US technology firm Apple saw its income more than double and total sales increase 54% in the first quarter of 2021, according to financial results statement released Wednesday.
Net income rose to $23.6 billion in the January-March period, up nearly 111% from $11.2 billion in the same period of last year.
Total net sales came at almost $89.6 billion, which were up almost 54% from $58.3 billion during the period.
CEO Tim Cook said the company is in a period of “sweeping innovation” across its product lineup, in addition to renewable energy.
“That certainly begins with products like the all-new iMac and iPad Pro, but it extends to efforts like the 8 gigawatts of new clean energy we’ll help bring onto the grid and our $430 billion investment in the United States over the next 5 years,” he wrote in the statement.
The Cupertino-based firm saw net sales from Mac computers reach $9.1 billion in the first three months of the year – up 72% from $ 5.3 billion year-on-year.
Its iPad tablet sales rose 77% to $7.8 billion from $4.4 billion during that period.
But it was the iPhone smartphone sales the firm generated the most income, which climbed 66% to $47.9 billion from $28.9 billion.
Britam Insurance has sunk into a Sh9.1 billion net loss for the year ended December 2020 from a Sh3.5 billion profit the previous year on higher operation costs, decline in financial assets and investment incomes.
Despite collecting more premiums, Sh28.1 billion in 2020 as compared to Sh27.1 billion, income from investments and property feel to a loss of Sh1.4 billion.
Loses on financial assets dropped from a profit of Sh4.3 billion in 2019 to a Sh2.4 billion loss last year.
Britam blamed its subsidiary, Housing Finance, for contributing a share of loss at Sh823 million and a reduction in the value of its investment in the bank of Sh603 million.
The Insurance firm plans to sell part of its 48.2 per cent stake in mortgage financier, HF Group, to one of the country’s big banks as part of a review of its investment portfolio.
Even as revenues fell, the company dug itself into the biggest hole from operating expenses that jumped from Sh8.7 billion to Sh13.4 billion.
The insurance company recently undertook a radical restructuring after long-serving boss Benson Wairegi exited.
He was replaced by former chief executive of Old Mutual’s Kenyan business Tavaziva Madzinga as MD who has been implementing restructuring at the firm which will see 138 workers leave Britam.
The board chairman Andrew Hollas also left and was replaced with Mohamed Said Karama in an acting capacity.
Britam announced it had scrapped several board positions including principal executive director, chief of staff, group chief operating officer, corporate affairs director, chief actuary & product development, chief investment, Britam asset manager, group commercial, finance, head of internal audit, legal and company secretary.
It also scrapped executive positions heading life assurance, general insurance and micro insurance.
The Senate Finance and Budget Committee investing businessman Naushad Merali has unearthed alarming details about his role in the collapse of Spire Bank. The Committee found that actions by Merali before and after the sale of the bank he once owned to teachers represented in the Mwalimu National Sacco was criminal.
The investigations which are focusing on the root cause of the bank’s financial woes that have left it at the brink of a total collapse come as the teachers rush to complete payment for their 25% stake which were owned by the tycoon.
The management of Mwalimu National Sacco confirmed that the sinister move by Merali to withdraw his deposits led to the financial woes the bank is currently facing.
“Merali had huge deposits which he withdrew in 2016 to the tune of Ksh.1.7 billion. In the aftermath, there were panic withdrawals from customers given what happened to Imperial and Chase banks,”Mwalimu Sacco Chairman Wellington Otiende told the committee.
Bungoma Senator Moses Wetangula accused Merali of taking away the money which would have been used to cloud the true financial health of the bank to hide in his businesses even after audit by Ernst & Young recommended otherwise.
“Once can say that due diligence on the financial health of the bank could have been substantially predicated on deposits held including Merali’s. If Merali goes on and withdraws the money leaving the bank as a hollow shell, this is quasi criminal,” Wetangula said.
[p/courtesy]Senator Charles Kibiru who leads the committee echoed Wetangula as he pressed bank and Sacco officials over the poor state of the bank which he attributed to the change of ownership.
“It is surprising that all over sudden, after Merali sold his shares, we have a situation where you as the bank are looking for a strategic investor. Is it that due diligence was not done?” he asked.
Teachers bought the bank back in 2014 at a Ksh.2.4 billion taking up a 75 stake but it has been making huge losses in six year including in December 2020 when it returned a Ksh.1.3 billion loss. The loss was three times wider than Ksh.472 million negative earnings in 2019.
They are now keen on abandoning the bank which has eaten up their initial investment savings in Mwalimu National Sacco which sunk to negative Ksh.8.4 billion from six years of accumulated losses.
Spire Bank Chairman David Ndegwa claims they are shopping for potential investors to lift the lender but the numerous woes are dimming their chances of recovery.
“Negotiations have proved to be extremely difficult. Three potential investors have for instance exited even after giving us timelines. We are hoping to meet someone serious who is willing to fulfill prudential guidelines before the end of the year,” he said.
Merali’s actions have left the interest expenses by Inspire now exceeding it’s earnings from lending activities while loan defaults are equal to the bank’s entire loan book. Punishment is also looming from the Central Bank of Kenya (CBK) as the bank’s capital and liquidity ratio continues to fall in breach of regulatory provisions.
Naivasha-based brewer, Keroche Breweries forecasts stronger sales this year despite COVID-19 setbacks which hurt sales in 2020.
Keroche Breweries Chief Executive Officer Tabitha Karanja has said as the company expands its beer portfolio to extra strong beer category, it expects to pay taxes in excess of Kshs.1 billion annually.
The CEO however asked the government to put in place intervention measures that will help rescue the beer industry which has since been hard hit by the Covid-19 pandemic.
The call was informed by the government’s recent directive that halted the sale of beer in bars to contain the spread of Corona virus in the country.
“Since the government prohibited the sale of alcohol in pubs, we have lowered our production capacity by 25% to keep the business afloat,” said Karanja.
She was however optimistic that the business will bounce back once the government eases the lockdown once the Covid positivity rate lowers.
Karanja voiced the company’s support on the government efforts to control the spread of the pandemic but urged for resumption of sale of alcohol while observing the social distance measures in bars to help save the industry from looming collapse.
On the new beer brand, she explained that its newly launched lager has an alcoholic strength of 10% and it’s the first locally produced beer in the extra strong category adding that the company aims to expand more to tap the growing niche in the local market.
