A web of M-Pesa transactions and incriminating text messages has exposed a brazen bribery ring at the Kenya Revenue Authority (KRA), a collection agency whose staff are cutting government revenue by engaging in corruption and colluding with tax evaders.
The staff disguised the bribes through M-Pesa as soft loans and ‘merry-go-round’ contributions, court documents reveal.
Investigators in court documents presented a sample of suspicious M-Pesa payments totalling Sh894,863 from employees at the Attorney-General’s Business Registration Services to former KRA iTax officer, Mr NMK’s phone number, between August 2018 and May 2019.
The bribed facilitated corrupt taxpayers to evade paying duty and providing tax-compliant certificates.
The money formed part of a wider multi-million-shilling bribery network where the KRA staff shared illicit gains under the pretence of mutual aid arrangements.
The scheme operated through carefully coordinated steps. Mr NMK, stationed at KRA’s Sheria Desk-Tax Payer Services/Tax Base Expansion (TPS/TBE) within the Domestic Taxes Department, would receive requests from the office staff. The desk is a critical unit for processing company tax PINs.
He would then forward approval tasks to a female colleague at the same desk. Once she processed the PINs, mobile money payments would immediately be sent to her phone, which was registered under a different name to avoid detection.
Investigators uncovered compelling evidence through text message exchanges between the officers.
One particularly damning message from Mr NMK to his colleague read: “Usisahau huto tutask nipate ya mafuta” (Don’t forget those tasks so that I may get my fuel money).
The Employment and Labour Relations Court interpreted this as clear evidence of kickback demands, rejecting Mr NMK’s defence that the payments represented innocent “soft loans” between colleagues.
The KRA staff have previously been accused of helping to fraudulently clear cargo and alter tax returns to help people dodge tax payments.
The corrupt dealings come as the government is struggling to raise tax revenues to fund its budget and cut reliance on debt, which has mounted and is consuming more than 65 percent of taxes in annual repayments.
The investigation revealed how the officers exploited Kenya’s popular merry-go-round savings culture to disguise their illicit transactions.
The scandal came to light following intelligence reports suggesting certain KRA officers were facilitating tax evasion through the irregular issuance of Tax Compliance Certificates.
Internal investigations identified Mr NMK as one of several officers involved in compromising the integrity of PIN approval processes at the Sheria Desk.
Jackson Kimeu, an Assistant Manager in KRA’s Human Resource Division, testified that in April 2021, the Deputy Commissioner of Human Resources received investigation reports alleging staff within the Domestic Taxes Department, particularly those at the Sheria Desk, were soliciting and receiving bribes from taxpayers.
These reports triggered disciplinary proceedings that ultimately led to Mr NMK’s dismissal in 2021.
During court proceedings, Cecily Mumbi, a supervisor in KRA’s Intelligence & Strategic Operations Department, presented detailed evidence tracing the suspicious transactions.
She explained how investigators mapped the flow of funds from Business Registration Department staff to Mr NMK, and subsequently to his colleague handling PIN approvals.
Mr NMK mounted several defences against the allegations. He claimed the Directorate of Criminal Investigations had cleared him of wrongdoing, though the court noted this did not preclude KRA from taking disciplinary action based on its own findings.
The court ultimately found Mr NMK’s explanations unconvincing. In its ruling, the Employment and Labour Relations Court upheld KRA’s decision to dismiss the officer, stating the termination was based on fair and valid reasons.
The judgment emphasised that Mr NMK’s conduct destroyed the trust KRA had placed in him as a revenue officer.
“It is this court’s respectful view that the circumstances of this case do not portray the claimant as an honest employee and, as a result of his own conduct, he provided the respondent with a fair and valid reason to terminate his employment,” said the judge.
The KRA has been under heat from both President William Ruto and the National Treasury to weed out corruption within its ranks amid persistent revenue leaks suspected to be fueled by rogue officials.
For example, President William Ruto, in 2022, claimed that rampant collusion between some KRA officials and rogue traders resulted in massive revenue leakages of up to Sh400 billion.
The KRA sacked 25 staff within the quarter ended September 2024 amid an internal purge to weed out corruption within the agency, which saw Sh549 million illicit wealth recovered after lifestyle audits.
In the court suit, the judge noted that Mr NMK admitted receiving money from his colleague and acknowledged directing PIN tasks to her without proper authorisation.
The judge found that this established a “mutually beneficial arrangement” that violated KRA’s integrity rules.
“Furthermore, during cross-examination, the claimant admitted that the said colleague was not his supervisee and that there was no policy permitting the delegation of PIN approvals. Consequently, there was no plausible explanation from the claimant for requesting his colleague to register and issue PINs at her station,” read the judgment.
The court also rejected Mr NMK’s procedural complaints about unfair dismissal. It found KRA followed due process by issuing a show-cause letter, convening a disciplinary panel, and allowing him to present supporting documents.
His argument about being denied a fair appeal hearing failed because labour laws do not mandate a second oral hearing at the appeal stage.
The court concluded that Mr NMK’s conduct destroyed the trust KRA had placed in him.
It said his role in revenue collection demanded the “highest standards of honesty and integrity,” standards he failed to uphold.
