Dynasties using KRA to hit business rivals – Weekly Citizen

Even as the government intensifies the war on corruption, there are claims that dynasties that have ruled the country’s economic and political pillars are unleashing salvos at the Kenya Revenue Authority to cripple firms belonging to upcoming investors who they view as a threat to their political dominance.
The claim was first made by controversial billionaire businessman Humphrey Kariuki who accused members of the Kenyatta family of sending government law enforcement agencies to harass him.

Humphrey Kariuki

Kariuki specifically pointed an accusing finger at Muhoho Kenyatta, president Uhuru Kenyatta’s younger and powerful brother, whom he accused of developing an obsession with his business deals.
Before the ink could dry, the proprietor of Keroche Industries, Tabitha Karanja, claimed that powerful figures in government on her rival, Kenya Breweries payroll, were all intent on crippling her business.
But according to highly placed sources, Keroche Industries is on the government radar after a local bank injected capital worth Sh5 billion to finance its expansion. Keroche has been able to service the bank loan and was to get another facility hence the current war with KRA.
The funds infused into Keroche led to an undercover tax investigation by KRA that resulted in the arrest and prosecution of the brewer’s owners, Tabitha and her husband Joseph Karanja last year. This year, KRA moved and froze the firm’s bank accounts before the High Court came to its rescue.
According to KRA, Keroche did not make full disclosure of funds it received from Barclays Bank and unnamed donors who reportedly pumped Sh5 billion to expand its Naivasha plant.
There are claims of company ownership is being restructured with new board members.
Keroche directors, Tabitha and her husband, needed cash to modernize their Naivasha factory so as to boost production and effectively compete with the giant East African Breweries.

Tabitha Karanja

In 2010, it was reported in a section of media that Keroche was seeking partnerships and external investors to inject extra cash to cushion it against the effects of a hurried expansion process.
Later in 2014, deputy president William Ruto and Tabitha were publicly seen during the launch of the Keroche Foundation at the Laico Regency. The move was not received well by a section of power barons.
Tabitha and Karanja were to be later arraigned in court to answer to up to 10 charges related to tax evasion.
They were released by Milimani Chief Magistrate Francis Andayi on cash bail of Sh10 million and Sh2 million respectively.
They were accused of fraud by posting incorrect statements on excise duty by reducing the company’s tax liability thereby denying the exchequer Sh14.5 billion over a period of four years.
Founded in 1997 and wholly owned by the Karanja family, Keroche started by making spirits and wines before diversifying into beer in 2009.
It was the first-ever Kenyan-owned company to brew beer which for a long time was the preserve of East African Breweries Limited.
Keroche has long promised that it plans to raise further capital for investment through an IPO on the Nairobi Securities Exchange, but so far no effort has been made towards this direction.
But other sources opine that the Karanjas are victims of a multinational company out to kill competition.
The sources add that the dynasties have frustrated efforts to form the Tax Appeals Tribunal which was enacted into law through the Tax Appeal Act 2013 which came into effect in April 2015.
The tribunal is borne out of the realisation that taxation is a global problem and that in order to support businesses to support economy, there is need to create a judicial body to arbitrate on taxes and the decisions of KRA before they end up at the High Court.
The members of the Tax Appeals Tribunal were appointed in 2015 and their term ended in April 2018.
Since then, the appointing authority (then cabinet minister Henry Rotich) refused to do so, resulting in failure to have a tax arbiter.
In the absence of a constituted Tax Appeals Tribunal as stipulated in the country’s laws, the designs of dynasties move quickly because there is no arbitration.
They add that Tabitha is being persecuted because she dared to be a billionaire without initiation by the dynasties.
Also, most of the dynasties own shares in EABL and she was therefore eating into their profits through her popular brands.
For Kariuki, according to sources, his desire to set up a milk processing factory set him in a collision course with the dynasties.
Speaking at a private get together at one of his palatial residences in Nairobi, Kariuki claimed Muhoho had developed cold feet over his rapidly rising billionaire status among the Kikuyus and was jealous of his Forbes African ranking.
Kariuki – who has never shown any interest in politics – feels his growing financial clout is being deemed as a serious threat to the dominance of Kenyatta family not only over the Kikuyu elite but also in Kenya’s and the regions business circles.
The reclusive Kariuki is one of the regions’ most influential and powerful business leaders and it is hard to overstate his stature in African business circles.
He is owner of international oil product distributing firm Dalbit Petroleum and has multinational interests in energy, manufacturing, retail, food and beverage, tourism and hospitality, oil and gas industries.
Kariuki is known as proprietor of a huge 105MW independent power production plant, the multi-billion Hub mall in Karen, Mt Kenya Safari Club and Africa Spirits Ltd.
But other sources dismissed the narrative of the dynasties versus hustlers, saying it was coined by the deputy president William Ruto to further his political interests.