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Tatu City directors accuse foreign partners of Sh1.5bn tax evasion

Tatu City directors Vimal Shah and Nahashon Nyagah
Tatu City directors Vimal Shah and Nahashon Nyagah when they appeared before the National Assembly’s Land committee July 25, 2018. PHOTO | DIANA NGILA | NMG 

Tatu City investors Tuesday accused their foreign counterparts of repatriating billions of shillings from the sale of land in Kenya to offshore accounts in Mauritius, Bermuda and Germany without paying taxes.

Tatu City chairman Nahashon Nyagah and minority shareholder Stephen Mwagiru made the allegation as they sought Parliament’s intervention to protect the interest of Kenyans in the multi-billion shilling real estate development and have the foreign directors pay necessary taxes for land sold.

Mr Mwagiru tabled documents before the National Assembly’s Land committee showing differences in the amounts of money indicated as having been paid for the transfer of land to potential investors and what was declared in Ministry of Land records.

“We noticed irregular entries in titles at the Ministry of Land. I have documents to show that property that was sold at over Sh1 billion is claimed to have been sold at Sh200 million to evade stamp duty and income tax,” Mr Mwagiru said.

Under-declarations

He accused the current Tatu City management, led by Stephen Jennings, of under-declaring valuations in order to “swindle the Kenyan government of income tax.”

Mr Mwagiru cited land title number 10887, which was sold at Sh842 million but whose entries in the title at the Land ministry shows that it fetched a paltry Sh235 million.

Mr Mwagiru said title number 11287 was alleged to have been transferred to another firm at Sh330 million when the actual value is Sh1.3 billion resulting in a Sh38 million loss in stamp duty and Sh291.7 million in income tax.

A similar fate befell title number 11428, which was under declared after it was marked as having been sold for Sh219 million when the actual value was Sh814.8 million.

Land number 11486 valuation was declared as sold for Sh340 million against its actual value of Sh1.19 billion while LR No 8749 was declared as fetching Sh2.7 million when the actual cost was Sh628 million.

Mr Mwagiru’s documents further show that LR 248/1 &248/5 was declared as valued at Sh200 million when the actual cost stood at Sh1.17 billion.

Committee chairperson Rachael Nyamai directed Mr Mwagiru to provide original documents to back his claims in seven days.

“These allegations are very serious because this report shows that the government lost Sh1.38 billion in taxes only. On stamp duty nearly Sh200 million was not paid,” Cherangany MP Joshua Kutuny said.

Asked whether he is aware of tax evasion, Mr Nyagah said, “I have a bible of Tatu City transactions having been the founder chairman and director and I will present to you given time.”

Mr Nyagah, in a sworn affidavit, accused Tatu City’s foreign owners of illegally shipping out more than Sh1.7 billion in the guise of paying equity contributions.

“In May 2018, the company secretary circulated Tatu City’s draft financial statements for the years 2015 and 2016 in which it was disclosed that Renaissance Group had siphoned out approximately Sh1.7 billion during the two years under the guise of repaying equity contributions by Cedar IV under Deposit Advance Agreement,” he said.

He accused Mr Jennings and Renaissance Group, now renamed Randeavour of repatriating money immediately conveyance cash hit the lawyer’s accounts.

“I am in court to know to know whether there are unpaid taxes. I have asked for an audit because I don’t want the whole land, originally 11,500 acres sold without interest of Kenyans safeguarded,” Mr Nyagah told the committee.

“There has been loss of land, money and taxes to the government. I am the chairman of Tatu City and there is a dysfunctional board ran by one side that doesn’t want the whole board to meet,” he said.

Overpaid Sh2 billion

The former Central Bank of Kenya governor said Manhattan Group, a company he co-owns with Mr Mwagiru and Bidco chairman Vimal Shah, has overpaid Renaissance Sh2 billion for a loan it advanced it to purchase Tatu City land.

He wants Parliament to order the closure of Tatu City, arguing that it was the only way to protect the interest of Kenyan investors.

“To protect the property, I am saying close down Tatu City to protect the petitioners and Kenyans' interest. I am saying this as chairman of Tatu City,” Mr Nyagah said.

Mr Mwagiru asked the committee to protect the over Sh500 million that 1,300 residents of Kiambu spent in the purchase of Tatu City shares.

“If the committee doesn’t intervene, the interests of local shareholders who put money in the project will be at risk,” he said.

The committee is inquiring into a public petition filed by 1,300 Kiambu residents through local MP Jude Njomo.

The residents, through Ms Winfred Gitonga, have petitioned Parliament to intervene and stop foreign shareholders of Tatu City from defrauding them of their land.

The residents claim that they own shares in the project and argue that their foreign partners have cheated them of what is rightly theirs.

Mr Nyagah, Mr Mwagiru and Mr Shah are the three shareholders in Tatu City and Kofinaf Company Limited, which are related companies owned by the same group of shareholders comprising of Kenyans and foreign nationals.

Mr Shah asked the committee to accord him more time to make substantive submissions backed by detailed documentation on the Tatu City controversy.

“These issues are very weighty. I want to request time to prepare an in-depth report. We have a lot of material, it’s a very deep issue and it could be deeper than what is happening elsewhere. I request a few days to prepare and provide my submissions with documentary backing,” Mr Shah said before the committee granted him seven days.

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