A local firm facing fraud charges alongside former Nairobi Governor Evan's Kidero never paid taxes totalling to Sh469 million for a period of six years.
Kennedy Wakoli, an assistant manager at Kenya Revenue Authority, told the court that Lodwar Wholesalers Limited did not pay self-assessment returns for 2014 to 2016. The company’s director had also not filed returns for 2010 to 2014.
Lodwar Wholesalers is one of the companies charged in relation to the Sh213 million graft case.
It is alleged that Kidero and nine others conspired to commit fraud, leading to the loss of Sh213,327,300 at the county government between January 16, 2014, and January 25, 2016. They allegedly authorised payments to Ngurumani and Lodwar Wholesalers for services not rendered
Wakoli explained to the court that he was on August 2016 tasked with investigating Lodwar Wholesalers after the anti-corruption commission wrote a letter requesting tax assessment and collection of the firm.
Investigations showed that on income tax Company, Lodwar had not paid self-assessment returns for the years 2014 to 2016.
He said they proceeded to issue demand for taxes totalling Sh469 million for September 2011 to 2017. Lodwar objected to the demand on November 6, 2017, on grounds they taxed non-vatable items.
The witness told anti-corruption magistrate Douglas Ogoti that Lodwar Wholesalers attempted to settle the tax issue and a process of alternative dispute resolution commenced.
The firms admitted amount for VAT was about Sh6 million yet KRA was demanding Sh140 million. For corporation tax the firm was willing to pay about Sh2 million yet the authority’s demand was Sh174 million.
Wakoli said they never agreed and the ADR process collapsed. “Several sessions were held with Lodwar wholesalers in trying to resolve the tax issues and the same did not bear any fruit. The reason being the company did not provide as requested documentation on the contracts with NCC purchase invoices [and] related party ledgers,” he said.
The court also heard that KRA was unable to establish where payment from Nairobi City County for the period of January 2011 to October 2013 was being deposited.
Wakoli said during the same period they sought from Lodwar Wholesalers actual sales invoices to NCC but these were never provided.
"We had sought for evidence of payment from the county but we were never able to trace where monies of NCC was being deposited at that time," he said.
Wakoli, who was being examined by prosecution counsel Jennifer Kaniu, said during the same period Lodwar Wholesalers received Sh681 million for purchase of sugar from Mumias Sugar Company.
He said the firm was a general trader and majority of their sales was sugar from Nzoia, Kibos and Mumias.
“We wrote to Mumias to provide us with the ledger of purchases by Lodwar [Wholesalers] which was provided. These purchases were from 2011 to 2013 totalling to Sh681 million,” Wakoli said.
The witness indicated that the purpose for ledgers was because the firm’s tax agent had indicated that the director, John Githua, did not keep formal records.
“He had no accountant. The taxpayer did not have records in support of the purchase claims in his accounts,” Wakoli said.
Edited by R.Wamochie
