Top KRA officers are now accused of being behind the tax evasion schemes in the alcohols and beverage sector.
According to documents contained in a confidential dossier sent to KRA Commissioner General and EACC, the head of Market Intelligence one Anne Irungu is said to collect at least Ksh 200 million monthly from tax evaders in the sector enabling the country to lose at least Ksh 8 billion monthly from the identified sector.
The evasion is enabled through the sale of fake revenue stamps and importation of bottle through a network of a cartel operating in every region of the country. The cartel is said to operate with the protection of top security officers who ensure that they protect the scheme and enable massive evasion.
The amount evaded then ends up in the pockets of key individuals at KRA and the security sector.
Top officials at KRA have reportedly enabled 30 well-connected companies to operate alcohol bottling plants with little oversight on the health, taxation or standards compliance. The 30 also get to copy products from other compliant firms.
Raw Material Suppliers
Kenya Revenue Authority (KRA) uses an excise management system supplied by SICPA Security Solutions to monitor factory productions, count bottles and prevent loss of tax revenue. But through this company, KRA officials are said to enable a parallel system used to avoid revenue and ensure that the same end up in the pockets of individuals.
Any complainant has always had tax issues brought against him/her and intimidated into silence.
Bottles used in the evasion are bought from Milly Glass Limited in cash and fall for quick imports if the local supply is not adequate. Some of the companies used in the importation of the bottles from Oman and Tanzania are Josinta Villa Limited, Amplified Consultants and Frank Man General.
The imported bottles are declared as glassware raw materials for pharmaceuticals so as not to attract tax.
Top fake alcohol producers
The bottle caps are bought locally or imported through shell companies with declarations tampered with to avoid detection. The labels are bought locally but at say Ksh 10 per label after which the seller package 4 or more labels as a crafted means of under-declaring label price. Manipal International Printing Press, Skanem Interlabels, Balaji Labels and others are said to operate the label schemes on behalf of the tax-evaders.
Spirits used in the manufacture are bought from local distilleries through cash transactions. If local supply for spirits is not enough, companies like Kilimanjaro Biochem LTD in Tanzania together with Uganda’s Sugar Corporations and Busia Distillers are used to smuggle the alcohol into Kenya with the help of KRA border officials and top police officers who are seen escorting the alcohol or protecting it throughout the journey.
Porous border points between Tororo and Mbale Uganda are key points used.
You’ll detect smuggled or tax-evading alcohol by seeing them retail for as low as Ksh 120 while any taxed spirit will not sell for less than Ksh 150 because duty alone is that much per 250ML bottle.
Revenue stamps are being printed by at least three entities that operate very sophisticated printing press and have a stranglehold on the illegal sale of alcoholic beverages, cigarettes, soft drinks, juices and bottled water. They print KRA revenue stamps on an industrial scale by first getting the real stamps through their networks and then creating fakes of the same.
The stamps are then approved by rogue KRA officials through the SICPA’s SOMA LABLE system. Rogue KRA and SICPA officials have clearly shared the security features of the authentic stamps with the printing cartels who then get approval and a quick pass from the KRA Market Intelligence team. It is estimated that 70 per cent of the revenue stamps in this sector are not authentic.
In this business, the beneficiaries are KRA’s Market Surveillance and enforcement teams together with prosecutors, judiciary, DCI and National Intelligence Service officers.
After the raid of Africa Spirits some time back, the cartel has now moved their operations into remote locations with private armed guards. KRA’s Market SUrveillance and intelligence unit would alert the culprits before a raid is carried out while if a raid is successful, key DCI officers get to transfer the same to select warehouses and then stage a theft while DPP officers will ensure that the cases are withdrawn under section 87(a).
According to the dossier shared with EACC and DCI, the exclusive logistics handler for the cartel is one James Warurwa Karanja of phone number 0722-708688 while the operation is cordinated by the vehicles below;
- KBP 034D – Trailer ZC8724
- KCC 704D – Trailer ZF2558
- KCC 709D – Trailer ZF2559
- KCC 170H – Trailer ZF3524
- KBU 830S – Trailer ZF6317
- KCG 120H – Trailer ZF3524
- T599 DHA
The key supply coordinator is one Jacob Mlingi of phone numbers +254 733 453 636 and +255 653232415. He was apprehended in the African Spirits raid but escaped to Tanzania where he coordinated the destruction of case against him. He is said to work closely with Patiala Distillers and a retired KRA Commissioner. Other people he works with are Charles Thondu Njuguna of phone number +254722851656 and Khen Mburu aka Starring of phone number +254722790256.
Illegitimate bottling is done between 7PM and 5AM while spirit is smuggled at night or during the evening hours.
Heavy goods transporters are paid cash-on-delivery per truck which has loading capacity of 35,000 litres per tanker 20,000 litres per truck with 80 drums of 250 litres each. The drums are masked with fresh and perishable goods.
Goods manufactured are supplied with authentic (30 per cent) and counterfeit (70 per cent) KRA stamps through the normal supply chain. Patiala Distillers supply goods strictly on CASH.