The CEO said the brand has been well produced and crafted with latest technology which she added will help the company fill the wide gap in the extra strong beer category which previously was being imported.
“Taking one Vienna Ice lager will roughly be equal to two regular beers of equal volume of 500ml,” she added.
The new alcoholic beverage to Keroche beer portfolio is also expected to stimulate economic viability of the local producers of sorghum and barley in the country as the country vows to buy the beer producing materials from the local market.
Keroche breweries has enjoyed a rapid growth in the local beer market and is currently the second largest alcoholic beverages producer in Kenya with a production capacity of 600,000 bottles per day.
Central Organisation of Trade Unions (COTU) Kenya Secretary General Francis Atwoli has hit out at Safaricom CEO Peter Ndegwa urging the Safaricom Board of Directors to relieve him from his duties if he doesn’t back down from his current managerial style.
Atwoli through a statement said that he should be relieved because his managerial style seeks to maximize profits at the expense of its employees through a managerial restructure.
These demands come a day after a local daily reported that the new Safaricom CEO had caused anxiety among its more than 6,000 employees by asking a majority of them to reapply for their current jobs.
According to the COTU boss, this move by the telco CEO goes against ILO Conventions particularly on the protection of jobs.
He also noted that COTU was alive to the fact that Safaricom has refused several attempts to unionize their workers and that Ndegwa while serving as the CEO for Guinness Nigeria PLC faced off with unions as he forcefully reduced the workforce by nearly 45 percent.
“It’s insensitive and inhuman for Ndegwa to bring drastic changes at Safaricom PLC while infringing on the rights of workers who have built Safaricom to what it is today with more than 30 million subscribers. It is also shocking that even though Ndegwa is the first Kenyan Safaricom CEO he remains the most dangerous CEO in the company has ever had when it comes to protecting workers’ rights,” read the statement in part.
Atwoli while acknowledging that COTU doesn’t have control over the management style employers adopt from time to time, noted that the union was highly concerned about prospects of job security with the implementation of certain management styles.
In conclusion, Atwoli through the union demanded the Safaricom CEO stops forthwith causing anguish, despair, and depression among its employees in his mission to maximize profits.
Even though the mainstream media might not want to antagonize Safaricom, considering the huge revenues, we remain true to defending Workers' rights. Safaricom should value all their employees. Safaricom should employ all the M-PESA agents because they work for Safaricom. pic.twitter.com/ygGalah6uF
Kenya Insights can now reveal that a dodgy small firm Kilig, already acquired the fridges necessary for stocking Russian vaccine Sputnik V. The company created in January 2020 is headed by well-connected consultant Willbroad Gatei Gachoka who is a childhood friend and business partner of David Murathe, vice-chairman of the ruling Jubilee Party.
This is despite government’s relentless effort to ban the vaccine which is said be the best according to CNN Health report.
Documents in our possession show that Kilig Limited owners transferred tenders to another firm to deal with Kemsa. Willbroad Gatei Gachoka is an aide of Murathe and was sacked by Uhuru Kenyatta on December 18 2019 as chairman of Kenya Planters Cooperative Union after the board of directors awarded themselves hefty allowances leaving it dry.
On January 22, 2020, Gachoka had Kilig Limited registered with a Chinese National Zhu Jinping of P O Box 36814-00200 Nairobi. On June 16, 2020, Kilig Limited after landing a lucrative deal at Kemsa, engaged a firm Entec Technology Company Ltd of P O Box 37925-00100 Nairobi, to deliver PPE kits to Kemsa from China at the price of USD 28,535,000 that is Sh3 billion. John Mburu is associated with Entec remotely and was to clear the goods with KCB funding the tender. Kilig Limited having brokered the tender from Kemsa at Sh4 billion played it safe by involving Entec thus not being responsible for any criminal or legal implication. Those in the deal were to share a cool Sh1.2 billion.
Kilig Limited and Entec Technology entered in what industry players call a bidding commercial contract. The broker was Mburu, well versed in clearing and forwarding deals. By virtue of being close to Murathe, Gatei kept on dropping Murathe’s name and that of State House. It was on these grounds that appearing before the senate health committee, John Manjari, the suspended Kemsa CEO revealed, how he was under pressure from CS Mutahi Kagwe and PS Susan Mochache to award tenders to specific firms. Entec was to supply PPE sets in two dispatches. First were 200,000 kits on June 28 2020 and the second installment of 239,000 on July 10, 2020. Documents we have show, to avoid any suspicion in the dealing, Kilig was to enter an Escrow Account Management Agreement with Entec Technology.
Here once Kemsa paid Kilig, it was mandatory for it to pay Entec. Here KCB was brought in the deal. Why KCB being a public bank was to fall under the pressure of political wheeler-dealers. Entec Technology in the documents signed with Kilig gave bank account details where its payments were to be forwarded. The said account transacts business in USD is Stanbic Bank, Westgate Branch. Reports indicate, after Kemsa scams erupted and went public, no payments were made to escrow account. Fearing arrest, Gatei and Zhu Jinping moved shares of Kilig Limited to a city young lawyer as a major shareholder.
Gatei and Ivy Minyow Onyango, the young lawyer are lovers. In documents, Gatei did not change the firm contacts. Kilig Limited enjoyed direct procurement. Manjari signed the award letter with a three months grace period to deliver the goods. The trouble started when then Kemsa procurement director Charles Juma wrote to Manjari twice in April and June raising que0stions over why Kilig was given direct procurement for a tender that was to be competitive. By then, word had spread, Kemsa was liquid. By then, Mochache had written to Manjari in relation to an audit of procurement made on behalf of the ministry relating to Covid-19 payments using World Bank Funds.
Ivy Minyow Onyango, the sole director of Kilig Limited.
While appearing before the National Assembly’s Public Investments Committee (PIC), Ivy who’s the liste sole director of Kilig told the committee that she had no information on the signatories to the company’s bank accounts at Equity Bank and SBM Bank.
“I need more time to go back to the bank and get the right information. I cannot remember who the signatories were because there was a joint venture for procurement of Covid-19 items. Give me two days to find out the bank signatories,” the 27-year-old lawyer told the committee.
Ms Onyango claimed she could only recall that Kilig had accounts at the two banks but did not know who their signatories were.
