Author: Kenya West

Amaan Gas Limited, the firm that owns Amaan Gas brand is the latest firm on the spotlight over unethical and illegal involvement in LPG cylinders a crime that has now become a menace to regulators as rogue firms in the lucrative gas industry engage in fake gas manufacturing.

In a case before Milimani Magistrate Court, MCCR/E436/2021  the firm’s director Mohammed Rashid Abdikalik who has been playing hide and seek with the court after junior staff of Amaan Gas Limited; Hassan Mohamed Mohamud, John Theuri Mathenge and Agostine Maina Njuguna and denied the fraud charges, are accused that on March 24 this year at the firmed premises L. P. G storage and filing station filing facility located along sabaki area Athi river within Machakos County jointly with others not before court they were found dealing with empty LPG cylinders of safe gas, Pro gas, Oilibya, Hashi gas, lake gas, gas yetu, Tisha gas among others without prior written consent from the licensed owners in the contravention of the law.

Theuri alone was charged that jointly with others not before court using a motor vehicle were found dealing with the above mentioned LPG cylinders without prior license from the owners.

The junior staff were released on a bond of Sh200, 000 or cash bail of Sh50, 000 each pending hearing and determination of the criminal case. Amaan directors were expected to appear in court on April 8 face criminal of charges of trading and dealing with LPG cylinders of another license. Kenya Insights search on the case couldn’t determine if this really took place. Milimani Resident Magistrate David Ndungi issued the summons after the directors failed to appear in court to plead to the charges.

The new law – Petroleum Act 2019 – requires all LPG retailers, wholesalers and transporters to hold licenses for each business location following the abolishing of the compulsory LPG cylinder exchange pool.

It also says the licenses will be specific to the authorised cylinder brands, and retailers are required to obtain prior written consent from brand owners.

While consumers may have been saved from the kitchen raid plotted by the Treasury that would have seen the price of Liquefied Petroleum Gas (LPG) rise by at least 14 per cent from the Value Added Tax, another assault stalks them on the safety of the gas they use.

Invesigations has established that a number of bulk LPG refilling plants have emerged in residential areas, near schools, churches, and in some cases, government premises, creating waiting disasters as a cartel of dealers seeks to drive informality into the sector with little regard to user safety.

Amaan gas Ltd operates such a firm in Machakos where doing the raid following intelligence, unearthed their dirty dealings that have been ongoing behind the backdoor.

Letters written by dealers to authorities, including the police, list at least 34 sites spread across the country, half of them in Nairobi and its environs.

Illegal refillers have disrupted the LPG sector in what is now a blow not only to traders, but is also a safety concern to the consumer, who is unaware of the place the cylinder was refilled or when it was last checked for leaking or any other defects.

QUALITY CHECKS

“They don’t care about quality checks on the cylinders they are handling illegally, in the first place, and while the valves on the cylinders may be similar, the gadgets used to refill them may not be the same, meaning that, each time they are refilled in different places, the valve may get damaged and households are put at risk when they use such cylinders,” Omondi Omollo, a lawyer who has been prosecuting illegal refills said in an interview.

Kenya has one of the toughest laws in place to curb illegal trade in cooking gas—perhaps more punitive than some Acts on drug trafficking—but loopholes surrounding the setting up of the refill plants, bulk storage and ferrying of the same make nonsense of such regulations.

The laws contained in the Petroleum (Liquefied Petroleum Gas) Regulations, 2019 specify huge fines for offenders with a design to push self-check among dealers.

One is not supposed to sell LPG to another trader if they are not licensed and hiring a driver or vehicle to transport gas is as illegal as transporting it in an unlicensed vehicle. It means both parties are liable if found in illegal dealership.

The laws are just on paper; on the ground, LPG refilling plants in Nairobi’s Industrial area, Embakasi, Githurai, along the Eastern and Southern Bypasses, Kikuyu, Thika, Sagana, Kisii, Embu, Meru, Murang’a and other parts of the country are doing big business. The punitive law is the least of their concerns.

SAFETY

They either obtain cylinders from retailers in small shops and refill them at a lower fee to attract them or simply hijack lorries ferrying empty cylinders, refill them and sell in the local market. Brand owners who have pumped millions of shillings into cylinder manufacture, meanwhile, wait for eons for their cylinders, which they also need to check for safety before refiling.

Illegal refillers such as Amaan Gas will have evaded both the cost of manufacturing a cylinder and that of checking each of the valves for safety. Even better, they will escape any blame should the cylinder explode, or turn out to be containing bad quality gas. How they escape the law is, however, the loophole by enforcement agencies that has thrown consumers under the bus.

The Energy and Petroleum Regulatory Authority (EPRA) that is tasked with policing the market has been largely blamed for handling offenders with kid gloves. Dealers have been pointing an accusing finger at the regulator for issuing warning letters to offenders, but is reluctant to charge them in court, and in some cases even tries to drop the accusations midstream.

Epra is said by journalists to being snobbish in addressing fundamental issues raised by dealers. The questions around the illegal set-up of LPG plants in residential areas, poor enforcement of transport guidelines for LPG distributors, which endangers motorists unaware of the possibility that the next car could be full of the explosive gas cylinders on the road, and the authority’s questionable handling of cases in court, were all evaded by the authority despite confirming their receipt.

One of the latest incidents involved a dealer based in Mavoko. Officers from Anti-Counterfeit Authority and the Directorate of Criminal Investigations conducted a night raid in his Syokimau premises, confiscated close to 600 cylinders belonging to different brands and two vehicles to press charges against the businessman.

EPRA, which had described the trader found with cylinders belonging to 42 different brand owners as dangerous, shocked lawyers representing the offended brands when it applied to withdraw the case. In less than two months, the suspect had been given back his licence, which had been cancelled, with only a ‘warning letter’ as punishment.

WITHDRAW CHARGES

“We attended court on 23rd January 2020 when the accused persons in the case were scheduled to take plea. We were, however, taken by surprise to learn that EPRA, through the prosecution, intended to withdraw the charges against the accused person and substitute them with an enforcement action that includes a warning and a 60-day moratorium in furtherance of your letter dated December 20, 2019, which we came to know of its existence in court,” lawyers representing one of cylinder owners wrote to EPRA in protest.

The protest, which reached the Petroleum ministry, forced the regulator to rescind the decision, but this too has come back to haunt it as the suspect now wants to know how the ‘deal’ that ended with a warning letter has been overturned. The matter is still in court.

Late year in July, EPRA announced it had revoked the licence held by Swift Energy Distributors adding to the flip flop in addressing the illegal LPG business. It was the second time the licence is revoked in less than half a year while the regulator says the firm has on three other occasions been found in breach.

ESCAPE JUSTICE

The agencies are also said to be weakly joined in a multi-agency effort to root out the trade, another loophole that has seen various illegal dealers escape justice. Who raids, who charges and under what law has been a subject of blame game among enforcement agencies.

While the Anti-Counterfeit Authority can charge those who sell gas using brands they don’t own, the offence will only attract three times the value of goods seized. The Petroleum (Liquefied Petroleum Gas) Regulations, 2019 would fine them at least Sh10 million for it.

