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KRA in out-of-court deal with firm in health ministry Sh5 billion scandal

Presiding Judge Grace Nzioka. [Photo by Gideon Maundu, Standard]

 

 

lqhwybsfwvgxg6wnc0y58f651343bcb7 KRA in out-of-court deal with firm in health ministry Sh5 billion scandal
Presiding Judge Grace Nzioka. [Photo by Gideon Maundu, Standard]

Kenya Revenue Authority (KRA) has brokered a deal with a firm said to be a beneficiary of the Sh5.3 billion Health ministry scam to withdraw a tax evasion case against it.

KRA and Estama Ltd agreed that the former would terminate the case and instead assess the amount of tax its owed after which it will be cleared or challenged before the tax tribunal.

“The applications filed herein and pending ruling be marked as abandoned. In the mean time, the matter be and is hereby marked as settled,” reads the agreement between the two parties in part.

KRA had sought to freeze seven bank accounts linked to Estama Ltd, which was the biggest beneficiary of the Health Minsitry scam, having received Sh1 billion of the cash meant for maternity care for expectant mothers and newborns.

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The scam involved diversion of more than Sh5 billion in an NYS-style mega corruption scandal where ministry officials made double payments for goods through manipulation of the Integrated Financial Management System (IFMIS).

Offshore accounts

According to court papers filed by KRA before High Court Judge Grace Nzioka, Estama is suspected to have started moving Sh800 million from its accounts, part of which is believed to be proceeds of the scam.

KRA had targeted the firm’s directors Njage Makanga and Irene Makanga as well as another firm, Business Capital Access Ltd in the quest to recover lost revenue from their dealings, including transactions from the Health Ministry scandal. “If the funds in the accounts of the respondents are not preserved, then it is highly likely that the respondents may frustrate the recovery of taxes if information on the commissioner’s intention to raise tax assessment is disclosed by withdrawing the money, transferring or putting it out of reach of the applicant,” KRA’s lawyer Sylvester Okello told the court.

Interestingly, the taxman claims the company, given the contract to supply medical mobile clinics, has already wired Sh330 million to an unknown offshore account. KRA demanded that Estama provide seven items, among them all its bank statements and those of its directors, including for overseas accounts.

KRA also said its analysis on Estama’s business revealed a possible overstating of purchases in order for the firm to reduce VAT tax liability. 

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