- Lack of high tech equipment providing a loophole for fraud
- Last year, 75 KRA staff were arrested and charged for allegedly aiding tax evasion
The Kenya Revenue Authority (KRA) has said it is hot on the heels of rogue staff and traders engaging in tax evasion schemes.
It said, a multi-agency team including the Directorate of Criminal Investigations (DCI) is pursuing leads on such tax racket rings.
The authority was responding to the Star Newspaper's inquiries on alleged corruption at the Namanga border.
''We are aware that such anomalies, may, from time to time occur, and when they do, we conduct investigations and take appropriate action,'' KRA deputy commissioner, marketing and communication Grace Wandera told the Star.
Documents obtained by the Star reveal an intricate corruption web where junior officials at the border point fabricate import documents to a fraction of import fees from traders, denying the country much-needed revenue.
This, even as the body struggles to hit annual targets, forcing the government to borrow, piling pressure on the country’s public debt that has since crossed Sh7 trillion mark.
The Star established that KRA staff at Kenya - Tanzania border deliberately switch off power to prevent scanners and high tech monitoring machines like the Customs Oil Stock Information Systems (COSIS) from detecting their illicit activities.
The staff also abet mis-invoicing or under-declare consignment into the country, sharing the proceeds with the involved traders.
''Ever wondered why there are regular power outages at the point? They are deliberate to avoid scans. KRA is losing a lot at that point. Something must be done,’’ a trader with the knowledge of operations at the border told the Star in confidence.
To avoid interceptions, after verification, the consignment is released even before an exit note has been entered.
For instance, on October 1, two trucks went through the Namanga border from Mozambique with entry number 2020NMA171597 weighing 4400 metric tonnes.
Although the OCT scanners show only one truck (KPC 220Z) passed, the inspection records indicate that two trucks, with scanning details of the second truck (KBN 165N) nowhere to be seen.
With each metric tonne charged $475 (Sh50,000), it means almost half of the import duty was shared between the officials and traders.
The following day, another LPG consignment by the same importing firm passes through the scanning points at the Namamba border without a trace but it is recorded and tabulated on the system generating entry.
According to the system report, the consignment with entry number 2020NMA171619 LPG number plate KCZ 086 entered the country after officials ignored KRA’s mandate to scan every consignment at the border point.
Furthermore, between October 4 and 5, 20 trucks bringing in LPG gas went through the Namanga border into Kenya but with the connivance of KRA officials, six trucks could not be accounted for, denying the country over Sh6 million in tax revenue.
The schemers have also been using single entry invoices to register multiple entries.
Records in our possession for instance show that on October 4, an LPG consignment with entry number 2020nma170619 carrying a truck was scanned.
Another consignment with a similar entry number carrying nine trucks of LPG is also recorded to have passed the scanner. Even so, six out of the nine lorries with an estimated 132 metric tonnes are not accounted for in the records.
The border point has a single scanner. With the deficiency of high tech equipment, some trucks show up at the border post and log the wrong cargo in the import declaration form for the compromised KRA workers to clear the goods without proper verification.
Substandard LPG continues to flow into the country via Tanzania, undercutting importers who follow the due process at the Port of Mombasa.
This is because, Kenya is yet to install testing equipment for imported cooking gas, despite the country’s energy regulator announcing plans to procure two test machines — gas chromatography-mass spectroscopy (GCMS) in 2017.
A major player in the sector who asked not to be named citing business interests told the Star that highly placed individuals benefiting from the illegal trade are frustrating efforts to install the two machines at the Namanga border.
''Those machines could have saved us a great deal. We are competing with players who are selling low quality and half-filled cylinders at half our prices. Apparently, they are well protected by greedy regulators who only care about kickbacks,’’ he said.
The two machines, according to the Energy Petroleum Regulatory Authority (EPRA) were to cost at least Sh50 million with one going for Sh10.3 million and the other one at Sh41 million.
Last month, the regulator told the Star that the machines were purchased through funding from the World Bank, installed and commissioned at the Kenya Bureau of Standards (Kebs) laboratories in Nairobi and Mombasa in 2019.
This was a clear admission that there is no GCMS machine at the country's border with Tanzania, exposing users to danger while denying the Kenya Revenue Authority millions in tax dues.
The government currently has only one functional machine at the Kenya Petroleum Refineries Limited, which is used to test and certify all cooking gas imports through the Mombasa port.
Last year 75 staff members were arrested and charged for suspected involvement in activities that undermined the institution’s mandate by abetting tax evasion and facilitating access to services through bribery and corruption.
Yesterday, the tax agency told the Star that it concluded 187 investigations of unethical staff last year, mostly touching on aiding tax evasion.
Most of them were accused of facilitating fraudulent clearance of cargo, amendment of tax returns to help taxpayers evade taxes and the irregular issuance of Tax Compliance Certificates.