“The circumstances of this case disclose offences under the Petroleum (Liquefied Petroleum Gas) Regulations, 2019. Specifically, contraventions of regulations 13(1) and 14(a) as read with the Fifth Schedule. Further, the penalties described under this schedule, being a fine of Sh10 million are far steeper than those provided under the Anti-Counterfeit Act. I am, therefore, of the opinion that this matter falls under the mandate of EPRA,” ACA investigators wrote after the Syokimau raid.

It was also exposed last year by an insider within ACA that some 700 cylinders were being handed back to an offender in Embu after EPRA failed to take up the matter involving refilling of brands without authority from the brand owners — another offence attracting Sh10 million fine.

The enforcement loopholes and increasing demand for cooking gas have made the trade a multi-billion shilling affair with some high ranking government officials, politicians, officials within the regulatory agencies, and police said to have joined the business, threatening to reverse the gains made in pushing for the clean cooking energy source.

The huge penalties are also said to have inflated the size of bribes sought from offenders whose cartel-like nature of operations ensures one of their own is saved from conviction whenever they are arrested.

Its unsurprising that the case of Amaan has not only been slow but the directors acting with impunity and avoiding the courts perhaps working in the same script as the rest of gas cartels who get caught and cut deals with corrupt regulatory officials.

Increasingly helpless traders have been seeking help from various quarters. In May, the Energy Dealers Association wrote to Interior CS Fred Matiang’i decrying the rampant stealing of cylinders and named the firms they suspected to be breaching their brands, indicating their helplessness at the hands of the cartels in the LPG market.

“Despite the requirement by the regulations that prohibit cross filling and transportation of cylinders with the exception of companies that have entered into a mutual agreement to do so, some of our members have refused to comply and have continued to illegally cross fill competitors’ cylinders without the authority to do so.

CRACKDOWNS

“This has put the general public at risk because it can’t be traced who filled the cylinders and whether safety requirements were followed,” dealers’ association chairman Peter Macharia wrote in the letter that was copied to Mining and Petroleum CS John Munyes and EPRA DG Pavel Oimeke.

It must also be noted that disgraced ex-Epra DG Oimeke thrived in corruption and was forced to resign and tee being caught in a bribery scandal. That only goes to show what goes on behind scenes once these cartels are caught in the act.

Frustrated dealers have been seeking permission to set up their own enforcement to protect their businesses in what may spark acrimonious crackdowns among the players, some of whom belong to the same umbrella organisations like the ADA.

Cases like this of Amaan can easily disappear in thin air if deals are cut behind doors and no one does follow up to keep a watch on the progress. The cases will always be sorted out and the rogue firms back to operations without consideration of public safety. We’re determined to do a follow up on this case and see if it will suffer the same fate of induced death or if it will go all the way.

Rogue firms ought to suffer the wrath of law by getting heavily fined beside losing their trading licenses.

Consumers and the general public can only pray that a tragedy will not be the wakeup call for action.

On April 13 last year, Kenyans were just beginning to adapt to a new life under a partial economic shutdown occasioned by Covid-19. About 9, 000 kilometres away in Beijing, Kunlun Tech Co Ltd chief executive Yahui Zhou had just tendered his resignation from the gaming firm he founded in 2008.

Aside from his famous gaming company, Mr Zhou was known for having reached one of the most expensive divorce settlements in China, having given his ex-wife Li Qiong Kunlun Tech shares worth $1.1 billion (about Sh119 billion). He had opted to leave Beijing Kunlun to become full-time CEO of Oplay Digital Services.

Oplay owns three Kenyan firms that offer loans through mobile phone apps without any security, and which have all significantly grown since entering the lending business between 2018 and 2019. They are Okash, Opesa and Credit Hela.

Mr Zhou runs several digital lending firms in Africa and Asia through an intricate web of shell companies registered in several countries. At the top of the pyramid sits Opera Limited, whose core product is a popular web browser by the same name.

While Opera Limited is headquartered in Norway, it is formally registered in the Cayman Islands, a popular destination for businessmen and companies looking to lower their tax liabilities.

Video games

The firm was founded in 1995 and went public in Norway nine years later after listing on the Oslo Stock Exchange. Beijing Kunlun Tech Co turned Mr Zhou into a billionaire after marketing and selling several popular video games in China.

In 2016, he paid Opera’s shareholders $1.23 billion (Sh133 billion) to acquire the browser. Between 2016 and 2019, the tycoon went on an aggressive investment drive. Opera later bagged a deal to manage Opay Digital Services. Opay is registered in Hong Kong but with subsidiaries across the globe.

Read: Digital loan shock for the jobless, students

Opay in turn owned TenSpot Pesa Limited, a special purpose vehicle that launched the Okash digital lending platform in March, 2018. Opay and TenSpot Pesa were also at the time running a digital payment service that enabled users to buy mobile phone airtime at discounted rates.

In December 2018, Opera made a move on Opay, and bought the firm and its assets, including Okash for $9.5 million (about Sh1.03 billion). Interestingly, Okash began operations before it was registered in Kenya. TenSpot Kenya Ltd started operating Okash in March, 2018. TenSpot was registered on May 23, 2018, more than two months after operations had started. Hong Kong-registered TenSpot Pesa Limited owns 20,000 shares in the Kenyan firm.

Oplay Digital Services, registered in Mexico, owns 200 shares in TenSpot Kenya, which has two directors, Li Cao and Kun Wang, both Chinese.

A few months into 2019, Mr Zhou’s network of companies launched Opesa through TenSpot Kenya. On November 4, 2019, the group incorporated a new company, O-Stream Credit Limited. O-Stream owns Credit Hela, the third of Mr Zhou’s digital lending firms. O-Stream is owned by Opay Digital Services, which is registered in the United Kingdom. Mr Wang and Han Fang are listed as O-Stream’s directors.

The three are among the biggest digital lenders in Kenya. When Opera was listing in the United States, the firm filed regulatory documents that gave an insight into its operations, including just how profitable the industry is.

“Initially, the service primarily marketed top Opera browser users. In the fourth quarter of 2018, Okash generated $1.7 million (Sh184 million) of revenue from 280,000 microloans, and held active licenses to provide similar microfinance products in four other countries,” Opera said in disclosures to the United States Securities and Exchange Commission.

Mobile loan apps like Okash, Opesa and Credit Hela may be minting millions in profits from loans, but their recovery methods and interest rates have raised red flags that have now seen legislators push to have them regulated by the Central Bank.

Read: Club warns loan seekers of fake mobile apps

Interest rates of up to 876 percent have been declared steep by financial experts across the world, with some terming the apps as predatory.

Digital lending

Before Mr Zhou ventured into digital lending, he tried to expand his portfolio to social media when he purchased American gay dating platform Grindr for $93 million (Sh10.1 billion) in 2016.

US authorities were unwilling to risk letting sensitive health data on Americans leak to the Chinese government through Grindr. Barely a month before resigning from Opera as CEO, Mr Zhou sold Grindr for $608 million (Sh66 billion). The corporate veil covering the owners of Kashway and Ipesa, two other popular lenders, is thick.