“We went into joint venture and opened bank accounts for envisioned transactions. I don’t know if the accounts were closed,” she said.
Members of PIC, however, dismissed her claim and ordered her to provide a full disclosure of the account holders.
“You cannot do business worth about Sh4 billion and you don’t know the bank account of your company yet you are a sole shareholder. You have portrayed yourself as a wise woman. How can you not know where your bank accounts are yet you chased for this big deal?” PIC chairman Abdulswamad Nassir said.
Ms Onyango said Kilig had various partners, including manufactures and distributors, who came together to deliver the supplies to Kemsa.
She told PIC that the joint venture also involved Wilbrod Gachoka, who has since resigned as director of Kilig.
“There was Wilbrod Gachoka and Entec Enterprises a Chinese company who had vested interest in the joint venture,” Ms Onyango said.
Ms Onyango told the committee that Collins Bush Wanjala a son of Budalang’i MP Raphael Wanjala was also a director of Kilig and that she took over the company from the junior Wanjala at a cost of Sh10,000.
Ms Onyango told MPs that she incorporated Kilig in February 2019 after receiving instructions from his clients, Mr Gachoka and Zu Jinping.
Mr Nassir, however, disputed the claims by Ms Onyango, saying official documents showed she never participated in the registration of Kilig.
The PIC chairman tabled documents by Registrar of Companies, which showed that the firm was registered on January 22, 2020, with its directors as Zhu Jinping and Willbroda Gachoka.
In April, the two transferred their shares to Collins Bush Wanjala, who later handed them over to Ivy Minyow Onyango in May.
Kemsa did not do any due diligence on Kilig, including its financial capability to supply the goods, shareholding or pre-qualification documents.
An auctioneer and three companies have sought join a case in which two foreigners are fighting over the leasing of a hotel building in Nairobi Eastleigh area.
Nadhia Auctioneer, Gold City Palace Limited, Intermiddle Enterprise limited and Galafa Trading Company limited are seeking to enjoin a case in which Mohamed Sharif Ali and Jamal Saleban Kariye has sued the owner Ismail Ibrahim Durow and Ismail Holding Company limited over disputed leasing of a 70 rooms building in Eastleigh.
Environment and Land court Justice Kossy Bor directed the application to be heard on May 17. Foreigners told the court they will oppose the application.
Senior Counsel Ahmednasir Abdullahi for the owner of the said property Ismail Ibrahim Durow and Ismail Holding Company limited told Justice Bor they won’t oppose application.
The property is situated along General Waruinge Street in Eastleigh within Nairobi County hosting Ismarriot Hotel and Resort.
The foreigners filed application seeking to stop Ismail and his Company limited from issuing any kind of threats or accessing their business premises or records at LR.36/VII/467 Eastleigh pending hearing and determination of the suit.
The two also urged the Environment and Land court to issue temporary injunction restraining Ismail jointly with his servants, agents or anyone claiming through them from issuing any kind of threats or accessing the business premises or records of the land.
Sharif and Saleban want the building leased to them and the owner compelled to return all records, assets, keys of the lodging, files, and computers of the said building.
“An order of mandatory injunction compelling defendants jointly and severally to immediately return all records and assets of Plaintiffs illegally taken by the defendants including but not limited to files, computers and keys of the boarding and lodging rooms at LR. 36/VII/467 in Eastleigh,” said the foreigners.
The two wants the court to direct Ismail to access the premises through written notices and for the court to order a monthly rent deposit of Sh3,500,000 be deposited in court, until Ismail Holding Company limited performs obligations under the lease between the parties dated July 10, 2018 and reconciliation of the accounts.
The two foreigners claim they have invested Sh52 million in the business and the same property may go to the drain if the owner completely and irregularly displaces them from the property.
They claim they are the first tenant in the said building and the lease is for 10 years from July 10, 2018.
According to the foreigners, the lease also provides that the lesor had two months to make repairs, renovation and vacate the premises during which time no rent shall be payable to the lessor”, they claimed.
“The lessee was to move into the premises from November 1, 2018 and was only to start from paying the rent from November 1,2018 and it is also term of the lease the rent for the first five years of the lease term is SH3, 500,00 for the last five years of the lease term, Sh. 3,675, 000 per month and the rent is to be paid in cash or bankers order in favor of the lessor”, they added.
The two foreigners argue that as lessees they paid Sh 19,500, 000 Ismail Ibrahim Durow and Ismail Holding Company limited made up of Sh. 10,500,000 being rent for three months from November 2018 to January 2019 and Sh. 9,000,000 being security deposit which payments were acknowledged by Ismail.
But Ismail and his Company has dismissed claims by foreigners saying that they did not pay rent for 12 months.
Supermarket chain Carrefour has been ordered to revise all its agreements with some 700 suppliers within a month after a tribunal found it has been exploiting traders.
Carrefour, Kenya’s second largest retail chain, will need to expunge up to six items from its supplier contracts that are said to give the store the power to offer ultra-competitive pricing to boost sales and increase market share.
The clauses include forcing suppliers to pay a non-refundable fee to do business with it and compelling merchants offering the retail chain goods to provide extra rebates or discounts.
Carrefour was found to be in breach of the law for forcing suppliers to post their own staff at its outlets at the expense of the traders. It was also accused of rejecting goods already delivered.
The order by the Competition Tribunal, which largely affirmed earlier decisions taken by the Competition Authority of Kenya (CAK), sets a major precedent in the retail sector and could be relied on to remove similar trade practices among other players.
It also risks upending some longstanding norms in the retail business, with consequences that will also be felt by consumers.
Rebates, for instance, are widespread in the global retail industry and represent income from suppliers that can be used to offer discounts to shoppers.
Carrefour has been the most aggressive in offering discounts on a wide range of goods, suggesting that it could be tapping its rebates reserves to grow sales.
Elimination of the rebates could therefore see the retailer scale down its price cuts and bring its pricing closer to most of its competitors.
A complaint filed with the regulator by Orchards Limited, a yoghurt processor, established that Carrefour charges its suppliers a series of fees to enjoy access to its shelves besides imposing other terms that transfer commercial risks to its partners.
“The appellant shall amend all current supply agreements relating to its Carrefour Hypermarkets in Kenya within the next 30 days hereof with a view to expunging all offending provisions, specifically clauses that provide for, lead to or otherwise facilitate abuse of buyer power,” the tribunal said in the orders issued on April 20.
