Bidco, KRA and senator in Sh5bn tax evasion suit

The Kenya Revenue Authority (KRA), consumer goods manufacturer Bidco Africa and a senator have been sued for colluding to deny taxpayers Sh5.7 billion in unpaid dues.

Activist Okiya Omtatah Okoiti has also accused Bidco Africa Chief Executive Officer Vimal Shah of ensuring that the company does not pay taxes over the years.

In the civil suit filed at the High Court in Nairobi, Trans Nzoia Senator Henry ole Ndiema is alleged to have broken the law when he exempted Bidco Africa from paying taxes when he served as a civil servant in the Ministry of Finance in the 1990s.

Mr Omtatah is relying on a whistle-blower’s report that alleges Bidco has survived by not paying its rightful share of taxes since then.

Mr Omtatah also relies on a High Court decision of 2012 allowing KRA to collect tax arrears and other fees amounting to Sh1.3 billion from Bidco Africa.

“The overdue tax (from the High Court decision), plus the interest and penalties remains uncollected to date in circumstances that point to collusion to evade tax, involving Bidco Africa, Mr Vimal Shah and KRA,” says Mr Omtatah in his affidavit, referring to the 2012 decision by Justice David Majanja.

Mr Shah is prominent in Kenya’s business circles. In June last year President Uhuru Kenyatta appointed him to be Chancellor of Jaramogi Oginga Odinga University of Science and Technology for a period of five years.

“The whistle blower’s report shows that as at December 31, 2015, Bidco Africa’s total tax exposure on the unpaid duty (including VAT) was some Sh4,394,779,047.00. In the circumstances, the tax owed is some Sh5.7 billion,” says Mr Omatatah.

According to the suit papers, the report shows that the company omitted from its returns amounts which should have been included and claimed relief or refund to which it was not entitled.

The company is also accused of having made incorrect statement which affected its liability to tax and preparing false records of account.

The petition states that the consumer goods firm avoided paying duty on imported high-density polyethylene, multiplier film for packaging, and refined, bleached and deodorised palm oil between 1992 and 1998.

Senator Ndiema is accused of having conspired with Mr Shah on September 26, 1995 to irregularly approve a customs exemption form for Bidco Africa after the Permanent Secretary Ministry of Finance had 14 days earlier declined to grant any duty remission to the company.

“He is sued herein pursuant to Article 226(5) of the Constitution and statutes which hold public officials personally liable for the loss of public assets,” Mr Omtatah added.

Justice Isaac Lenaola directed the respondents to file their response before July 11 when the case will be mentioned for directions on submissions.