Nation could not establish the owners, but traced them to Hong Kong. The global financial and trading hub has become a popular tax haven for businessmen looking to invest in other countries without having their identities revealed. The closest individual link to Ipesa and Kashway is in directorships of the two firms running the lending platforms. Chinese national Junjie Zhou and Kenyan Elijah Ng’ang’a Ikahu are directors in XGO Kenya Limited, which operates Ipesa and Wakanda Credit Limited, which manages Kashway.

Hong Kong-registered MIB Network Limited sits atop the chain of companies behind the two lending applications. MIB Network owns XGO Kenya Limited and Wakanda Credit Limited. XGO Kenya was registered as a company on May 15, 2019, and began operations as Ipesa. On August 2, 2019, the individuals behind Ipesa registered Wakanda Credit Limited, which then started operating the Kashway platform.

American nationals Mathew Joseph Flannery and Daniel Kyung Joon Jung were among the early entrants into the industry, with Branch International. Working from San Francisco, California, they began operations in Kenya on April 2, 2015. Two years later, they joined the list of businessmen looking to shave their tax liability, as they incorporated Branch International Holdings in Mauritius.

They then transferred all 8.5 million shares from the Kenyan firm to the Mauritian entity. Its profits attracted $170 million (Sh18.4 billion) from private equity firm Foundation Capital and Visa in 2019. At the time, the firm expected to earn $70 million (Sh7.5 billion) from its African markets alone. It has issued over 15 million loans to more than two million Kenyans.

Also headquartered in San Francisco is Tala, one of the first players to join the mobile lending industry. It was founded by Shivani Bassant Siroya, who owns the app through Inventure Mobile Limited. The parent company is US-registered Inventure Capital Corporation (998 shares) and Ms Siroya (two shares). Ugandan businessman Joseph Kyeswa Ivan Mbowa is listed as a director.

When the International Consortium of Investigative Journalists (ICIJ) published a list of companies and individuals using Mauritius to avoid taxes, Mr Mbowa featured under Umati Capital, an institution that offers credit to agribusinesses, retailers and suppliers of fast moving consumer goods.

Mr Mbowa is the firm’s chief executive. Other shareholders are Information Cabinet Secretary Joe Mucheru, Dominic Kiarie, Anne Marie Van Swinderen, Ace Micro Services Limited, Dataposit Limited and Munyutu Waigi. His Nairobi residence status shows Mr Mbowa calls the shots at Tala’s operations.

Much like MIB Network, we were unable to establish the owners of Zenka Finance Limited. Zenka Finance runs a platform by the same name and it’s owned by Poland-registered Pocco S.A. Its board chair Lukasz Ewangelis Notopulos and company vice president Konrad Marcin Bartnik are listed as directors in Zenka Finance, alongside Chilean businessman Walter Felipe Sanhueza Valle.

One of the few locals that has penetrated the saturated industry is billionaire Stanley Ng’ethe Kinyanjui, who owns Berry. He is a close ally of President Uhuru Kenyatta, and was part of a group of influential businessmen and politicians – ‘Friends of Jubilee’ – that raised at least Sh1 billion towards Jubilee Party’s 2017 election campaigns in under two hours.

To many Kenyans, Magnate Ventures is an advertising company with several billboards scattered across the country. But the firm has become synonymous with public procurement.

Magnate Ventures could be supplying prepaid metres to Kenya Power today, security equipment to the Kenya Airports Authority tomorrow, and building a road the third day. It is such mega contracts that have built Mr Kinyanjui a vast empire estimated to be worth billions.

On May 29, 2018, Mr Kinyanjui registered Finberry Capital Limited. Finberry Capital owns the Berry mobile loans application. The sole shareholder of Finberry is Adept Capital Limited, which was incorporated on February 23, 2018.

Adept Capital is owned by Mr Kinyanjui, Robert Kamau Kinyanjui and Magnate Securities Limited. Magnate Securities is owned by Magnate Ventures (900 shares), Mr Kinyanjui (60 shares) and Robert Kamau Kinyanjui (40 shares).

Other lenders thriving in the mobile loans industry with locals as shareholders are Zazipay trading as MyCredit, Okolea International Limited and Kuwazo.

Zazipay owners

Everlyne Rotich, George Mbira, Hellen Kithinji, Mamili Limited, Robert Odhiambo, Victoria Muya, Jackline Kirima, Lewis Muriti, Ian Kingara, Charlene Waweru, Michael Mbira, Priscilla Kimani, David Wangai, Vincent Ndirangu, Mary Maina, Sally Muenesi, Jeremy Muyela, and Nchi Nzuri Limited. Others are Julie Ogutu, Peter Kinyanjui, Scholastica Ndirangu, Johnson Mwangi, Patrick Mugo, Armstrong Kituku, Rages Investment Limited, Ken Kaberia, Mark Mbuthia, John Antony Jude Fernandes, Joshua Ojall, Stephen Kamau, Neil Ribeiro, Bubbles Personal Care and Kairu Mbuthia.

Okolea International

Julius Githira, George Mburu, Sarah Karingi, Cosmas Mulumba, Wilson Kamau, Third River Solutions, Eliud Kibe, Peter Njoroge Muraya and Lillian Njeri Njehia.

Kuwazo

UK national Ian Groome and Zambian Victor Chicha. Others are former football referee Gilbert Moore Titus Ottieno, Ng’ethe Chege, Catherine Mutua, Edwin Migiro, Richard Kinyua Kinyanjui, Edwin Nduati, James Katende, Antony Kamigwi, Patrick Alando, Victor Nyanjom who hold their shares through Dagham Holdings. Others are Rose Maruru, Roy King’uri, Allan Ngugi, Samuel Magecha, Christopher Rwengo, Moses Kiboi and Lasoi Mukuru.

Article originally published on The Nation.

Acquisition of the land where the multibillion-shilling Kings Business Park sits in Nairobi’s Industrial Area was fraudulent, a court has ruled.

Lady Justice Loice Komingo of the Environment and Land Court ordered title for the land be revoked and a new one issued to the genuine owner, Horticultural Crop Directorate (HCD).

Former President Daniel arap Moi’s son Jonathan and businessman Jacob Juma (both now deceased) were associated with the land.

Judge Komingoi’s ruling that the Land Registrar cancels the title and issue HCD with a new one, was premised on three basic facts of law.

First was that though every person has a right to acquire and own property in any part of Kenya, the rights under Article 40 of the Constitution do not extend to any property that is found to have been unlawfully acquired.

While ruling out compensation, the Court noted that in a situation where the mode of acquisition of the land is suspicious and cannot be defended, allowing payment of damages would amount to condoning an illegality.

“In a situation where the mode of acquisition of the said property is suspicious and cannot be defended, allowing payment of damages will be tantamount to condoning illegality, a task a court of law cannot be party to,” the court ruled.

Komingoi stated that a title deed is an end product, and if ownership is contested, the holder of the title cannot dangle it as an absolute or indefensible proof of ownership.

She observed that one had to go further and prove the legality of how the land was acquired so as to entitle him to the land.

The court noted that HCD proved its case “on a balance of probabilities as against the defendants” and that the grant for land parcel LR NO. 209/12490 issued to the other party was fraudulent, null and void.

Currently the land is valued at Sh400 million and has 28 godowns of approximately 10,200 square feet each.