Buyer power means the ability of a purchaser to extract more favourable terms from a supplier on whom it can also impose significant opportunity costs by, for example, delaying payments.
Thursday, the retail chain came out fighting, promising to take the battle against the competition watchdog and the tribunal to the High Court.
“Carrefour has only received the decision of the tribunal this afternoon and intends to appeal it to the High Court,” the retailer said in a statement last evening.
Suppliers say Carrefour has used the supplier contract to depress their earnings and gain market advantage through competitive pricing.
Since launching its Kenya operations in 2016, the franchise has grown far faster than expected, attracting a strong client base among the country’s expanding middle class even as homegrown competitors like Nakumatt and Uchumi faced strong headwinds, leading to their collapse.
The CAK investigations were prompted by complaints from Orchards, which claimed its contract had been severed because it had failed to meet the tough supply terms.
The authority found Carrefour had wronged Orchards and ordered the retail chain to compensate the supplier of yoghurt for unilateral contract termination.
Orchards’ complaint to the CAK revealed that the supermarket operator requires its suppliers to pay a listing fee of Sh50,000 for each product sold in its stores.
Failure to pay the listing fee attracts a penalty of seven percent to eight percent of the outstanding amount.
According to the Orchards’ complaint, Carrefour required suppliers to pay a further rebate of 10 percent on the second delivery of supplies to new branches.
The charges cost Orchards hundreds of thousands of shillings and Carrefour was ordered by the tribunal to refund the amounts within 30 days.
The retailer will repay the supplier Sh289,482 in form of rebates and Sh130,856 for loss arising from its unilateral termination of the yoghurt processor’s supply agreement in 2019.
Carrefour was also fined Sh124,768, calculated as 10 percent of the gross revenue it recorded from the sale of Orchard’s Cool Fresh brand of yoghurts in 2018.
Orchards filed the complaint on April 26, 2019, sparking a legal fight between the CAK and Carrefour that ended up at the tribunal.
The tribunal has specifically ordered Carrefour to remove listing fees and rebates in the contracts besides unilateral delisting of suppliers.
Carrefour becomes the second major retailer to be investigated for abuse of buyer power after Tuskys, which was found to be withholding supplier payments beyond their due date.
An Italian investor whose ship was nabbed for allegedly doing illegal fishing in Kipini area of Tana River County has dismissed claims that he does not follow the laws of fishing.
Last week, two dolphins and a turtle were found dead along the shores of the Indian Ocean in what is believed to be a result of trawlers fishing in the area.
Basta Alessandro the owner of Itika limited whose ship MV Roberto was nabbed fishing in Kipini waters of the Indian Ocean said his trawler was doing fishing legally as per the license which was issued by the fisheries department.
Speaking in Malindi, Sandro said he owns two ships that do trawling activities in the Indian ocean three of which were licensed to do fishing from 3.2 miles adding that another company also has two ships which do fishing both in the shallow and deep sea.
He said the forces behind the arrest of his vessel crew members were people pout to seek attention and funding from international wildlife organizations.
“I have been doing fishing in Kenya for the last 20 years I work with the community and you can hear from them if I do something legal or illegal, I do fish legally and sell fish to locals at a very cheap price,” he said.
The Italian said there is no conflict with the fishermen and his catch comprise of small fish which are sold in Malindi and Mombasa at a very cheap price from Sh. 130 per kilo.
He said his ships are normally inspected and use the nets which are required by the fisheries regulations.
Sandro said last week his ship was ambushed by a group of security personnel from KWS with guns by officials who had no masks which were risky to the crew members who have been on the ship for 30 days.
“This is just a plot to protest so as to get funding from organizations in America, Germany and other international donors, but the truth is we are very keen on conservation,’’ he said.
He said his captain was arrested and taken to the police station but revealed that there was no evidence to prove that he was doing illegal fishing.
“All evidence is fake my lawyer made sure they go to the relevant departments and everything was found to be alright,’’ he said.
He said each ship has 80 crew members adding that his work feeds over 3000 families through the fish caught by the trawlers.
Since the incident happened, he said he no longer goes fishing in Kipini but as there are a lot of fish in Malindi fishing area.
However, he revealed that he has incurred losses amounting to over Sh 40 million and vowed to take legal action against those who led to the arrest.
Community members interviewed said the trawlers had no problem and help in supply of fish to local fishmongers at a very cheap price.
Abdul Hamza one of the fish dealers in Malindi said the trawlers the ships fish from 3.2 miles that are recommended and do not have any negative impact.
On the issue of Kipini he said the locals are lazy that’s why they are not happy with the efforts of the Italian who does fishing,
He dismissed claims that the ships were destroying turtles saying turtles live in corals where they do not fish.
“I would urge the government to investigate this issue and find out the real problem instead of just following here say,’’ he said.
He said there are five ships among them four do fishing in shallow waters and the other one goes fishing in the deep sea.
Ali Hamza a resident of Malindi also said there was no problem with the trawlers because most of the fish are sold locally to fishmongers.
Kipini residents last week asked the government t0o ban trawlers as they were harmful to marine life such as sea turtles, dolphins, and other endangered species like the guitarfish.
Four companies associated with billionaire businessman Mohamed Jaffer got a reprieve after a decision by Kenya Revenue Authority (KRA) to withdraw their tax compliance certificates was quashed.
The High Court in Mombasa quashed the entire decision of the Commissioner of Tax revoking and withdrawing the tax compliance certificates in respect of Grain Bulk Handlers Ltd, One Gas Ltd, One Petroleum Ltd and African Gas and Oil Company Ltd.
Justice Eric Ogola further directed the commissioner of tax to reinstate the tax compliance certificates to One Gas Ltd and Grain Bulk Handlers Ltd, and deem them as valid, legitimate and legal from the date of withdrawal.
The court further issued an order prohibiting KRA and its agents from further withdrawal of the tax compliance certificates, which are lawful and valid, without due process.
It noted that even though the tax compliance certificates for African Gas and Oil Company Ltd and One Petroleum Ltd have expired, proceedings leading to the grant of orders issued in December started when they were valid, hence KRA’s action of withdrawing them remains illegal and quashed.
