Karume estate in deeper trouble

The troubled Njenga Karume Trust has been pushed into a deeper crisis following the filing of criminal charges against its trustees for non-payment of taxes.

At the centre of the suit that Director of Public Prosecution (DPP) Noordin Haji has opened against the trustees and management of the Karume estate is the multi-million shilling dispute between the taxman and the late tycoon’s estate

On the list of those facing criminal charges are Alfred Kigera Karume, Kungu Gatabaki, Jane Grace Njoki Njenga, James Raymond Njenga, Mary Wamboi Kimotho and James Kimondo Ngata.

The trustees had last month moved to court seeking to restrain the DPP from charging them with a criminal offence over a civil matter.

They had sought the court’s protection against the Kenya Revenue Authority (KRA) whom they accused of using the criminal justice system to enforce payment of civil debts and settling scores arising from a family succession dispute.

The High Court had last month directed the trustees to serve the DPP and the taxman with the suit documents and return to court this morning for further directions.

The petitioners are seeking “an order of prohibition directed at the 1st and 2nd respondents prohibiting them from prosecuting, continuing with prosecution and/or instituting criminal prosecution against the applicants in the resident magistrate court…in connection with tax demands.”

Alfred Karume, a son of the late tycoon, is however not part of those challenging the criminal charges in the High Court despite being listed as one of those facing criminal charges.

KRA has accused the trustees of deliberately failing to remit value added tax (VAT) by the due date and of failing to remit Pay as You Earn (PAYE) tax contrary to the Tax Procedure Act.

The taxman claims that between April 20, 2016 and December 20, 2016, being the directors of Jacaranda Hotels Limited, the trustees failed to remit Sh43.5 million in VAT, and a separate Sh44 million in VAT for the period between April 2017 and December 2017.

The accused face another count of failing to remit Sh32.8 million PAYE covering April 2016 to December 2016 and a separate Sh32.5 million PAYE for the period between April 2017 and December 2017.

Mr Gatabaki, however, says in a sworn affidavit that the charges preferred against him, Mary Kimotho and James Ngata are malicious and faulty because they were not directors, shareholders nor members of the board of Jacaranda Hotels Limited at the time the said taxes accrued.

KRA issued the Jacaranda Hotels Limited with an enforcement notice on January 12, seeking immediate payment of tax arrears amounting to Sh197 million and on the same day moved to secure goods at the Jacaranda Hotel to recover the tax.

On January 18, the hotel management proposed to settle the undisputed amount within 18 months, noting that it was facing financial distress. But KRA rejected the plea and instead demanded that the debt be paid in monthly installments of Sh50 million.

The taxman further demanded payment of Sh7.9 million to pay auctioneers who had already secured the hotel’s property to recover the tax.

The trustees also told the taxman that an earlier court order blocking the sale of the hotel’s property had made it impossible to immediately settle the outstanding debt.

The petitioners argue that by end of last month, the hotel had paid KRA Sh127 million even as it continues to interrogate the taxman’s demands, which keep on mutating.