HCD, which was formerly known as Horticultural Crops Development Authority (HCDA), had initiated the process of reclaiming the land which was initially sold to Sakir Properties by businessman Jacob Juma, who was shot dead in Nairobi in May 2016.

Repossessing land In a letter dated March 10, HCD’s head of legal services Andrew Osodo confirmed that the authority had initiated the process of repossessing the parcel of land.

“The purpose of this memo is therefore to forward the judgement for your record and most importantly to note that the court has reverted back the suit land to the authority,” Osodo wrote.

Acquisition of the land was investigated by the National Land Commission (NLC) which recommended the revocation of the title, indicating that the piece of land, L.R number 209/12490, was allocated to HCD.

HCD was to build their headquarters there.

The matter went to court after Sakir Properties, through their lawyers, S.S Jowhal and Company Advocates, maintained that they did a search on July 10, 2007 under reference 444/2007 and another one on October 13 under reference 805/10/09.

Both searches, they claimed, did not show that the land belonged to the HCDA. They further claimed that the plans for the development of Kings Business Park were duly approved by the Nairobi City Council, now the County Government of Nairobi.

Juma had told detectives that he bought the company that bought the land from Jonathan Toroitich Moi who was the original owner. Toroitich died in April 2019.

“After I bought the company and they transferred the shares. The land had two letters of allotment, one for Sakir Properties and the other for the HCDA. HCDA could not raise the 1.

7 million for the land rates,” Juma wrote, adding that he later, in 2009, sold the land to Double Ess.

The Court however ruled that HCD’s evidence had not been controverted. “I find the first defendants (Sakir Properties) defence amounts to a mere denial. It claims to be a purchaser for value having bought from the allottees in January 1999.”

According to records, the matter was also referred to the Public Investments Committee (PIC) and the HCDA was instructed to pursue the recovery of the land.

During initial investigations, the NLC wrote to the Registrar of Companies requiring information about the Kings Collection but the Registrar said that the company was not registered.

“The above business name/company does not appear in our database of registered businesses/companies,” the letter dated April 21, 2015 stated.

The probe revealed that according to the card at the Ministry of Lands, the land belonged to Double Ess since January 1, 1998.

However, NLC noted that the card had been swapped since it was valid from January 1, 1998 “while the government had held the land as per the allotment since 1987.”

“It is a fact that government land was stolen after the government had paid fees on it and is currently under private hands who stole it knowing clearly that it belongs to the public,” the NLC reports stated.

An affidavit dated February 28, 2008 and sworn by the HCDA Internal Auditor Isaac Chemwon Meto states that the authority was allocated the 3.5Ha property in January 1987. HCD paid Sh152,608 stamp duty and a receipt -number B290939 -was issued.

Waiver of accumulated rent However, it was established that while the communication between HCDA and the Commissioner of Lands was going on regarding the waiver of accumulated rent, Sakir Properties was allotted the land and issued with a title deed. HCDA immediately cautioned the property.

Investigations however later revealed that Sakir Properties illegally acquired the documents for the land during registration. Interestingly, the grant presented by Sakir Properties was prepared and signed on May 27, 1998 the same day the grant for the HCDA was prepared. It even offered to sell the land to HCDA.

The grant had a deed plan number 193909, which was used to prepare a fraudulent grant to Sakir Properties. “No other documents were presented by Sakir Properties to show that they had a different Deed Plan. The suit property was therefore not available for allocation to Sakir Properties,” the Court stated.

It later fraudulently registered the same parcel in its name, conspired and purported to sell it to Double Ess Properties Ltd during the pendency of civil suit, the probe further revealed.

LABYRINTH OF OWNERS 

• The land was initially sold to Sakir Properties by businessman Jacob Juma.

• Jacob Juma told detectives that he bought the company that bought the land from Jonathan Toroitich Moi who was the original owner.

• An NLC probe concluded that the property was fraudulently obtained since HCDA did not surrender the land, and that the Commissioner of Lands did not give any notice of revocation.

A deal sealed by Moi-era powerful minister and businessman Jared Kangwana and embattled Ex-Treasury CS Henry Rotich in 2019 has come to haunt the duo as Central Bank closes in on investigation, Kenya Insights has learnt.

In 2016, Kangwana teamed up with his associates to ; University don Beatrice Shabana, managing partner at Grant Thornton Kenya Kamal Shah and a then visiting professor at Strathmore Business School Prof Alejandro Lago to form Maisha Microfinance Bank targeting small traders.

Maisha MFB became the 13th micro lender licensed by the Central Bank of Kenya (CBK).

Maisha’s initial capitalization was Sh90 million. The CBK requires microfinance banks to have a core capital of Sh60 million.

To gain an edge over its peers, Maisha had poached senior management staff from industry giants including Equity Bank and Family Bank to boost its operations including the CEO Ireneus Gichana from Faulu Bank.

As the assets base grew, Kangwana wanted to raise his stakes in the bank above 25% and here’s where the problems started.

The CBK restricts ownership of share capital by an individual and associates to a maximum of 25% of the share capital except in exceptional circumstances where the Treasury gives the greenlight and here’s where Ex-CS Rotich came in handy.

As the Treasury secretary, Rotich gave the consent in a Gazette notice published in April 2018.

“ … the Cabinet Secretary for the National Treasury exempts, for a period of four years with effect from March 1, 2019, Kamu Limited from the provision of section 19 (1) of the Microfinance Act, 2006,” said Mr Rotich in the legal notice dated 18 March published on April 5, 2018.

By then the Bank had Sh207 million in paid up capital from the initial Sh90 million when it was licensed.

A probe into the deal was commissioned by Governor Njoroge to determine the ‘special’ circumstances under which the Ruto ally extended the facilities to Kangwana. Information seen by Kenya Insights, reveal that Rotich acted independently without consulting the Central Bank a move that has landed the fire ball on his head with intriguing details coming from the investigations into the deal.

The CBK boss has informed his counterpart from the Ethics and Anti-Corruption Commission (EACC), Twalib Mbarak, of the progress of the investigation.

Mr Kangwana and his family hold the stake in Maisha through Kamu Ltd. Mr Kangwana is associated with the Monarch Group that owns Monarch Insurance and a raft of real estate properties including Chester House in Nairobi city centre — where Maisha Microfinance Bank’s first branch is located. The KTN founder is also associated with The Mall in Westlands.

The latest investigation now add to the long tail of Rotich’s trials a new circus that will twirl around the court.

On July 23, 2019, Rotich was accused of flouting procurement procedures in awarding a contract worth billions of shillings for the construction of the two dams to Italian firm, CMC de Ravenna.

They were accused of taking part in fraud in the planned construction of two multi-purpose dams projects in Kimwarer and Arror, Elgeyo Marakwet, estimated at Sh63 billion.

The suspects were charged with conspiracy to defraud, failure to comply with applicable procurement laws, engaging in a project without prior planning and abuse of office among other economic crimes.

Studies shows that every year, more than 8,000 Kenyans are killed by tobacco-linked diseases, part of what the WHO calls the ‘biggest public health threats the world has ever faced’.

In 2019, the Kenyan government increased the excise duty on cigarettes again, to the point that taxes constitute 35% of the retail price of a pack of 20, this was part of not only raising taxes but measures to curb excessive smoking. Marketing trends has seen an overall decline in tobacco retail volume sales due to these price increases, as they have forced many Kenyan consumers, especially low-income ones, to either quit smoking cigarettes altogether or to reduce the number of sticks they smoke per day.