Justice Ogola ruled that prior to the communication withdrawing the tax compliance certificates, KRA was required by law to issue the companies with a demand note or notice, so as to give them an opportunity to be heard before withdrawal.
“That failure clearly affords the applicants a hearing before this court which has the jurisdiction to safeguard their rights to a fair hearing and right to fair administrative action,” said Justice Ogola.
The court noted that the four companies are tax payers who had applied for the tax compliance certificates from KRA, which were issued to them with expectations that they would enjoy the benefits that accompany them.
“Further, there was an expectation that should the tax compliance certificates become wanting in any way so as to affect their continued use or purpose, such resultant status would be notified to the applicants before any drastic action, such as withdrawal would be taken,” said Justice Ogola.
The judge ruled that KRA violated the companies’ legitimate expectations and that administrative action cannot be said to be procedurally fair when a decision is arrived at based on opinion formed as a result of consideration of only one party in a controverted matter involving two parties.
The companies had filed their applications separately but were jointly heard because they raised similar issues.
According to the companies, KRA’s decision to revoke their tax compliance certificates was taken in arbitrary, capricious and illogical manner.
They argued that the withdrawal of the tax compliance certificates was not preceded by any request for information, or documents, in accordance with the Section 59 of the Tax Procedure Act.
The companies told the court that their tax compliance certificates were just withdrawn without any demand, which (situation) amounted to violation of any taxpayer’s legitimate expectation that a certificate once issued remains for the duration of the tax period.
“The respondent’s action jeopardizes the applicants’ business as they cannot apply for trade licenses, permit and certificates for the next calendar year without evidence of a valid tax compliance certificate,” part of the suit documents stated.
On its part, KRA argued that the Tax Procedures Act gave it powers of enforcement and that the tax compliance certificate bears a caveat to the extent that it (KRA) has the right to withdraw the certificate, if there is reason.
The taxman further told the court that it is entitled to carry out investigations and that they (investigations) are still ongoing.
KRA argued that it withdrew the tax compliance certificates held by the companies in accordance with the Tax Procedures Act.
The taxman also said that it reserved the right to withdraw the certificates if new evidence alters tax compliance status of a holder.
The regional tea auction in Mombasa may lose up to Sh2 billion in business after it suspended its operations following last week’s raid by the State, its managers said.
The auction has been shut since Friday after detectives looking into the activities of the Kenya Tea Development Agency (KTDA) raided its offices and confiscated computers, laptops and transaction files dating back from 2014 as well as staff mobile phones. The State is seeking to unravel the reasons behind persistent low earnings by tea farmers.
The auction is run by the East Africa Tea Traders Association (EATTA) and serves more than 11 countries in the east and southern African region, including Kenya, Rwanda, Uganda, Burundi, Tanzania, Malawi, Ethiopia, DRC Congo, Mozambique, Rwanda and Madagascar.
Economic harm
“If we don’t run the auction tomorrow or the day after, they will be adversely affected. The auction is so significant because the trading that goes on here weekly is about Sh2 billion. What kind of harm can it be to our economy?” Said EATTA managing director Edward Mudibo.
President Uhuru Kenyatta last month ordered Attorney-General Kihara Kariuki “to conduct an inquiry into the alleged statutory and regulatory compliance breaches allegedly committed by KTDA and its directors”. This, he said, includes “potential price and auction manipulation, abuse of dominance, insider trading, wastefulness and breach of directors’ fiduciary duties”.
The inquiry will look into KTDA’s activities and those of its subsidiaries, including KTDA Management Services, Chai Trading Company, Kenya Tea Packers, Majani Insurance Brokers, Greenland Fedha, The Tea Machinery and Engineering Company, KTDA Power Company and Dubai-based KTDA DMCC.
Bharti Airtel CEO Gopal Vittal has summoned his right-hand man in Africa Raghunath Mandava to weigh up the worth of his Kenyan business according to information availed to Kenya Insights.
This follows Nairobi’s request the company give up 30% of its capital to Kenyan businesses by 2024.
Nairobi’s announcement on 9 April that all foreign operators would have to open up 30% of their capital to Kenyan businesses by 2024 has shaken Bharti Airtel’s leadership. With the Indian telecoms major’s attempt to convince telecomms minister Joe Mucheru to delay that date until 2026 having fallen upon deaf ears.
CEO Gopal Vittal has summonned his representative in Kenya Prasanta Das Sarma and the head of the company’s Africa division Raghunath Mandava, also based in Nairobi, to study the possibility of closing down the shops.
According to National Information Communication and Technology Public Policy Guidelines of 2020, ICT companies from abroad will now give Kenyans a 30 percent stake to be considered Kenyan.
The international companies with an interest in the Kenyan market will have to give the 30% stake to be considered as Kenyan companies in a push for a local stake as a requirement to obtain licenses in the country. Companies were given 3 years to comply with the local ownership regulations. The time frame was a subject to a one-year extension by the ICT Cabinet Secretary upon request.
“It is the policy that only companies with at least 30 percent substantive Kenyan ownership, either corporate or individual, will be licensed to provide ICT services. For purposes of this rule, ICT companies without a majority Kenyan ownership will not be considered Kenyan, and may thus not be calculated as part of the 30 percent Kenyan ownership calculus,” reads the policy in a recent Gazette Notice.
The regulation is part of a government effort to grow the ICT Sector in Kenya by encouraging equity participation among Kenyans.
Listed companies will conform to the equity participation rule ‘to the extant rules of the Capital Markets Authority’.
The new law also requires that the government ICT procurement processes will give preference to local ICT companies in the award of tenders, including in sectors like security and defense. Further, where local businesses cannot fulfill tender requirements, foreign companies will have to transfer skills to local firms.
“Kenyan built solutions will be preferred over any other solution; where there are no local businesses that meet the tender requirements, skills transfer to local firms and personnel will be a mandatory requirement,” continues the Gazette Notice.
The High Court has declined to hear a dispute filed by high-end Mount Kenya Safari Club against Kenya Power over a Sh38 million electricity bill saying the matter should be handled by Energy and Petroleum tribunal.
Justice Hatari Waweru dismissed the case noting the hotel failed to show why the case should be handled by the High Court and not the tribunal as required.
“The upshot of all that is stated above is that the initial jurisdiction to deal with the dispute between the Plaintiff and the Defendant lies with the Authority or the Tribunal,” the Judge said.
