Swiss firm denies BAT bribe helped it win KRA tender

The Swiss security printing company at the centre of bribery allegations against BAT and former Justice minister Martha Karua has denied being a beneficiary of corrupt payments that reportedly influenced the Kenya Revenue Authority (KRA) to award it a lucrative tender for the supply of excise duty stamps.

Former BAT employee Paul Hopkins, the whistleblower in the scandal, has claimed that he paid Ms Karua a £50,000 (about Sh7.5 million) bribe to access confidential information regarding procurement of the excise tax stamps, which the tobacco firm used to block a rival firm from winning the lucrative tender by the KRA.

Ms Karua has denied the bribery claims, but has admitted receiving Sh2 million from Mr Hopkins — which she supposedly understood to have been a personal donation for her 2013 presidential campaign.

“If BAT, as alleged, attempted to influence the tendering process in Kenya on behalf of a favoured provider, then SICPA as an independent provider is also a victim of their action,” the Swiss company, SICPA, said in a response to the Business Daily queries.

SICPA, which won the five-year KRA contract in December 2012, dismissed claims that BAT wanted it to bag the deal over other bidders.

Allegations of the bribery were first published by Britain’s Independent newspaper.

Mr Hopkins, who worked with BAT in Africa for 13 years, has submitted his evidence to the UK’s Serious Fraud Office.

He also told the BBC’s investigative programme Panorama that opposition leader and former Trade minister Moses Wetang’ula solicited bribes from BAT to influence the dilution of anti-tobacco legislation in Parliament.  

The KRA has said that it is investigating the claims, and has contacted Mr Hopkins and the Ethics and Anti-Corruption Commission on the matter.

“We would like to emphasise that SICPA has a clear code of business conduct in place to assure ethical behaviour throughout its activities,” the Swiss company said.

Reports of BAT’s alleged bribery of Ms Karua added a new twist to the excise tax stamps contract, which was marred by tender wars, legal hitches and delays since it was first advertised in 2008.

Mr Hopkins has alleged that he bribed Ms Karua through her aide to block an unnamed company from bagging the tender to supply excise tax stamps at the KRA.

“They then had the contract deliberately delayed while they secretly lobbied to get their own system chosen,” the London newspaper reported.

Bidders for the excise tax stamps tender included three Indian firms: Madras, Holistic and Security Printing Press; British company De La Rue, Apple Inc. subsidiary AuthenTec, and Ukrainian firm EDAPS.

Mary M’Mukindia, currently a KRA board member, was the conduit through which BAT allegedly bribed Ms Karua to peddle her influence in the awarding of the multi-billion shilling tender, according to the Independent report.

“BAT paid £50,000 to Kenyan politician Martha Karua, a former Justice Minister, to prevent a rival company supplying Kenya with technology to combat cigarette smuggling,” says the expose by the London newspaper.

“In return for the donations, paid in cash via a middle man, BAT obtained key confidential KRA documents outlining the £100m five-year contract for new technology designed to stamp out tobacco smuggling.”

The Lausanne-based security printer specialises in printing banknotes, tax stamps and anti-tamper seals.

SICPA said it has “deep technical expertise and unique on-the-ground experience successfully providing excise monitoring systems to governments in a number of countries” to help combat fraud and boost revenue collection.

The SICPA excise stamps solution has already been rolled out at Kenya’s factory lines producing alcoholic drinks, water, juices and carbonated drinks – and the system can transmit real-time data to KRA servers to help the taxman monitor companies for tax compliance.

Ms Karua has disputed the sum of cash received and its purpose.

“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 a response to the allegations.

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.

KRA commissioner-general John Njiraini has denied any tendering fraud in awarding SICPA the excise tax stamps deal, saying the Swiss company won the contract by beating 21 other bidders.

“KRA is not aware of any attempts made by BAT to influence past tendering processes for excise tax stamps,” said Mr Njiraini.

“As with all our processes, the tenders for excise tax stamps have been openly competitive and the winning tenderer selected transparently, on the basis of published specifications.”

The shocking allegations of BAT — a big taxpayer — pulling strings at Kenya’s tax agency comes at a time when the KRA has failed to meet revenue targets in the first quarter (July - September) of the current fiscal year that the Treasury partly blamed for the biting cash crisis in government.

President Uhuru Kenyatta has ordered a lifestyle audit of all KRA employees in an effort to stem rampant corruption in the agency that costs the State billions of shillings in revenue leakages.

The KRA is also battling allegations that top-ranking tax officials received hefty bribes from BAT to conduct corporate espionage by giving the British firm tax files belonging to rival, Mastermind Tobacco.

The officials also allegedly pocketed huge bribes from BAT to slap Mastermind with numerous tax demands, a strategy meant to intimidate its rival and damage the reputation of the Kenyan company.

One out of every three Kenyan taxpayers or 34 per cent of total have been asked to pay bribes to tax officers to receive services, according to a survey by Transparency International (TI).

KRA officials are ranked the sixth most corrupt group in Kenya after the Police (75 per cent), civil servants (46 per cent), MPs (45 per cent), business executives (38 per cent), and ward representatives (MCAs) at 36 per cent, the study says.

TI polled 2,397 respondents and released the findings on December 1, 2015.