KRA sacks 35 officers for fraud, opens senior staff to graft probe

Kenya Revenue Authority has in the past three years sacked 35 employees involved in tax fraud, in a fresh corruption purge meant to plug leakages that cost the country billions of shillings in tax revenues.

The taxman has also revealed that it handled a total of 148 cases involving “unethical conduct” between July 2013 and September this year.

The cases involved tax-related misconduct such as theft, cheating on tax returns and declarations, corruption, collusion, and soliciting bribes from tax cheats.

KRA said 23 other cases involving tax officials are ongoing in the courts, and seven staff have been compulsorily retired.

The taxman made the revelations in response to questions as to whether it had conducted the lifestyle audit on staff that President Uhuru Kenyatta ordered one year ago.

“A staff vetting framework has been developed to determine suitability for employment at KRA. Names of all senior staff have been forwarded to the Ethics and Anti-Corruption Commission (EACC) for background checks and necessary action,” KRA said in response to our questions.

“Staff who contravene the provisions of the code of ethics are subjected to the disciplinary process as stipulated.”

KRA’s rare disclosure follows in the footsteps of Safaricom and KCB Bank, the only Kenyan companies that have openly revealed the number of staff kicked out over fraud and professional negligence.

Mr Kenyatta gave the vetting directive in October 2015, saying the agency had constantly failed to meet tax collection targets, amid fears that KRA employees were lining their pockets with potential tax funds.

Total tax collection in the year to June 2016 was Sh1.21 trillion, narrowly falling short of the targeted Sh1.29 trillion. The target for the current period ending June 2017 is Sh1.44 trillion, a projected growth of 12 per cent.

Bribes paid to tax officials jumped the highest last year, according to Transparency International’s 2015 bribery survey.

The study also found that the average size of bribe to KRA officers more than doubled to Sh6,815 from Sh3,400 in 2014.

“Lifestyle audits should be supported by a robust wealth declaration system that will ensure routine and accurate asset disclosures that are made public,” said Transparency International.

The integrity of KRA officials has of late come into sharp focus due to an upsurge in the number of tax fraud cases involving tax officers, especially customs officers and those in the road transport department.

For instance, rogue KRA officials were said to be at the centre of a tax-evasion racket involving 124 luxury vehicles, which had skirted paying duty worth more than Sh600 million.

The fuel guzzlers were impounded in mid-May and deregistered two months later after the owners failed to show up to pay Caesar his dues.

In the same month of May, KRA suspended four customs officers suspected of being part of a cartel of tax evaders that had fraudulently cleared seven containers at the port of Mombasa.

Coast regional co-ordinator Nelson Marwa in July revealed that a “sophisticated cartel” involving corrupt tax officials and shrewd businessmen were jamming KRA’s system to conceal goods passing through the port.

The tax agency has also widened the net to target those colluding with its officers – especially banks - to carry out tax-related fraud.

Equity Bank’s Namanga branch operations manager Benson Rwara Kabuu and cash officer Douglas Wachira Gikunju were in March arraigned at a Nairobi court to face tax evasion related charges.

The two Equity Bank staffers, in collusion with senior KRA staff, are accused of tampering with the taxman’s IT system to deny the tax agency more than Sh120 million in revenue.

A joint probe by KRA and Equity Bank revealed that a total of 2,926 transactions involving 916 taxpayers were initiated in the online clearance portal - Simba 2005 - without corresponding dealings in the bank’s system to confirm actual payment.

Other banks under investigation include the National Bank of Kenya, Commercial Bank of Africa, and Co-operative Bank of Kenya, KRA said on March 17, 2016.

“Plans are also under way to expand the investigation scope to cover several other banks,” said KRA.

Separately, a National Bank of Kenya staff, Kennedy Otieno Juma, was in March charged in court with the offence of manipulating information stored in KRA customs computerised system.

KRA said it is currently implementing an intelligence gathering system that will provide employees and public with a safe, secure and confidential medium of reporting corruption.

“Implementation of this system demonstrates the authority’s commitment to public scrutiny,” KRA said.

Further, the agency has developed a whistle-blowers framework to protect informers who report incidences of tax fraud.

“This shows commitment to recognise and take action in defence of those who report malpractice, illegal acts or omissions by its employees or tax evaders.”

Four customs officers were in February arraigned at Nairobi’s Milimani Law Courts, for perpetrating tax evasion related crimes. The four - Lilian Akoth Onyango, John Wesonga, Anthony Ochieng and David Mwongela - were immediately suspended from service, KRA said.

A cashier in the road transport department was found to have pocketed Sh16 million collected as revenue between May and September 2004.

The cashier was dismissed for fraud, but KRA never pursued asset seizure to recover lost taxpayer funds.