He added that the hotel should first exhaust the dispute resolution mechanisms provided for under the Energy Act, 2015 before coming to the High Court.
The hotel agreed that the Tribunal had the jurisdiction to deal with the dispute, except that it is not currently fully constituted as it is without a chairperson, and therefore cannot sit and hear the case.
Mount Kenya Safari Club rushed to court in January.
The Nanyuki based Fairmont Mount Kenya Safari Club offers luxury accommodation with the main structure reflecting the 1950’s colonial architectural design with a luxury country club feel.
Businesses can now breath a sigh of relief after the High Court sitting in Machakos issued conservatory orders restraining the Kenya Revenue Authority (KRA) from collecting the Minimum Tax pending the hearing and determination of the petition filed by Kitengela Bar Owners Association.
The Minimum Tax which is calculated at the rate of 1% of gross turnover was introduced by the National Treasury through the Finance Act which was assented to by the President on 30th June 2020.
Treasury earlier stated that by introducing Section 12D under the Income Tax Act, firms operating in Kenya would be required to pay a Minimum Tax whether they were making profits or not as they are enjoying the use of services and infrastructure funded by other taxpayers.
However, the petitioners argued that the Minimum Tax which was introduced by the National Assembly is unconstitutional as it does not fall within the category of taxes imposable by the National Government under Article 2019 of the Constitution.
“According to the Petitioners, by its very definition and as is undeniable, the said Minimum tax does not amount to Value-added tax, custom duties nor excise tax, yet the 1st Respondent purports to include it in the category of income tax. However, by dint of section 3 (which is the charging provision) Petition E005 of 2021 Page 5 as read with Section 15(1) of the ITA, Income tax is only chargeable on gains or profit and not as gross turnover as implied by Minimum Tax,” Justice George Vincent Odunga stated in his ruling delivered virtually at Machakos High Court.
He went on, “As such, this novel tax cannot be deemed in any manner of form to amount to income tax. It was therefore contended that the action of the 1st Respondent to introduce the said novel tax is not only ultra vires but also contra the Constitution of Kenya 2010.”
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The private sector has decried the implementation of the tax at a time COVID-19 has dented cashflow small businesses while threatening the collapse of many others.
The Italian firm in the middle of Arror And Kimwarer dams scandal where over Sh63 billion was looted risks its machinery and equipment at the Mombasa port being auctioned by the Kenya Revenue Authority (KRA).
A notice issued by KRA on Friday shows that CMC Di Ravenna among other dubious firms risks losing their imported goods which are still held at the customs warehouse if not collected by May 2021.
The equipment being held at the Kilindini harbor includes muck cars used for tunneling and dump stations which are used for disposal of raw sewage.
“Pursuant to the provisions of section 42 of the East African Community Customs Management Act 2004, notice is given that unless the under-mentioned goods are entered and removed from the Customs Woodlouse, ICDE within 30 days from the date of this notice, they will be sold by public auction on May 18,” KRA said.
CMC Di Ravenna managers in an old courtesy photo.
CMC Di Ravenna imported the machinery in 2018 for construction projects but it failed to clear the equipment due to financial woes hence pushing the taxman to issue threats of auction.
The move to auction the equipment comes barely a week after CMC Di Ravenna lost the first round of attempts to stop Absa Kenya from selling 98 cars over a Sh585 million bank loan.
KRA has not disclosed the amount it is seeking to recover through the sale of the equipment as pressure keeps mounts on the controversial firm that is also fighting to stop Absa bank from auctioning its cars over defaulted loans.
CMC Di Ravenna suffered a blow suffered a setback after the court upheld a consent agreed between the firm and Absa to freeze the transfer of the cars pending the determination of a case in which the bank is seeking to recover over Sh585 million loan given to the firm in 2017.
The firm approached the lender for various financial facilities ranging from asset financing, working capital, short-term loan/overdrafts and bank guarantees.
In a ruling made last year, court allowed KRA to seize over 100 cars belonging to CMC Di Ravenna over tax evasion claims. The controversial firm came into the limelight over its role in the failed construction of the multi-billion Arror and Kimwarer dams in Elgeyo Marakwet County.
The Central Bank of Kenya (CBK) has appointed the Kenya Deposit Insurance Corporation (KDIC) to commence liquidation of Chase Bank Limited In-Receivership (CBLIR) due to its weak financial position.
According to CBK Governor Dr Patrick Njoroge the process which will result to the sale of the remaining 25% of the value of moratorium deposits along with other assets and liabilities will help clear outstanding payments to creditors and depositors.
An independent audit commissioned by KDIC in December 2019 and which was submitted in September last year revealed gaps in the lender’s financial books prompting the insurance corporation to recommend its liquidation as the final option in its report to the regulator on 7th April, 2021.
“The report indicates that considering the weak status of CBLIR’s financial position, liquidation is the only feasible option,” said Dr Njoroge.
The distressed lender was placed under receivership on On April 7, 2016 by CBK due to liquidity constraints which the regulator said was fueled by “inaccurate social media reports” and the stepping aside of two of its directors making it unable to meet its financial obligations.
According to Dr Njoroge, liquidation would facilitate the orderly resolution of the residual assets and liabilities of Chase Bank to protect the interest of CBLIR depositors, its creditors, and the wider public interest.
In August 2018, Mauritius-based SBM Holdings through its subsidiary SBM Kenya completed the acquisition of 75% of CBLIR’s assets and liabilities which include value of deposits under moratorium,all non-moratorium deposits at CBLR, 50 branches and majority of employees.
The sale of the remaining 25% stake in CBLIR will allow for payment to less than 3% of the remaining depositors, bring to an end, the bank’s 25 years of operation.
The Kenya Defence Forces (KDF) wants the government to stop the planned privatization of the loss making Kenya Meat Commission (KMC). KDF through the Ministry of Defence has written to the Privatization Commission to remove the meat processing enterprises from the list the Cabinet approved for sale.
KMC was transferred to the KDF in September 2020 following an executive-order from President Uhuru Kenyatta to bolster its operations after the state had previously announced plans to sell it following the formation of a task force to lead a privatization plan.
“We received a letter from the Ministry of Defence asking that we remove the Kenya Meat Commission from the list of the privatization programme,” Privatisation Commission chief executive Joseph Koskey said.
