A Chinese firm that is entangled in a fraud and money laundering case has bribed a judge and the Kenya Revenue authority to withdraw a case and solve it “out of court” the editor of this site has learnt.
The Chinese company’s offices which are located on Mombasa road and are involved in the importation of various items including construction materials and household commodities were at the centre of a multi-billion tax evasion scandal.
High Court’s Lady Justice Hedwig Ong’udi recently issued orders freezing the accounts of Housemart Company Ltd following an application by the Kenya Revenue Authority claiming that the Chinese firm has evaded tax through under declaration of Value Added Tax of its products since 2010 totalling to Sh2B.
The order was issued for preserving funds and prohibiting the release, transfer, payment or other dealings involving the money held by the company at Barclays Bank of Kenya, Standard Chartered Bank, NIC Bank and Bank of Africa pending determination of the suit.
KRA says the Chinese company is engaged in tax evasion and money laundering through the creation of “briefcase companies” who have no physical presence in Kenya and used to syphon millions of shillings from the country.
According to preliminary findings of investigations done by KRA and presented before the court, it revealed that the company has evaded taxes amounting to sh2,243,781,488 between 2015 to 2017.
According to an affidavit filed by KRA forensic investigator Cyrell Wagunda, they received information in January that six companies were registered and used to open bank accounts in which proceeds from sales by Housemart Ltd were being channelled.
The companies include Colila Ltd, Akubi Ltd, Nkemm Ltd, Obest Ltd, Sunda Industrial Company Ltd and Wise Databank Ltd.
He swore that he discovered tax fraud and money laundering through diversion of sales and using fictitious forms to claim VAT refunds.
“We discovered they were using their employees or security groups contracted to transport cash totalling sh4 billion. Once the funds are transferred to the six companies’ accounts, they then wire it to another company based in China without declaring their tax,” swore Wagunda.
In one instance, the KRA official stated that a total of Sh515 million was deposited to Colila Ltd, Akubi Limited received Sh241 million, and Wise Databank Limited received Sh3.5 billion between 2015 and 2017.
Separately, Housemart’s MD Mr Ye Wei was also caught in the same problem, the Chinese national was charged in a Nairobi court with three counts of tax evasion. Mr Ye was arraigned at the Milimani Law Courts where he was jointly charged with others not before court evading on payment of tax amounting to over Ksh 800 million and an additional count of failing to declare sales amounting to more than Ksh 3 billion.
He denied the charges and was released on a Ksh 2 million bond with a surety of a similar amount or a cash bail of Ksh 1 million. The case will be heard on November 21, 2018.
Between 1st January 2016 and 30th June 2017, he is alleged to have willfully defaulted in paying Ksh 154,328,071 being income tax payable to the Commissioner of Domestic Taxes in contravention of the Tax Procedures Act.
In the second count, Mr Ye is alleged to have defaulted in paying Ksh 583,353, 575 between 1st January 2016 and 30th June 2017, while in the third count, the defaulted income tax is indicated as amounting to Ksh 85, 082, 282. This is for the period between 1st January 2015 and 30th January 2017, according to the charge sheet.
In the fourth count, Mr Ye is alleged to have deliberately defaulted on an obligation to declare sales amounting to Ksh 3, 232, 584.773 for the period covering 20th January 2016 and 20th December 2017 to the Commissioner of Domestic Taxes as required by the Value Added Tax.
According to a source privy to the matter, corrupt Kenya Revenue Authority officials have been harassing the corrupt Chinese after they refused to pay the bribe and finally agreed to settle the matter after money changed hands.
Despite all the fraud and money laundering, Housemart Co Limited has filed the consent with the KRA at the High Court. The consent allows Housemart to contest the outstanding tax as per the law.
“The consent …is hereby adopted as an order of the court. The (temporary) orders herein are accordingly vacated and the file is marked as closed,” ordered Justice Paul Nyamweya.
KRA agreed to withdraw all preservation orders issued to banks blocking the Chinese firm from transacting its accounts.
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