Nairobi County sues CBK, taxman over withheld funds

Nairobi City Hall. Nairobi County says operations are nearly paralysed as it has no money for its recurrent expenditure. FILE PHOTO | NMG 

By SAM KIPLAGAT
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Summary

• High Court judge Pauline Nyamweya Monday asked the two senior officials together with several banks to file their responses to the application before the hearing on December 17.
• The County Government through lawyer Cecil Miller said they obtained a court order stopping KRA from enforcing the agency notes but the taxman went ahead and withdrew Sh4.49 billion from the county’s recurrent expenditure account.

The Nairobi County Government wants Central Bank of Kenya Governor Patrick Njoroge and Kenya Revenue Authority (KRA) boss James Mburu committed to civil jail for allegedly attaching the county’s recurrent expenditure against a court order.

High Court judge Pauline Nyamweya Monday asked the two senior officials together with several banks to file their responses to the application before the hearing on December 17.

The County Government through lawyer Cecil Miller said they obtained a court order stopping KRA from enforcing the agency notes but the taxman went ahead and withdrew Sh4.49 billion from the county’s recurrent expenditure account.

The agency notices were initially issued on December 6, 2016. Fresh ones were issued on April 12, 2019.

According to Mr Miller, the enforcement was calculated to cause economic sabotage and blackmail the county government to give in to KRA’s demand. He said the county’s operations have since been paralysed as it has no money for its recurrent expenditure.

Other than disobedience of a court order, the withdrawal was in violation of Public Finance Management Act as the county exchequer was withdrawn without approval of the comptroller of budget. The money, withdrawn from the County Revenue Fund, argued Governor Mike Sonko’s administration, was not authorised, contrary to Article 207(2) of the constitution.

Mr Miller said there is apprehension, unrest and tension at City Hall as the employees have not received their monthly salaries to date and that the county is unable to meet any of its recurrent expenditures and service deliveries.

The county has named several banks, among them Equity, Co-operative Bank, Commercial Bank of Africa, Standard Chartered, Barclays Bank and National Bank (NBK).

The county government initially challenged an alleged tax dispute agreement dated September 19, 2019, purportedly entered into between some officials of county government and KRA, saying it is null and void.

City Hall wants the agreement quashed since it was entered without following the laid down procedures and requisite approval and consent of the county government finance committee.