Government had pumped Sh80 million into the cash-trapped KMC in the last financial year but KDF is also set to inject cash to revive the dying meat plant after the Treasury allocated Sh4 billion under the supplementary budget.
Agriculture CS Peter Munya [p/courtesy]KMC is listed with other 26 parastatals earmarked for sale to strategic investors as the government resorts to privatisation to make troubled entities like KMC economically viable.
The move comes after the Law Society of Kenya also filed a petition in court challenging the legality of the transfer of KMC to KDF arguing that the responsibilities of KMC could only be transferred after amending its Act.
Agriculture CS Peter Munya directed Livestock PS Harry Kimtai to facilitate the transfer of KMC to KDF following the president’s order but in February the court directed the ministry and the Attorney-General to regularise the transfer of the KMC to the military within three months.
Justice Anthony Mrima in her ruling stated that the transfer contravened Article 10 of the Constitution since there was no public participation.
In November last year, Interior CS Fred Matiang’i alluded that KMC had met the bulk of debts owed to livestock farmers and other suppliers since the controversial KDF takeover.
Media mogul and billionaire Samuel Kamau Macharia (S.K Macharia) is in court seeking orders to become his grandson’s guardian, to take over the management of the seventeen-year old’s multi-million inheritance.
At stake is a Sh389 million life insurance, a pension payout whose beneficiary is the grandson, Adam Kamau Macharia as per the deceased father’s wish, and a multi-million estate left behind by S.K’s late son John Gichia Macharia who according to court documents had no relationship with the tycoon at the time of his death.
SK, who owns Royal Media Services (RMS), in the originating summons, asks the court to appoint him as guardian to Adam Kamau Gichia jointly with his mother Lisa Anyango Amenya, and appoint him solely as the guardian of the estate of his grandson.
Under Section 38 of the Law of Succession Act, the said Adam Kamau Gichia is the heir of his late father’s property which include 600,000 shares in AKM Investments Ltd that owns Kyuna estate L.R No. 209/7799, Mugumo Estate L.R. No. 7752/258, Kibarage estate L.R No 7752/258, 3.7 million shares in DirectLine Assurance Limited, 500 shares in Serenity Media Productions, 350 shares in Big Five Conservancy Limited, 500 shares in Bushfire Media Distributors, as well as shares in Big Five Lotto, Toi Development Limited and Harbour Capital Limited.
John, who was the director and founder of the Triple A Finance, also owned three expensive Harley Davidson motorbikes, and had five bank accounts at Diamond Trust Bank, and three at Equity Bank.
The late John Macharia. He died in a road accident in 2018. His father, media mogul SK Macharia, is wants control of the multi-million estate left by John.
‘Promote his welfare’
“The child in this suit is 17 years old and therefore in need for a guardian to promote his welfare. The parents of the said Adam Kamau Gichia are the late John Gichia Macharia and Lisa Anyango Amenya; they were not married. The said minor’s father was a member of a group insurance policy taken with Jubilee Assurance Company and was a member of a pension fund. In both, he had named the said minor as the sole beneficiary. Following his death, the minor has become the owner of Sh314,992,768 under the group policy and Sh67,000,000 under the pension scheme. There is therefore a need for a guardian to receive the money and manage it for the benefit of the said minor,” the tycoon say in the suit.
The billionaire businessman says that as the grandfather of the minor, he is well placed to serve as the guardian of both the minor as a person jointly with the mother and also serve as a guardian to the minor’s estate.
The billionaire businessman says that as the grandfather of the minor, he is well placed to serve as the guardian of both the minor as a person jointly with the mother and also serve as a guardian to the minor’s estate.
SK Macharia
“The appointment of the applicant will enhance the capacity to provide the welfare of the minor and also protect his estate both in the short and long run,” reads the suit.
DirectLine Assurance Company Ltd, in which John Gichia was an executive director, had taken a Group Life Assurance Policy with Jubilee Insurance Company Ltd covering all its directors and employees. The deceased was also a member of Zamara Retirement Fund pension scheme.
Gichia had named his son Adam Kamau Macharia as the beneficiary of both the life cover and pension scheme. Following his death Sh314,992,768 was paid to DirectLine Assurance Company Ltd while Zamara Retirement Fund paid out sixty-seven million shillings from the pension scheme.
Gichia died in an accident while driving along the Southern By Pass on the night of April 26th 2018.
Gichia was the executive director of Direct Line Assurance Company Ltd which the tycoon attempted to take over before the Insurance Regulatory Authority (IRA) Chief Executive Officer stepped in.
He also owned 600,000 shares in AKM Investment Ltd which owned prime property in Nairobi and Laikipia Counties.
Although the mother, Lisa Anyango Amenya was not married to Gichia, she lived in one of his company-owned houses in the posh Kyuna Estate with her son.
Lisa and John had arranged for the minor to spend as much time as he wanted either in Kyuna Estate or Mugumo Estate where he lived, and later Kibarage Estate.
Macharia further avers that the minor regularly visited his Runda home and his grandmother’s Karen residence.
Macharia and his estranged first wife Serah Njeri Macharia, who is the mother to the deceased, in December 2018 made Miscellaneous Application No. 171 of 2018 (OS) at the High Court of Kenya at Nairobi for the Guardianship and Custody of Adam Kamau Gichia (AKG).
In his supporting affidavit filed at the High court by his lawyer Kamau Kuria & Company Advocates, SK Macharia admits that his son John and Lisa are Adam’s parents. He argues that his grandson was born out of wedlock and that until John died, the minor had two guardians, his two parents, who lived separately but in the same area.
“The respondent lived in Kyuna Estate on L.R No.209/7799 which is owned by my son’s company known as AKM Investments Ltd whilst my said late son lived in Mugumo Estate on L.R No. 7752/258 which is also registered in the name of the said AKM Investments Ltd. By the time of his death, my son had moved to from Mugumo estate to a newly constructed house in Kibarage Estate. However, this house has a huge loan that would deplete the estate of my late son if allowed to be retained,” Macharia says in his supporting affidavit.
By the time of his death, my son had moved to from Mugumo estate to a newly constructed house in Kibarage Estate. The house has a huge loan that would deplete the estate of my late son if allowed to be retained
SK Macharia
According to the tycoon, after the death of his son, the mother of his grandchild moved from Kyuna estate to Kibarage estate where she resides with her son. He further avers that John’s death took away the direct contact of the minor with his grandparents, uncles, aunts and cousins from his life and there is need to re-establish that direct contact.
