Jubilee leaders attack Uhuru war on tax cheats

A political storm has greeted the ongoing crackdown on alleged tax evaders amid fears that it could trigger massive layoffs at a time when companies are trimming their payrolls to remain afloat.

The Mount Kenya region is not sitting pretty. This comes after the dramatic arrest of owners of alcohol giant Keroche Industries, Tabitha Karanja and her husband Joseph Karanja. The brewer was accused of Sh14 billion tax evasion.

They were held yesterday after Director of Public Prosecutions Noordin Haji on Wednesday ordered their detention.

Keroche is the only locally owned beer manufacturer and employs hundreds directly and indirectly.

Immediately after the DPP issued arrest orders on Keroche directors, tycoons from the Mt Kenya region hurriedly convened at  Boulevard Hotel to deliberate on the latest move.

They are understood to have expressed 'deep concern' over the business environment under the Jubilee administration and its implications on their businesses.

"You cannot compare this government with [former President Mwai] Kibaki’s administration. Apart from the bad business environment, we have become targets of state machinery. For how long will it go?" one of the businessmen who attended the meeting told the Star.

But nominated Senator Isaac Mwaura dismissed claims the ongoing tax evasion crackdown was targeting Central Kenya businesses, saying all traders must pay tax.

"This must not be seen as a witch-hunt. Everybody must pay tax whether Kikuyu or Luo. Ethnicity must not be used as camouflage," Mwaura said.

He said while members of the Kikuyu community are known to be enterprising, they must equally pay tax as required.

Leaders from President Uhuru Kenyatta’s Jubilee Party and mainly allied to DP William Ruto also came out guns blazing, claiming the Jubilee administration had launched a witch-hunt disguised as a fight against tax crimes.

The furore could further poison the political environment in the party against the President.

Nakuru Governor Lee Kinyanjui, in whose county Keroche Industries is located, said the quest to enhance tax collection must be balanced with the need to protect businesses and jobs.

"While there may be tax matters that require redress, it would be an act of utmost betrayal for Kenyans, who have built their businesses over the years, to be reduced to fugitives," the governor protested.

Last week, billionaire businessman Humphrey Kariuki was charged with tax evasion amounting to Sh41 billion.

In an unprecedented move, detectives closed Kariuki’s firm, African Spirits, as they moved in to freeze his bank accounts.

The state has also mounted a vicious clampdown on betting companies, most of which have directors hailing from the Mt Kenya region.

Among the casualties is betting giant SportPesa, whose CEO Ronald Karauri and Paul Ndung’u are among the biggest losers.

SportPesa has been a roaring success since it set up shop in Kenya in 2014 and its shareholders include Asenath Wacera Maina, who owns a 21 per cent stake.  Wacera is the widow of former Nairobi Mayor Dickson Wathika.

Ndung’u owns a 17 per cent stake in the firm. He was the chairperson of the Friends of the Jubilee Foundation technical committee that raised billions for the party in the run-up to the 2017 election.

Other shareholders are Ronald Karauri, who owns a seven per cent stake in the firm, Peter Kihanya (one per cent), Francis Kiarie (one per cent) and Robert  Macharia (three per cent).

 Senate Majority leader Kichumba Murkomen said that while tax evasion is a serious crime, the Kenya Revenue Authority should negotiate a tax repayment plan instead of criminal enforcement.

"This fight must not leave the country in a worse situation than it is," he stated.

For months now, investors from Central Kenya have complained of an unfavourable business climate that they claim has stifled growth since Jubilee rode to power in 2013.

Kikuyu MP Kimani Ichungw’a told the Star the crackdown on businesses "is not the way to deal with matters of revenue collection or tax evasion".

"We have formed a bad habit of using state agencies to coerce, intimidate and arm-twist Kenyans. Be it in the fight against corruption, the fight against tax evasion, Huduma Namba registration or the upcoming census, we want to intimidate and coerce Kenyans," the vocal MP protested

Kirinyaga Woman Representative Wangu Ngirici cautioned the state against using "primitive means to wage political wars on perceived competitors, be it in business or politics".

"What we are seeing now is the blatant passing of organisations as criminals without due process being exhausted. The private sector and investor world will surely be affected by this," she said.

Naivasha MP Jayne Kihara expressed dissatisfaction with the manner in which the government is dealing with local investors, saying it was clear some politics and business wars are involved.

"I’m feeling very bad. It is a sad state of affairs in this country, more so my area where Keroche is situated. The government needs to move slowly on such huge businesses considering that there are hundreds of people employed by these companies," she said.

Mathira MP Gachagua Rigathi blasted the government and read mischief in how the state is going after the alleged tax evaders.

"Where was the government? Unless they are telling us that KRA had failed then they should go for those who abdicated their role. This is a big indictment of the government and it should stop this barbaric way of doing things," he said.

Kieni MP Kanini Kega, who is the chairman of Trade committee in the National Assembly, also expressed his reservations in the manner in which the government is handling the investors.

"We must all pay taxes, be it individually or companies, but when there are disputes relating to unpaid taxes. We shouldn't dramatise it but rather look for alternative solutions," he said.

"If we close down companies, how many people will lose jobs? I beseech KRA to find an amicable way of paying due taxes, not this drastic way. We should have a soft spot for local investors. The move was very harsh. They should have explored other means," he said.