Faced with a declining sales trend but determined to maintain dominance, the British American Tobacco (BAT) Kenya in 2019 came up with a new plan.

BAT Kenya pumped in a new a Sh2.5 billion investment in Kenya, a nicotine pouch plant in the country . The firm had not only identified a loophole in the Kenyan market to dive into but Africa as Nairobi would be the export hub.

With the sales taking wind in 2019 on its introduction, it was abruptly stopped by the Kenyan government after it had emerged that the registration was irregularly done and illegally marketed. Since then, there have been intense lobbying for LYFT to be allowed back to the market as a harmless product by BAT but anti-tobacco lobby groups have stood their ground and persistently urged the government to ban the product that research show is as deadly as other tobacco products.

In the talks, the government gave BAT the options of registering it a fresh as a dangerous nicotine product like any other tobacco products or exit the market. After attempts to arm twist the government with economic shenanigans, left with no options, BAT eventually gave in and agreed to work with the government’s conditions and will now sell under strict tobacco rules.

In its fantasy worldwide strategy, BAT had projected to increase the overall size of the’ non-combustible products’ targeting some 50 million more consumers by 2030 and in the process, earn over Sh650 billion in revenues by the end of 2025.

On its introduction to the market in 2019, the nicotine pouch known as LYFT, was falsely marketed by BAT as a panacea to help addicts quit smoking but turned out to be a potential bait for new smokers , children are not off the hook as Kenya caught herself unawares in nicotine pouches storm.

The registration and marketing of the nicotine pouch was shrouded by controversies. It is suspected that licensing officials were compromised to allow the product illegally into the market.

Pharmacy and Poisons Board which is now becoming a suspicious body following several reversed licenses like the latest importation of Sputnik-V vaccine into the country with many suspecting they were bribed by the cartels, also gave BAT a go ahead of importation and marketing of the deadly nicotine product.

With a giant global marketing budget of Sh150 billion, BAT Kenya had Sh1 billion to sell the product in the country and so they did.

According to a UK based investigative publication the Bureau, BAT used old tricks in the new product LYFT targeting unsuspecting young Kenyans by using social media and hiring influencers for their deceptive campaigns.

Experts argue that the only rationale for a corporation like BAT to spend big money on marketing the new product is not just to increase the overall size of the nicotine product but a clever way of recruiting a new generation of nicotine addicts.

BAT marketing in Kenya singled out the young, sexy and famous influencers. They posed with the white pouches which is slipped between your gums and teeth. The product was made to look like the trendy and must have thing. With a population of over 15 million internet users and over 10 million active social media users, the market was ripe and ready to go.

The frenzy took over social media platforms with many youngsters posing with the product to be seen as classy and given that it was a smokeless product, it was deemed safe.

The facts suggest otherwise. Nicotine is toxic to the developing adolescent brain. BAT was forced to withdraw its nicotine pouches in Russia, where products made by other brands have been blamed for a number of teenage hospitalisations and linked to one death. Unfortunately, that does not appear to have stopped BAT from seemingly setting its sights on younger generations in other markets.

While BAT insisted that it was only sold to adults, market surveillance showed that it is new entrants, the young people are the ones starting to use it. Because of poor regulations, it was easily available, parents had complained of this product that was being bought over the counters, bending machines. BAT was fully aware of what it was doing and the dark recruitment of addicts they were bringing without considering the future health of the young generation.

It took the relentless alarm of the lobby groups for the government to wake up and stop the spread of the monster but it was already too late.

The firm recently revealed it already has 13.5 million consumers of the LYFT, a growth of three million in 2020 alone and its Kenyan subsidiary defied Covid-19 business disruptions to record a 42 per cent jump in net earnings last year.

BAT recently agreed to adhere to the market rules after fighting for LYFT to be exempted from the tobacco rules and allowed to advertise their poisonous pouches to the unsuspecting youngsters.

Petroleum Principal Secretary Andrew Kamau is on the radar of parliamentary watchdog that has now given him three months to explain why public funds were committed to the project, which aborted after contractors delivered substandard cylinders whose valves were prone to fire hazards.

“Where the accounting officer fails to provide an explanation, the accounting officer (during the period under review) should be surcharged Sh870,339,283 pursuant to the provisions of section 202 of the Public Finance Management [PFM] Act, 2012,” the National Assembly Public Accounts Committee (PAC) said in a new report.

Under the Mwananchi Gas Project, more than four million households were to be supplied with six-kilo cooking gas cylinders and burners for a discounted price of Sh2,000 each in three years, with refills costing Sh840.

The plan had been piloted in Machakos and Kajiado counties.

The public finance management law imposes personal liability to a public officer where loss of public funds occurs.

“A public officer is personally liable for any loss sustained by the national government that is attributable to — the fraudulent or corrupt conduct, or negligence, of the officer,” states the PFM Act.

Further, the law stipulates that the Treasury may, by civil proceedings brought in a court of competent jurisdiction, recover damages from a public officer for any loss for which the officer is liable.

The Public Procurement and Disposal Act 2015, which came into force on January 7, 2016, made principal secretaries, chief executives of parastatals and county accounting officers fully responsible for all procurement contracts in their respective organisations.

Mr Kamau was retained as the Principal Secretary in the Ministry of Petroleum and Mining last month but with an expanded mandate after President Uhuru Kenyatta announced the merging of the State Mining Department with that of Petroleum.

He had been appointed PS for the State Department for Petroleum in December 2015.

The parliamentary watchdog committee, chaired by Ugunja MP Opiyo Wandayi, inquired into the Mwananchi Gas Project following queries raised by the Auditor-General on the financial statements of the State Department for Petroleum for the year 2017/18.

The audit showed taxpayers did not get value for money arising from shortcomings in the implementation of the project.

It found that contracts were awarded on the basis of unenforceable performance bonds and with no performance durations.

The cooking gas subsidy plan was initiated by the defunct Ministry of Energy and Petroleum during the 2016/2017 financial year.

The plan was aimed at cutting reliance on kerosene and charcoal, which are not environment-friendly but are the main source of fuel for most rural and urban poor households.

The project entailed the supply and distribution of LPG cylinders, grills and burners to households at subsidised prices and the erection of facilities to store the cylinders at local distribution points.

The audit showed that 10 firms had been contracted by the ministry in May 2017 to supply various components of the LPG gas project at an aggregate cost of Sh1 billion.

As at the end of June 2018, the State Department for Petroleum had spent a total of Sh870 million.

A total of 109,649 six-kilogramme cylinders, 329,422 burners and 329,260 grills have been lying in State-owned National Oil Corporation (Nock) warehouses since the distribution was halted in 2018.

The exercise aborted after it emerged that some contractors had supplied 67,251 faulty gas cylinders prone to fire eruptions.

Nock suspended the project citing distribution challenges.

When he appeared before PAC, Mr Kamau said the project had not stalled but that it had been delayed by cases filed against the ministry and Nock by the Consumers Federation of Kenya (Cofek).

