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KRA boss reveals blackmail plot by businessman in tax case

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Kenya Revenue Authority Commissioner General John Njiraini has accused a businessman of attempting to extort and blackmail him after the country’s chief tax collector refused to help the entrepreneur evade taxes.

Mr Njiraini says that Njama Wambugu’s claims that he is using his position to harass him were defamatory, malicious and unfounded and meant to muddle up the tax dispute between his companies and KRA.

“These malicious and unfounded allegations are driven largely by my refusal to accede to requests by the first Petitioner (Wambugu) delivered through two emissaries between August and September 2018, seeking my intervention to halt tax investigations said to have been in progress at the time,” Mr Njiraini says in court papers.

The Commissioner-General said the claims against him by the trader were the manifestation of a threat issued when he was approached. “Upon my refusal to accede to the requests, the emissaries warned me that the 1st Petitioner was determined to ‘drag my name through the mud’, but despite the threats, I found no basis to alter my stand and instead asked that the Petitioner be advised to provide relevant evidence to the investigators,” he said.

Mr Njiraini’s assertions are contained in affidavits that were submitted at the High Court on Wednesday March 27th 2019 in the case Mr Wambugu has filed at the Constitutional and Human Rights Division seeking to stop KRA from demanding that he pays taxes.

Mr Njiraini also denied a claim by the trader that he is a shareholder in Space & Style Limited through a holding company called Decamis Ltd. “In view of the foregoing, I am a stranger to the dispute herein in so far as it concerns the affairs of Space & Style Ltd,” said Mr Njiraini.

Mr Wambugu and his companies – Citigate Developers Ltd, Roser Roofing, A One Healthcare Ltd and Tradeline Express – are facing a tax bill of Ksh159.7 million, which they have subsequently challenged at the Tax Appeals Tribunal. A KRA official has said in an affidavit that Mr Wambugu and his businesses were involved in tax fraud by deliberately leaving out amounts which should have been included in their returns.

He said that the claims by Mr Wambugu are dishonest and unfounded and meant to divert attention from the taxes due from him. “The petitioners are merely making conspiracy theories, conjectures, assumptions, speculations and wish to mislead this Honourable Court into determining this matter on the basis of emotions,” the KRA official said in the affidavit.

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Ms Winfrida Wanjiku Ngumi, the managing director of Space & Style, said the company was established in 2002 with herself and Mr Wambugu as shareholders, with Decamis Ltd acquiring shares in the company in 2015.

But Mr Wambugu had in the meantime started a competing company called Roser Roofing, she said, and they agreed in 2018 that he should hand over his shareholding to her. They executed a Term Sheet in January 2018, she said, where Wambugu was to be paid Ksh225 million subject to a valuation of the company.

Ms Ngumi said that before the valuation could be completed, Mr Wambugu took an advance payment of Ksh25 million in the form of a loan. The valuation would eventually put the value of Space & Style Ltd at a total Ksh907 million but Mr Wambugu refused to proceed with the sale of his shares and instead challenged the valuation, said Ms Ngumi in her affidavit.

“I wish to categorically state that that…John Karimi Njiraini is not a party to the legal proceedings concerning shareholding and management of Space & Styles Ltd.”

There have since been a series of court cases that have eventually ended at the Court of Appeal. Ms Ngumi also distanced Mr Njiraini from the cases and the claims by Mr Wambugu.

“I wish to categorically state that that…John Karimi Njiraini is not a party to the legal proceedings concerning shareholding and management of Space & Styles Ltd. Moreover (he) is not a shareholder or director of Space & Style Ltd and neither does he play any role in the company’s management,” she added.

She said that Mr Njiraini is also not a shareholder in Decamis Ltd. Mr Wambugu has gone to court claiming that KRA acted at the behest of Mr Njiraini, because of the ongoing dispute in Space & Style Ltd, when it asked him and his company to pay taxes.

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BT Reporter
BT Reporterhttp://www.businesstoday.co.ke
editor [at] businesstoday.co.ke
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