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Afya House scandal firm fights back

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Estama Investments, the company at the Centre of Afya House’s Ksh1 billion mobile clinics scandal, has moved to court to have the freeze on its bank accounts lifted. The company claims that the money in the accounts was not acquired as a result of any corrupt dealings as alleged.

Through lawyer Philip Nyachoti, the company and its director Njage Makanga claims that the frozen money was not acquired illegally. In court documents filed yesterday, Makanga claims that the monies at the Kenya Commercial Bank (KCB) and Equity Bank arose from valid and lawful contractual payments made out to the company by the Ministry of Health.

He added that the money was meant for the supply of portable medical clinics containers in accordance with the contract agreement with the ministry of health dated July 17, 2015. The order to freeze the accounts was issued on January 5, 2017, by lady justice Hedwig Ong’undi. Mr Makanga claims that he is aggrieved by the order because the said contract was awarded to Estama following a competitive procurement process, which has never been challenged before the Public Procurement Administration Review Board.

He added that the contract has never been declared irregular pursuant to the provisions of the Public Procurement and Asset Disposal Act. “The said orders were obtained through the misrepresentation of facts and by further concealment of fundamental facts by the Ethics and Anti-Corruption Commission,” said Mr Makanga.

Mr Nyachoti added that the company wants the orders set aside because it is unable to discharge any of the obligations under the Ministry of Health. He said that the company has not been able to commission and install all the 100 portable medical clinics in Nairobi and other parts of the country because the money has been frozen. “The companies operations have further been frustrated since the remaining 90 clinics are still laying at the National Youth Service (NYS) camp in Jomvu,” said Mr Nyachoti in court documents.

He added that the ministry directed the company to keep them at the camp pending further instructions on the specific counties and slums to be supplied with the same. Mr Nyachoti claims that Estama urgently requires funds to transport the clinics from Mombasa to various counties in the country.

“It also wants to engage sub-contractors and manpower for the installation of the same as per specifications in the contract and pay the entire attendant costs related to the same hence the urgency of the application,” he added.

He added that unless the orders sought are granted and the matter given the priority, the company’s fund will continue to remain frozen thereby occasioning substantial loss. Makanga added that the Ministry of health has also never been investigated by the public procurement regulatory authority established under the law in regard to this contract.

The director added that EACC investigations on allegations of procurement and irregularities at the ministry of health are merely speculative and without any basis at all. On January 12, 2017, the Kenya Revenue Authority (KRA) sought to freeze accounts on the grounds that it has not paid taxes on the Ksh800 million the company was paid for supplying mobile clinics to the Ministry of Health, but has since moved some of the money to secret offshore bank accounts.

KRA alleges that Estama Investments has been suspiciously moving funds received from the controversial Ministry of Health tender without meeting its tax obligations. Estama has not filed any tax returns nor paid a single cent in taxes since its formation in 2008, KRA says in its petition before the court.

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The company is also accused of overstating its costs while supplying the mobile clinics, a move that significantly reduced its value added tax (VAT) liability. “An analysis of Estama Investments’ business transactions reveals a possible overstating of purchases in order to reduce VAT liability. This is evident from the fact that Estama Investments claimed purchases amounting to Sh819, 839,113 against imports valued at Sh33, 764,330.”

KRA says in court papers that it intends to probe Estama’s books of accounts from the year 2010 to date with the aim of establishing how much money the firm owes in VAT, withholding, income, PAYE and directors’ taxes. KRA has enjoined owners of the firm Irene Makanga, in the suit alongside Business Capital Access Limited, another company that the couple co-owns.




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BT Correspondent
BT Correspondenthttp://www.businesstoday.co.ke
editor [at] businesstoday.co.ke
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