“The State Department procured a Third Party Inspection Services in FY 2019/20 after the withdrawal of the court case by Cofek and clearance from the Directorate of Criminal Investigations for LPG cylinders which were procured in financial year 2016/17. In conclusion, the Mwananchi Gas Project is ongoing and has not stalled,” he said.

Of the Sh870 million expenditure, PAC said the ministry had paid out Sh481 million, leaving a pending bill of Sh389 million as at June 2018.

The question is just how did an ambitious plan go down the drain?

It all started with a contract awarded by the Petroleum Ministry and the National Oil Corporation of Kenya (Nock) to a consortium led by Allied East Africa Ltd. The decision by two senior state officials to cut a deal with a company teetering on the brink of bankruptcy led to the uneventful collapse of a project that would have seen millions of homes supplied with cheap cooking gas.

Kenya Insights is informed that the decision to hand the Sh3 billion tender to Allied East Africa Ltd, a firm already under administration, was orchestrated by a senior member of the Executive and a vocal MP who together created a company that became part of four firms that were to supply National Oil Corporation of Kenya (NOCK) with 500,000 gas cylinders.

Allied East Africa was already broke by the time it won the tender in late 2016. On July 15, 2016 a few months before it won the tender, the High Court found Allied East Africa in default of a Sh135 million debt they owed to First Community Bank, a situation that led to its subsidiary Midland Energy being put under administration two years later.

It is not clear how a company unable to pay a debt of Sh135 million convinced the government that it could manufacture and supply gas cylinders worth Sh300 million.

But after being put in liquidation, it became clear that Allied East Africa, which had requested the court to bar First Community from listing it with the Credit Reference Bureau (CRB), was also being sought by ABC Bank and I&M Bank.

It is not the first time the government has awarded a major project to a bankrupt company, with the latest case being the multi-billion shilling construction of Arror and Kimwarer dams which were awarded to a broke Italian firm.

But a broke Allied East Africa, which owned an LPG distribution company known as Midland Energy that dealt in a brand called Mid Gas, did not manufacture the cylinders locally, according to the source.

Having gotten the tender, but with no capacity to deliver, the consortium turned to Mohammed Jaffer owner of Africa Gas and Oil (AGOL) which also owns Proto Energy Limited under which Pro Gas is sold.

The company was then just beginning and was virtually unknown in the country.

Jaffer had however managed to obtain a lease for use of a cylinder pressing machine from KPA in a shady deal that seems to have been orchestrated by officials from the Energy Ministry.

The fraudulent suppliers, in the first batch, delivered faulty cylinders raising questions about quality assurance and monitoring of the manufacturing process.

A total of 67,251 cylinders were found to be leaking posing a serious safety hazard had they gone into circulation.

This, however, seemed to be part of the grand plan to kill the project as then PS Andrew Kamau canceled the tender purchase order of 357,000 cylinders despite money having been paid out to East Africa Allied and Mohammed Jaffer.

The PS also canceled another purchase order of 700,000 cylinders with little explanation as to how the total budgetary allocation that had risen to Ksh2.9 billion had been spent.

This necessitated Consumers Federation of Kenya (COFEK) to sue Government in October 2018.

COFEK told court the Government’s ambitious program to buy and supply 5 million subsidized gas cylinders to low- and middle-income households by end of 2019 were in jeopardy as 60% of the cylinders delivered were faulty.

As Kenyans continued wondering why the Gas Yetu project is not taking off despite the immense benefits it would have afforded them, a new player in the market was beginning to emerge.

With its bright pink colored cylinders, Jaffer’s Pro Gas was starting to penetrate into the market offering gas cylinders at cheaper rates than competitors.

Pro Gas with the help of Energy CS Charles Keter, PS Njoroge and other corrupt government officials at the Energy and Petroleum Regulatory Authority (EPRA) and Kenya Revenue Authority (KRA) continue to engage in illegal and unfair trade practices to gain an edge over competitors.

Through use of intimidation tactics and sabotage, Pro Gas has been hiring thieves in hoods to steal cylinders from competitors resulting in millions of shillings in losses.

On June 20, 2019 at Southernsun, Mayfair Hotel in Nairobi, members of the LPG Cylinder Exchange Pool lamented the unfair practices by Pro Gas. Minutes of the meeting also indicate that members voted for pricing formulas with majority preferring cylinder cost minus validation cost to remain competitive.

However, EPRA went against the norm and published new rates. In a public notice issued July 25, 2019, EPRA announced a new deposit rate of Ksh2,170.03 for the 6kg cylinder and Ksh 3,588.86 for the 13kg cylinder.

These rates according to members of the exchange pool are in bad faith and are bound to resort in massive losses.

Despite numerous complaints to EPRA, no action is taken against Pro Gas.

Exchange Pool members now say they have evidence that PS Njoroge has been receiving Ksh30 million monthly in bribes while other officials at EPRA led by the Director-General Robert Oimeke pocket not less than Ksh10 million each month.

This is also the case at KRA with senior officials receiving millions of shillings monthly to turn a blind eye to Jaffer’s indiscretions.

The tycoon has also pocketed a significant number of MPs ensuring that any parliamentary committee investigations go his way.

To date, there have been more than five investigations on the unfair monopoly by his companies including Grain Bulk Handling Limited (GBHL) but no action has been taken.

Through bribery, Jaffer has now completely taken over the imports, distribution and retail business in the LPG sector undercutting other companies and driving them out of business altogether.

Suits filed in Court against Pro Gas, Energy Ministry and EPRA are often thrown out as he bribes witnesses and threatens anyone who comes in his way.

Photos taken at the main Pro Gas yard in Kabati shows they have been stockpiling the stolen cylinders there from where they are washed, repainted and rebranded into the signature bright pink color. They are then refilled and distributed to Kenyans at very low prices dealing a huge blow to competitors.

In October 2018, at the height of the Gas Yetu scandal, DCI George Kinoti said he will begin investigations into the loss of billions.

“We will initiate a probe. We cannot allow a program that is funded by taxpayers to put Kenyan citizens at risk,” said Mr Kinoti.

Almost one year later though, no investigations have been done and no one has been taken to court over the scam raising questions about how many agencies are on the take from Mohammed Jaffer.

This as 80% of Kenyans who use firewood and kerosene continue to suffer at the hands of cartels at the Energy Ministry.

Last year in October while acting on intelligence tips, KRA raised the Pro-Gas plant in Mombasa in a suspected Sh200M tax evasion scandal. African Gas and Oil Company Mombasa is said to have been underpaying the corporate tax and also reducing the company’s tax liability by under-declaring and undervaluing imports.

The new development of the parliamentary watchdog committee reignites one of Kenya’s most under discussed scandal where greedy businessmen hijacked a plan that would have given the poor affordable cooking options, instead they took it to their advantage and found a leeway to build their own dirty empires. In our following series, we tell you how and why the Kenyan government is on the spot for ceding the importation of liquefied petroleum gas to a private company, something that has made efforts to make cooking gas affordable and accessible to the majority come to naught.

Despite implementing fiscal policies, subsiding cylinders and going to the extent of launching a cooking gas programme to make gas affordable to the common man, industry players contend that ceding the bulk importation of LPG to Africa Gas and Oil Ltd has denied the country the benefits of cheap cooking gas.

