Sh1.1bn remitted to National Treasury as withholding tax, says county

Almost half of the Sh1.18 billion earlier claimed to have been stolen from Kilifi County government was remitted to the National Treasury as withholding tax, records indicate.

Documents made available to the Nation show that nearly Sh400 million was remitted to the national government as withholding tax in line with financial regulations which require that any individual or entity paying for goods or services deducts tax from the payment and remits it to Treasury.

The balance of the amount, totalling close to Sh700 million, the documents show, was paid to suppliers of goods and services to the county government during the last financial year.

The documents also show that the county government headed by Governor Amason Kingi lost Sh43 million to a cartel suspected to operate in cahoots with unscrupulous county government officials or fraudsters manipulating the much discredited integrated financial management system (Ifmis).

The documents, for instance, show that an entry of Sh340 million was an inter-account transfer between the county government’s bank accounts held at the Central Bank of Kenya.

They, however, show that the county government lost the Sh43 million to suspect companies identified as Makegra Supplies Ltd, Zohali Services Ltd, Kilingi Investment Company Ltd, Leadership Edge Associates Ltd and Daima One Enterprise. All these are based in Nairobi.

The companies are also reported to have targeted several other county governments in what appears to be a well coordinated scheme to exploit loopholes in Ifmis.

County governments said to have been targeted include Kitui and Kakamega. Kilifi county government was able to intercept the theft of another Sh8 million from its account following the intervention of the Central Bank of Kenya.

On Saturday, Mr Kingi lamented about the slow pace of investigations into the matter. “It is now almost two months since we reported the theft to the Ethics and Anti-Corruption Commission (EACC), the Anti-Banking Fraud Unit and the Directorate of Criminal Investigations (DCI) yet nobody has been arrested in relation to the theft,” he said.

PASSWORDS HACKED

The governor said he had already ordered the suspension of 10 county government employees whose passwords were used in the fraudulent transactions.
“We urge the investigative agencies to move with speed so that the perpetrators are brought to book,” he said.

On Wednesday, EACC boss Halakhe Waqo said the agency and seven others were investigating the scandal. Mr Waqo promised quick investigation into the theft, which is said to have been executed between 2015 and 2016.

“The information communication technology section analysis is at an advanced stage and will be used to build a case. Investigations will be expedited,” Mr Waqo said.

The multi-agency probe team comprises officers from the Kenya Revenue Authority, Director of Public Prosecutions, Asset Recovery Agency, Financial Reporting Centre, National Police Service and National Intelligence Service.

A report from the National Treasury to the county government dated October 21, 2016 relating to loss of the Sh43 million confirms there is no evidence to show that passwords were hacked to facilitate the theft.

On Friday, EACC deputy chief executive officer Michael Mubea admitted that the fraudsters who looted the Sh43 million could have exploited loopholes in Ifmis.

He said that following increased cases of illegal transfer of money to private accounts through the system, the commission would meet Treasury officials next week to draw a plan.

Kilifi county chief finance officer Ben Kai is on record stating that only Sh51 million was targeted by the cartels, out of which Sh8 million was intercepted by CBK detectives.

“The money was irregularly wired to bank accounts of various companies based in Nairobi,” he told reporters in Malindi town.