The Ethics and Anti-Corruption Commission is investigating 10
senior Kenya Revenue Authority officials, who include two commissioners,
over their possible flirtation with a company that was recently ordered
by Court of Appeal to pay Sh2.5 billion to the taxman.
The Saturday Nation
has seen three separate letters sent to KRA headquarters by EACC dated
February 1, February 5 and March 12 inviting senior officials to record
statements on “alleged corruption” during the investigation into the
importation of 40 million kilos of sugar by Darasa Investment Limited.
ACCUSATIONS
“It
is true that we are investigating the matter and our Mombasa office is
handling the matter,” the EACC spokesman, Yassin Amaro, said.
The
number of officials who have recorded statements in Mombasa is not
clear but from Nairobi’s KRA headquarters, the EACC has listed 10
officials who are to record statements.
“We are interested in getting the truth about the sugar import since a lot of accusations cropped around it,” said Mr Amaro.
Public interest.
The
investigations will be of public interest since it goes into the
integrity of an agency entrusted with revenue collection for the
national government. It might also shed light into how KRA officials and
employees collude with companies to evade tax.
BILLIONAIRE
During
the court case, some KRA officials were concerned that Darasa
Investment had insider information in its bid to evade paying Sh2.5
billion tax – an issue that the EACC will be investigating.
Sources
told us that some of the officials have been invited to give background
information as EACC attempts to build a case and that various documents
have been handed over.
The saga is
tied to a company owned by publicity-shy billionaire Ibrahim Noor
Hillowly, who had taken KRA to court seeking to get duty exemption on
Brazilian brown sugar cargo worth Sh2.12 billion, which he claimed to
have imported when the government opened a duty free window to traders
to offset a national shortage.
At the
High Court, KRA lost its bid to levy the Sh2.5 billion tax with Justice
Eric Ogola saying that the sugar imported by Darasa Investment Ltd was
entitled to be cleared duty-free. He termed the decision by KRA to levy
duty as unlawful arguing that the sugar was loaded from Brazil between
May 12 and August 31 and destined for the Port of Mombasa as per the
requirements of a Gazette notice.
CONSIGNMENT
KRA
had argued that the MV Anangel Sun was not destined to Mombasa when it
left Brazil and that papers by Darasa indicated that the sugar on board
the ship was not the property of company. It also questioned why a ship
that could not dock in Mombasa was allowed to carry the consignment.
But
Justice Ogola ruled that he was satisfied that the vessel that carried
the consignment from Brazil could not dock at the Port of Mombasa due to
its size, hence the sugar had to sail to Dubai for trans-shipping.
KRA
appealed the ruling and won the case handled by lawyer Ken Ogeto, now
the solicitor general. The Court of Appeal was told that the High Court
disregarded inconsistencies in documents presented by Darasa, such as a
pre-export verification certificate showing that the sugar was produced
in August and September 2017.
GAZETTE NOTICE
While
the first exempted imported sugar loaded into a vessel destined to a
port in Kenya between May 11 and August 31, last year, a second gazette
notice also allowed a duty waiver on any sugar that was “loaded into a
vessel between September 1, 2017 and December 31, 2017, destined to a
port in Kenya and consigned to a local sugar miller.”
The
problem with Darasa Investment Limited papers was that the lading
papers indicated that it only became the owner of the sugar cargo in
Dubai – which is not a producer of sugar. Also, the date of production
was ahead of the loading date.
TRIBUNAL
KRA
lawyer, Mr Ken Ogeto told the court that “(It was) illogical for the
applicant to contend the sugar was shipped from Brazil in July yet in
their documents it was produced in September.”
In
its final ruling on the matter, where Darasa Limited had also sued the
KRA commissioner in charge of Customs and Border Control Julius Musyoki,
in his personal capacity, the Court of Appeal said that Darasa
Investments Limited had jumped the gun and should have taken the matter
to the tax tribunal rather than seek a judicial review.
The
Court of Appeal said that that inconsistencies regarding when the sugar
was loaded into the vessel were not resolved and that “judicial review
is not available when facts are disputed.”
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