Tax crimes such as tax evasion and corruption are top on the list of factors that substantially continue to impair revenue collection efforts across the world. In the process, colossal amounts of money are lost every year.

In an article published by The Borgen Project in 2019 titled ‘Tax evasion in Sub-Saharan Africa’, the Organisation for Economic Co-operation and Development (OECD) estimates that Africa loses $50 billion annually to tax evasion.

The taxman missed its target for the five months to November last year by Sh100.72 billion compared with a similar period in 2019. Treasury data shows that the KRA collected Sh527.73 billion in the July-November 2020 period, a 16.03 percent drop compared with Sh628.46 billion a year ago.

Given the depth of tax crimes as an impediment to economic growth, there is a dire need to tighten the noose on the vice by all means possible.

Closer home, the fight against tax evasion has in the recent past taken a different approach whose end goal is to decimate the vice as effectively as possible.

The Kenya Revenue Authority (KRA) has, notably, prioritised combating tax evasion in its efforts to enhance revenue collection.

In the new approach to combating tax evasion and other tax related crimes, the KRA is leveraging on the immense potential of intelligence gathering and analysis, among other strategies.

The intelligence management function has been key in the collection of information relating to tax evasion, cyber-crime and corruption. The function has continued to enhance the capacity to penetrate and quash tax evasion cartels.

The outcomes registered lately show that the intelligence-driven strategies are bringing down intricate tax evasion webs with unmatched efficacy.

In the 2019/2020 financial year, for instance, the KRA successfully foiled tax evasion schemes which could have seen the government lose approximately Sh259 billion.

Through intelligence gathering and analysis, the KRA also managed to profile 1,309 individuals for tax purposes in the financial year that ended in June 2020.

In the same period, 367 tax evasion cases worth Sh65.93 billion were filed. From the cases, 303 were prosecuted for tax fraud. This translated to a performance of 51 percent. In the process, the KRA recovered Sh62.8 billion in revenue.

To widen the scope of nabbing the tax cheats, KRA earlier this year announced an expansion program of sleuths by hiring 2,000 more officers to bolster its pursuit of high net worth tax cheats amid pressure to meet its collection targets.

In November 2019, the KRA got Sh2 billion for hiring 1,000 intelligence and enforcement officers to identify and arrest wealthy tax cheats, setting the stage for an escalated crackdown on tax evasion.

Before the step up, crafty businessmen colluded with corrupt KRA officials in evading tax, a crackdown on such elements would then see over 70 KRA officials arrested and charged for abetting tax evasion. Most of the dishonest businessmen also relied on political connections to cushion them from the roving eyes of the tax collector.

For decades, a good number of wealthy businessmen bribed their ways through the KRA net using godfathers and it’s no wonder nearly all key businessmen in town do sponsor politicians during their campaigns for cushioning when they ascend to power. We’re going to look at a few prominent cases that have been in the media lately.

Vimal Shah, Bidco Group.

In 2016, the Kenya Revenue Authority (KRA), consumer goods manufacturer Bidco Africa and a senator were sued for colluding to deny taxpayers Sh5.7 billion in unpaid dues.

Activist Okiya Omtatah Okoiti accused the then Bidco Africa Chief Executive Officer Vimal Shah of ensuring that the company did 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 was relying on a whistle-blower’s report that had alleged Bidco had survived by not paying its rightful share of taxes since then.

“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,” said Mr Omatatah.

Mr Omtatah also relied 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 2015, President Uhuru Kenyatta appointed him to be Chancellor of Jaramogi Oginga Odinga University of Science and Technology for a period of five years.

According to the suit papers, the report showed 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 was also accused of having made incorrect statement which affected its liability to tax and preparing false records of account.

At the time, Vimal was closely knitted to the Jubilee government and one of the key financiers of their campaign where hundreds of millions was raised from businessmen. Because he deemed himself untouchable and with bought protection, the Ombudsman wrote to KRA demanding answers from the Kenya Revenue Authority commissioner general John Njiraini over the alleged tax evasion by Bidco Refineries Ltd.

The Commission on Administrative Justice had received a complaint against KRA for allegedly delaying to collect tax arrears from Bidco as per an order by the High Court in 2012.

The Ombudsman said the delay in recovering the taxes owed, since the initial demand in September 2009, has been compounded by an “abuse of the judicial process by Bidco”.

Humphrey Kariuki, Africa Spirits Limited

Known as one of the most reclusive billionaires in Kenya, Humphrey for long remained in the shadows while cutting multi billion deals until his cover was blown. One of Kenya’s most prominent businesspeople, Kariuki is also one of its most controversial. He had been linked in the past to organized crime, but always denied his involvement with businesses in the underworld.

He came to national attention in 2001 when the FBI alerted the Kenyan police about Ksh 2B wired to Kariuki company; his accounts were frozen in the Charter House Bank $1.5B scandal but got orders to have them unfrozen.. the Ksh 2B vanished so did Kariuki.

In 2018, he won a libel suit against the popular Standard Newspaper in Kenya on allegations linking him and his businesses to human, narcotics and weapons trafficking.

Kariuki has been battling run ins with the taxpayer. His woes started in February 2019 when the Directorate of Criminal Investigations raided the premises of his company in Thika town, Africa Spirits Limited, over tax fraud claims.

The businessman has facing three cases in court amounting to Sh41 billion tax evasion which a court acquitted him of before DPP quickly challenged the judgment, throwing him back to the dock.

The other cases are on possession of unaccustomed goods and fake custom receipts.

In the case, Humphrey Kariuki, Stuart Gerald Herd, Peter Njenga Kuria, Robert Thinji, Kefa Gakure and Eric Mulwa are facing various charges including being in possession of unaccustomed goods.

The most outstanding discovery was the underground piping system- like Walter White’s Breaking Bad factory- which made a mockery of KRA’s piping system that is meant to monitor the amount of alcohol the wines factory makes. What this means is, the spirits Company can make billions of liters of wine without KRA knowing a thing about it by by passing KRA meters.

Kariuki, alongside other senior staff of the company, were charged with nine counts relating to tax evasion with his two companies.

While sanctioning their prosecution, the DPP said that an audit by KRA revealed that Africa Spirits Limited/WOW Beverages Limited had evaded the payment of tax between 2014 and 2019 amounting to 41 billion shillings.

Humphrey Kariuki, 64, is the founder of Janus Continental Group, a conglomerate that includes The Hub – a premier shopping mall in Nairobi; Africa Spirits, a leading manufacturer of Alcoholic beverages; Dalbit Petroleum, one of the largest oil distributors in East and Southern Africa, and Great Lakes Africa Energy, a U.K-based company that is a developer and operator of power projects in Southern Africa. Ndegwa is also the owner of the 5-star Fairmont Mount Kenya Safari Club, and the neighboring Mount Kenya Wildlife Conservancy and Animal Orphanage.

Kariuki is not your ordinary guy, he has a Cypriot passport; he runs a multi billion business empire that does deals with Governments around the world.

Mohammed Jaffer, African Gas and Oil Company

Last year in October, the offices of tycoon Mohammed Jaffer in Mombasa were raided over Ksh200 million tax evasion probe.

Jaffer who owns African Gas and Oil Company Mombasa is said to have been underpaying the corporate tax and also reducing his company’s tax liability by under-declaring and undervaluing imports.