“The applicant is the grandfather of the said Adam Kamau Gichia who is well placed to serve as the guardian of both the person of the said child jointly with the respondent and in addition also serve as a guardian of his estate. The father of the said minor was like the applicant, a businessman,” the affidavit says.
According to court documents, S.K seeks to obtain a grant representation in respect of the estate of his late son and prays that when he obtains it, the minor will have an estate from the proceeds of life policy insurance payout and the father’s estate which according to the tycoon should be managed by the same person.
In an Affidavit of Justification of Proposed Administrator for the estate John Gichia Macharia, in Succession Cause No. 691 of 2018, the tycoon and his estranged wife Serah Njeri Macharia say that after payments of the just debts and taking into account all their liabilities in immovable and moveable assets in Kenya are worth at least Sh62 million.
In a petition of letters of administration intestate filed at the High Court of Kenya, Nairobi on December 11th 2018, Macharia says they present the petition in their capacity as father and mother of the deceased and no one has either an equal or prior right to grant of representation.
‘Frivolous suit’
However, in her replying affidavit drawn and filed through her lawyers W.G. Wambugu & Co Advocates on 8th February 2019, Lisa Anyango Amenya opposes the said application because it lacks merit and points out that the said minor is Adam Kamau Macharia and not Adam Kamau Gichia as referred to by the grandfather.
“The late John Gichia Macharia maintained the minor and myself and paid a majority of our expenses on a monthly basis. I vehemently oppose the said application and wish to state that the application lacks merit. I have lived with the minor in my house as the primary care giver and he was living with the deceased from the time to time over the last five years. I know of my own knowledge that I am capable of taking care of the minor’s interests as his mother and primary care giver,” Anyango’s affidavit reads in part.
She terms Macharia’s application as because he (Macharia) has already petitioned for grant of letters of administration of his late son’s estate. According to the court documents, Anyango admits that Macharia interacts with the minor as any grandchild would but has never resided with him and he has not demonstrated why he should be appointed as her sons’ guardian or how the appointment will impact the minor’s life.
Anyango insists that Macharia and his son had no relationship at all at the time of his death and reveals that a trust fund has already been created for the benefit of the minor.
The applicant and the deceased had no relationship at all at the time of the demise of the deceased. I know of my own knowledge that a trust fund has already been created for the benefit of the minor and in his best interests.
The Capital Markets Authority (CMA) has fined four former directors of microlender Real People a combined Sh15 million for their roles in diverting proceeds of a Sh1.3 billion bond to South Africa.
The lender raised Sh1.3 billion in 2015 from Kenyan investors to issue loans to local customers but the bulk of the money was wired to its parent company in South Africa to pay an internal loan.
This landed nine former bosses and directors – four Kenyans and five South Africans, in trouble with the regulator who ordered an inquiry into the company.
Five of the nine executives have opposed the regulatory action at the CMA tribunal, while the four have been fined between Sh2.5 million and Sh5 million.
“CMA initiated an investigation into the matter and noted that there appeared to have been a plan involving RPKL (Real People Kenya Limited) and RPIHL (Real People Holding International Limited), South Africa to use the medium-term note proceeds to settle an intercompany loan even before the application, approval, and issue of the medium-term note,” CMA said.
The Kenyan unit of Real People is fully owned by South Africa firm—Real People International Holding.
Real People Kenya former board chairman Robert Arthur, and Neil Grobbelaar, the South African CEO and a board member for the Kenyan unit, were fined Sh5 million each and barred from being directors at firms licensed by the CMA until the bond money is recovered.
Arumugam Padachie and Bruce Schenk, who served on Real People board, were fined Sh2.5 million each and also barred from holding top positions in licensed firms.
Other directors, Charl Kocks, Nthenya Muli, Daniel Ohonde, Yvonne Godo and Norman Ambunya, will know their fate once their case is resolved at the tribunal.
Real People experienced financial problems immediately after raising the funds and has failed to repay the bondholders, prompting CMA to investigate how the Sh1.3 billion was used.
CMA says the money was diverted to pay an internal loan to Real people South Africa instead of being lent to customers in Kenya.
James Mbui, former RPKL Chief Information Officer, Bruce Evans, former RPIHL Group Head of Corporate Finance, and Werner Nel, former RPHIL Group Head of Treasury got off the hook.
The National Treasury is going for a Sh60 billion loan from local investors to fund infrastructure development after the country’s debt piled to Sh7.35 trillion in January this year, down from Sh7.28 trillion last December.
The debt is still expected to pile further if the treasury succeeds to secure Sh262 billion from the International Monetary Fund (IMF) in the current financial year ending June.
Projections are already showing that Kenya will borrowed close to a Sh1 trillion by this financial year but that will depend on whether part of the IMF funds will be used to refinance some of the maturing external loans.
Treasury CS Ukur Yatani, he defends over borrowing [p/courtesy]The Central Bank of Kenya (CBK) noted in it’s prospectus that the bond will be an 18th-year old paper whose interest rate will be determined by the market.
The move to borrow from local investors comes after government borrowed up to Sh407.8 billion from the market by March 19, including commercial banks, pension funds, insurance firms and parastatals.
But the new infrastructure bond and the stock of domestic bond will shoot to Sh467.8 billion should CBK get sufficient subscribers. Experts argue that over subscription of the bond can allow CBK to borrow more than Sh60 billion in the current FY ending June.
The Ukur Yatani led docket is going for more loans despite when it vowed to stay away from expensive commercial loans. The National Treasury has also hinted that Kenya will return to the Eurobond market to borrow at least Sh124 billion by end of June 2022 to offset part of the principal repayment of Sh351 billion..
Kenya has already received over Sh500 billion from multilateral institutions as IMF, African Development Bank and World Bank meaning it will have to shop for other sources to fund a Sh3.01 trillion budget.
Director-General for Public Debt Management at the Treasury Haron Sirima said Kenya will have to access international markets for loans to support the budget and pay expensive loans that will soon be due.
The late John Macharia. He died in a road accident in 2018. His father, media mogul SK Macharia, is wants control of the multi-million estate left by John.
