Former Prime Minister Raila Odinga has become the latest high-ranking politician to be entangled in the ongoing revelations of bribery involving British American Tobacco (BAT), Kenya Revenue Authority (KRA) officials and Mastermind Tobacco.
Whistleblower Paul Hopkins says in his latest revelations to a British newspaper the Independent that high-ranking officials in Mr Odinga’s office intervened to stop the KRA from freezing Mastermind’s accounts over non-payment taxes worth billions of shillings.
Mr Hopkins told the UK newspaper that the senior officials in Mr Odinga’s office ordered the KRA to freeze multi-million shilling tax demands issued to Mastermind Tobacco – the maker of the Supermatch brand of cigarettes.
“When KRA wrote to Mastermind’s bankers threatening to freeze accounts until the outstanding amounts were paid, officials in the office of former Kenyan Prime Minister Raila Odinga stepped in and ordered them to suspend the demands,” the report says.
Mr Hopkins, who worked for BAT in Africa for 13 years, has admitted to offering KRA officials hefty bribes for access to rival Mastermind Tobacco’s tax files and directing the taxman to demand the amounts due.
Mr Odinga’s office wrote to the then KRA boss Michael Waweru asking him to immediately suspend agency notices issued to Mastermind’s bankers, according to a letter seen by the Business Daily.
“You are requested to put on hold the enforcement action you have instituted against Mastermind Tobacco Kenya Limited in order to facilitate further review of the matter,” says the letter dated May 4, 2010 and signed by Andrew Mondoh, who was the acting permanent secretary in Mr Odinga’s office.
Mr Odinga in October appointed Mr Mondoh to lead a team of administrative advisers working in his private office as he prepares for the 2017 presidential poll.
The involvement of Mr Odinga’s office in the BAT bribery scam are contained in a dossier Mr Hopkins forwarded to the UK’s Serious Fraud Office (SFO), according to the Independent.
Mr Odinga was yet to respond to our queries by the time of going to press.
Mr Odinga is no stranger to allegations of his meddling in tax matters having faced a similar storm in April 2012 when an MP accused him of meddling in the KRA’s affairs in order to shield Mastermind from paying its rightful share of taxes.
The then Mutito MP Kiema Kilonzo filed a question in the House seeking to know whether Mastermind had been remitting taxes to the KRA since 2007 and accused Mr Odinga, then Prime Minister, of shielding the cigarette firm from paying taxes.
“The court case that exists challenges issues up to April 2010. What about penalties, taxes and interest thereafter? I table a letter from the PM instructing that the company’s taxes should not be collected,” Mr Kilonzo told the House.
But then Finance assistant minister Oburu Oginga, who is Mr Odinga’s elder brother, hit back, saying Mr Kilonzo had on two occasions demanded Sh6.6 million from Mastermind to drop the question — suggesting that Mr Kilonzo had attempted to extort money from the tobacco firm.
Mr Kilonzo was in August last year appointed Kenya’s first ever ambassador to Turkey.
The KRA yesterday confirmed having received the letter from the former PM’s office, saying it did not in any way affect its pursuit of Mastermind for taxes.
“In the particular case of the letter from the former PM, KRA is aware that such a letter was written, but it had no influence whatsoever on the tax demands,” the KRA said in a statement.
The taxman declined to provide details on how many other orders from the PM’s office it received seeking to stop collection of taxes, citing rules of confidentiality.
“The law prohibits KRA from divulging details regarding the affairs of any taxpayer,” said the KRA statement.
The claims that the KRA has been acting on the whims of top bureaucrats and multinationals instructing the agency on tax matters come in the wake of the agency’s failure to meet revenue targets in the first quarter (July- September) of the current fiscal year. The Treasury has partly blamed the revenue shortfall for the recent cash crisis in government.
President Uhuru Kenyatta has responded to the crisis by ordering a lifestyle audit of all KRA employees in an effort to stop rampant corruption in the agency that costs the State billions of shillings in revenue leakages.
The KRA further argued in response to our queries that its acrimonious tax battle with Mastermind was before court, making it difficult for the agency to comment on the matter.
“A significant proportion of tax demands against Mastermind are the subject of court cases, and so any comment on them must take this into account,” the KRA said.
Mr Odinga, who served as Prime Minister between 2008 and 2013, now becomes the fifth Kenyan to be named in the mounting allegations that BAT operated an elaborate bribery scheme involving tax officials, legislators, rival company insiders and the United Nations representatives — all aimed at crippling rival Mastermind’s operations.
According to the Independent report, former Justice minister Martha Karua allegedly received £50,000 from BAT in bribes to block a rival firm from winning a multi-million pound contract at the KRA meant to fight smuggling of tobacco products.
Ms Karua has disputed the sum of cash received and its purpose, saying she received a Sh2 million “donation” to her presidential campaign.
“At no time did I ever discuss the award or influence of contracts/tenders whether at KRA or indeed within any other government entity with Paul [Hopkins] or anyone else,” Ms Karua said in response to the allegations.
The BAT bribe was supposedly paid to Ms Karua through her aide Mary M’Mukindia, currently a board member at the KRA.
Ms M’Mukindia, a former chief executive at State-owned oil marketer Nock, served as campaign adviser and fundraiser for Ms Karua’s unsuccessful presidential bid in 2013.
Julie Adell-Owino, a former BAT Kenya lobbyist, also left his job at East African Breweries (EABL) early this month after she was accused of organising payment of bribes to senior government officials, including former Trade minister Moses Wetang’ula, for reasons that were not explained.
Ms Adell-Owino resigned from EABL where she had taken a new job, indicating that the Diageo-owned brewer did not want to be associated with the corporate upheaval at BAT.