Among the documents seized during the raid for examination by KRA were bank statements, financial reports, import declarations, stock records and delivery and sales records.

Tax Evasion Claims:
Taxman raids LPG supplier in Mombasa
Africa Oil & Gas to be investigated on tax evasion
KRA tax collection drops by 15%
Slowdown in collection due to Covid-19#FridayNight @lillian_muli pic.twitter.com/VHBJQa9MV1

— Citizen TV Kenya (@citizentvkenya) October 16, 2020

“KRA shall analyse the documents to establish the accurate tax liability and institute relevant recovery measures depending on the findings. If it becomes necessary, we will carry out other sanctions as per the law,” said John Bisonga, KRA’s acting coordinator for the southern region.

“We can go as far as when the company started its operations. The investigation has been going on for quite some time now.” He said during the raid.

This came months after the High Court to ordered Maritini Free Port Ltd to refund Ksh1.8 billion to State that had been paid by the National Lands Commission (NLC) as compensation for land. The Standard reported that Maritini Free Port Ltd, a company owned by Mr Jaffer, had irregularly received the money in 2015. He sued the newspaper for defamation over the reportreport.

In 2019, it was reported that the  Directorate of Criminal Investigation was investigating how Jaffer received Sh.2 billion compensation on portland owned by a deceased person.

Reportedly, Jaffer was paid the cash despite protests orchestrated by the family of the late Kamau Ngotho.

The hefty amount was wired to the accounts of a company associated with Jaffer, the African Oil, and Gas Company.

The amount was paid despite a court order, stopping the National Land Commission and its agents from releasing the money.
Also on the radar is a former Managing Director of Kenya Railways Athanas Maina, during whose tenure the cash was paid.

African Gas and Oil Company deals with the importation, repacking, supply and exportation of liquefied petroleum gas (LPG) and enjoys a monopoly in the sector. The company owns Pro Gas.

According to revelations by KRA top officials, the fraud in the company started after its inception, and could see it sanctioned by the taxman.

The company has severally been accused of being behing the fall of the government’s Gas Yetu Project, a project fronted by the government to cushion the low income earners for clean energy.

The project was to be undertaken by National Oil Corporation, but the scheme was allegedly fraudulently taken over by Jaffer and his company.

Gas Yetu project would see millions of households receive subsidised 6kg cooking gas cylinders at a cost of Ksh 2,000. 5 million households were targeted.

Close to Ksh3 billion was allocated to the project, and it is suspected that it ended in Jaffer’s company.

Jaffer is not new to hide and seek games with the taxman, in 2018, KRA win against him in which he was accused of evading Sh458M. The taxman had in February 2012 issued a demand for customs tax of Sh458 million and Sh24 million for falsification of documents contrary to section 23 of East African Community Customs Management Act.

In 2015 Jaffer was involved in another Ksh180 million tax tussle with the KRA alleged to have been undeclared tax.

At that time, he was being investigated over big deposits amounting to hundreds of millions, whose tax was never paid.

KRA said a perusal of the income tax returns for January 1, 2007 to July 27, 2011 indicated that monies banked in Mr Jaffer’s accounts from the proceeds of sale of grain were not declared for tax purposes. The taxman however lost the case.

It is reported that Jaffer earned Ksh300 million in business and another Ksh31.9 million in 2009 where he was entitled to pay the taxman an Ksh90 million.

He said that his only source of income was from his employment as the managing director for African Gas and Oil Company.

The Grain Bulk Handlers (GBH) founder has been looking to extend his empire beyond Mombasa with the dwindling fortunes of Mombasa economy.

Jaffer found himself in trouble in the alleged encroachment of Nairobi National Park following a contested deal between KWS, Kenya Railways Corporation and the Grain Bulk Handlers Limited regarding the re-alignment of the park’s fence for the construction of grain silos and bulk cargo imports.

Jaffer has been able to wither in the storms given his strategic realignment to powerful politicians most of whom he finances to guarantee him security for his businesses. He has shuffled around the political divide with links to Raila Odinga, William Ruto and lately he’s been rumored to be courting CS Matiang’i. It is not a brainer therefore how many of his cases get the dismissal arrival.

Continues in Part 2….

Rogue senior police officers are abetting land cartels to defraud Kenyans of their legally acquired land in Nairobi and its environs, a new report has revealed.

The report by the National Police Service accuses a section of the senior officers of being in dubious activities including forceful and sometimes violent evictions of legal land owners, destruction of private property, extortion and offering protection to criminal gangs involved in fraud.

The rogue officers do not just ‘turn a blind eye’ to criminal activity, they knowingly abet and profit from criminal activity.

According to the report, the officers offer protection to illegal gangs which forcefully evict legal land owners and resell their properties to unsuspecting buyers.

“Only those owners who pay ‘protection fee’ to prevent destruction of their property or ‘approval fee’ to be allowed to build, amounting to hundreds of thousands of shillings are spared and allowed to continue with their planned constructions,” reads the report.

This loot is then shared between the gangs and the officers protecting them.

The gangs are said to be headed by current and former police informants who use their privileged associations with the police to commit crime unabashedly without fear of repercussions.

One area afflicted by criminal land cartels under police protection is Sosion Estate within Umoja in Nairobi.

Here, a gang-like cartel disguised as “Kiambu Dandora Farmers Association” has been violently and forcefully grabbing undeveloped plots, reselling them and offering the new owners protection against reprisal by the legitimate land owners.

Land owners who intend to develop their parcels must part with Sh300,000 paid to the gang leader or face eviction and destruction.

The leaders enjoy protection of senior officers at Kayole police station, which is now under the radar.

One resident, only known as Chebet, suffered the wrath of the gang when she failed to pay them the so called approval fees and had her ongoing building demolished.

The gang is also said to have approached the owners of Shujaa Mall, which is currently under construction, demanding for the said approval fees, failure to which they plan to deface or demolish the mall.

A similar distressing scenario has been taking place in Mlolongo on the outskirts of Nairobi.

Here, a group has been hiring gangs to destroy people’s property in Mulinge Scheme with the aim of displacing the rightful owners so that they can sell the land.

In one incidence, they hired the Taliban Gang from Dandora to destroy properties built on the scheme.

One gang member is said to be connected to senior police officers in the region and police headquarters.

With this kind of connections, the leader has been issuing protection to hired gang members allowing them to destroy properties unabated.

The wanton destruction of private property by these gangs puts into question the role of the respective planning directorates, whose mandate it is to approve any construction and demolitions, and the respective land registries which are supposed to ascertain and protect land ownership.

However, the land extortion gangs appear to have usurped these mandates with lands officials seemingly unaware or unresponsive to the cries of distressed land owners.

Additionally, the brazen manner in which the gangs extort legal land owners in the guise of approvals, under the full glare of the police, begs the question of who will protect wananchi from such heinous criminal groups.

Inspector General of police Hilary Mutyambai is studying the report for action.

This, according to those in the know is one of the ways the trend which seems to be playing out at various places can end.

“Only this will stop the gangs from becoming bolder and expanding their criminal enterprise, ensuring the safety of Kenyans and restoring their confidence in the Police Service,” said an officer aware of the plans.