paid into the fund under the Income Tax Act.”

The new fund comes replete with an oversight board, a function that will rub the Sports ministry the wrong way especially after Parliament enacted the Sports Act 2013, which established Sports Kenya (to manage and maintain sports facilities), the National Sports Fund (to finance sports projects) and Kenya Academy of Sports (establish and manage sports training academies).

The new legislative notice signed by the Treasury CS on August 10 could effectively set the stage to end the life of the Act.

Rotich’s move via Kenya Subsidiary Legislation 2018 states: “There is established a board to be known as the Sports, Arts Establishment and Social Development Fund Oversight Board, and the Sports, Arts and Social Development Fund Oversight Board.”

Similarly, the Sports Act 2013 states: “There is established a board of trustees of the fund to be known as the National Sports Fund Board of Trustees.”

The National Sports Fund under the Sports Act 2013 has 35 employees whom The Standard established are sitting idle.

A source at the ministry described the Sports CS as a “lame duck” whose saving grace would be an interpretation from the office of the Attorney General.

“The functions and revenue streams to the new Fund are an exact copy of the Sports Fund only that it adds a Social Development aspect to it,” the source told The Standard.

“The fund was a beehive of activity as it was being set up with the ‘who’s who’ in the Sports ministry walking in and out of the office and then suddenly everything went quiet. Instead, action has shifted to Treasury Building from where the billions will be controlled,” the Sports ministry official said.

As of last month, the fund had Sh12 billion and counting. The money has been raised from betting companies after the Government increased taxation to 35 per cent at the beginning of the year.

Under the new fund will be an administrator, who “shall open and operate a separate bank account or accounts at the Central Bank of Kenya or a bank to be approved by the board and the National Treasury in accordance with the Act”.

The directive takes money from the Sports docket, which is already reeling from under-funding and which has not been able to meet its financial responsibilities towards sports federations.

Mr Echesa admitted that some of the suggestions they had given on how the fund should be run were deleted.

“I have heard that some changes were made to what we had proposed and what we have is not what we had suggested. However, we are waiting for the document to go to Parliament and then we can protest,” he said.

Echesa said they were anxious to have the original fund (under the Sports Act 2013) operational so they could fund sports activities and associations.

As the fight over the sports billion takes shape, it’s not clear the fate of Patrick Wahoro who was recently appointed by President Uhuru Kenyatta as the Chairperson of the National Sports Fund Board of Trustees.

Sudden interest

Sports ministry personnel who did not want to be named because they are not authorised to talk to the press told The Standard the huge amount of money the fund expects to raise is what has led to the sudden interest from Treasury.

If CS Rotich will have his way, sports federations would have to shift their begging bowls to the new fund administered by Treasury – an unprecedented shift in the history of Kenya.

“The red tape is already choking at the Sports ministry and now you have Treasury directly involved here; this will have serious repercussions on the sports industry altogether,” said the sources.

An official who was part of the team that established the National Sports Fund under the 2013 Act questioned the wisdom of a duplicate fund.

“Under the Constitution, the minister is not allowed to establish another body when one already exists. This is a duplication of roles. The Sports Fund is up and running complete with employees and a CEO. Where do you take them?” the official asked.