Zuku rivals back KRA in Sh3.4bn taxation case

KRA headquarters in Nairobi. FILE PHOTO | NMG
KRA headquarters in Nairobi. FILE PHOTO | NMG 

Rival shareholders of Internet and pay-TV service provider Zuku have joined a Sh3.4 billion tax evasion suit pitting Kenya Revenue Authority (KRA) against Richard Bell, a major owner in the company, with whom they have been fighting a boardroom war.

The High Court allowed Wananchi Nominees Limited, International Consulting Limited (formerly known as ISP Kenya Limited) and East Coast Telecoms Limited to be enjoined in the case and help the taxman prove his case against Mr Bell.

The three applicants had told the court that they have information that KRA doesn’t have with regard to Mr Bell’s responsibility as the representative of the offshore companies, a position that makes him directly answerable on the suspected tax avoidance.

Mr Bell moved to court seeking to reverse KRA’s decision requiring him to take responsibility for a Sh3.4 billion tax fraud case against the offshore companies. “I am satisfied that the proposed respondents have raised sufficient ground to be enjoined in the case,” the judge ruled.

The judge said that while the rival shareholders have indicated that they have information that could help the court, and since the proof is required to conclusively determine the case, it was important that they be enjoined in the case.

However, the judge directed the shareholders to limit themselves to Mr Bell’s responsibility for the alleged tax evasion and desist from dragging the court into issues they have in a separate dispute with Mr Bell.

KRA wants Mr Bell to be held responsible for the taxation of Wananchi Satellite and Wananchi Programming, both based in Mauritius, but whose operations the taxman claims are in Nairobi.

The rival shareholders, who have been enjoined in KRA tax case are locked in a vicious boardroom war with Mr Bell that begun  with the announcement of plans to sell Wananchi Business Services — the unit that deals in corporate data services.

Their application to help KRA’s cause is being seen as a show of deep difference between them and Mr Bell.  

Mr Bell, a founder of the Wananchi, moved to court seeking to stop his partners — Wananchi Nominees Limited, ISP Kenya Limited and East Coast Telecoms Limited — from instituting any civil or criminal proceedings against him or East Africa Capital Partners Management LP (a company he owns) for alleged mismanagement, asset stripping and tax fraud schemes.

The suit revealed the Internet and pay TV service provider’s intricate ownership structure that is made up of several layers of companies.

Mr Bell argues that the rival shareholders have sent damaging letters to the taxman and the competition watchdog making “baseless” allegations.

Wananchi Group Holdings Limited had in a 2015 board meeting resolved to sell Wananchi Business Services, which owns licensed public data operator Simbanet, satellite teleport service provider iSAT and tier one carrier Wananchi Telecom.

The planned sale of Wananchi Business Services was intended to pump more capital into better performing units in the group, and to cater for projected cash shortfalls in future. East Coast Telecommunications Limited had in 2014 filed a suit against Mr Bell’s East Africa Capital Partners, Wananchi Group Holdings Limited and ATMT Holdings seeking a forensic audit of the Internet and pay- TV’s books of accounts.