Sh2.4 billion bill returns to haunt taxman
The explosive dossier in Parliament that cast aspersions on the integrity of the man nominated to lead the fight against corruption, Mr Mumo Matemu, is a continuation of a long-running tussle over a Sh2.4 billion tax bill due to the Kenya Revenue Authority. (Read: Matemu linked to Sh2.4 billion scam)
In a sworn affidavit tabled in the House, a Mr P. J. Wishaminya accuses Mr Matemu, who is poised to lead the Ethics and Anti-Corruption Commission, of failing to collect the tax arrears from Kingsway Motors and Automart Ltd.
“Mr Mumo Matemu failed, was reluctant, ignored or refused to collect Sh2.4 billion in outstanding taxes from Kingsway Tyres and Automart Limited even with a judgment from the High Court of Kenya backing him,” said Mr Wishaminya, who is a distraint agent appointed by the Commissioner of Income Tax.
A distraint agent is a person authorised by the law to seize property in order to obtain payment of rent or other debts.
The issue is that Kingsway owed tax arrears. Kenya Revenue Authority appointed Speedman Commercial Agencies Limited on September 15, 2004 to impound Kingsway assets and ensure arrears were paid.
Thirteen days later, Kingsway wrote to the Commissioner of Income Tax agreeing to pay at the rate of Sh1.5 million a week from October 1, 2004.
This was to continue until the whole amount was cleared. Kingsway then asked KRA to get the debt collectors off their backs.
The taxman agreed and the following day ordered the release of all goods that had been seized.
As soon as Speedman released the goods, Kingsway rushed to court and challenged the tax bill and sought to block KRA from issuing further distraint orders.
The case was concluded three years later on May 27, 2007 by Justice R.P.V.
Wendo who ordered KRA to collect the taxes due to it and said that Kingsway had “abused the court process”.
Speedman expected that as soon as KRA got the money, it would be paid the Sh62 million commission that had been agreed on.
But on March 19, 2008, KRA wrote to Speedman, through their lawyer, saying that no tax had been collected. That letter was signed by a Mrs J. W. Kamande.
It shows that Speedman earned a total of Sh887,000 — Sh287,000 paid directly by KRA and Sh600,000 obtained from Kingsway.
When Speedman pressed on, Mr Matemu as the Commissioner in charge of support services, wrote on July 29, 2008 that Speedman should be paid according to the work done, and that had been done.
Mr Matemu said KRA’s hands were tied, because it could only deal with the matter in line with the provisions of the Income Tax Act and Rules.
It is these documents, plus a detailed chronology of the back and forth, that Mr Wishaminya presented to the Justice and Legal Affairs Committee, which, he says, show that Mr Matemu had failed to collect tax.
The committee recommended that Mr Matemu and his two other nominees, Prof Jane Onsongo and Ms Irene Keino, “lacked the interest and sufficient passion” to lead the war against corruption.
However, its report did not include Mr Wishaminya’s complaints.
It was Ikolomani MP Boni Khalwale, who spilled the beans. Dr Khalwale urged MPs to reject Mr Matemu. The debate resumes on Tuesday.
