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Investigations

How Chinese Firm Housemart Limited Conspired To Steal Sh3B Of Kenyans Money Through Large Scale Money Laundering And Tax Evasion

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Mr Ye Wei, Managing Director Housemart Ltd In Court.

Kenya struggles to stay afloat with heavy foreign and domestic debts and the weight rests on the taxpayers who by design have to bare the wrath. We’re spending more than we’re earning interms of revenue collection which by reports has not been meeting targets. KRA has been failing to meets its obligations and they largely attribute it to non paying population.

Kenya and China have created a commercialized bond in the past decade and we’re witnessing an increased number of Chinese investors streaming into the country given cordial relationships to set up their companies here.

There’s an influx of Chinese nationals in Kenya but that’s a story for another day, the immigration department is currently doing a swoop on illegal immigrants many of which are Chinese and have been deported, just a few though meaning the problem still is intact.

Apart from mistreatment of locals, a good number of Chinese firms have been accused of several malpractices and fraudulent rings including tax evasion and that’s why we’re talking about Housemart Company Limited a subsidiary of Sunda International Ltd a leading exporter in building materials.

The Chinese company’s offices which are located on Mombasa road and are involved in the importation of various items including construction materials and household commodities, are also at the centre of a multi billion tax evasion scandal.

High Court’s Lady Justice Hedwig Ong’udi recently issued orders freezing the accounts of Housemart Company Ltd following an application by the Kenya Revenue Authority claiming that the Chinese firm has evaded tax through under declaration of Value Added Tax of its products since 2010 totaling to Sh2B.

The order was issued for preserving funds and prohibiting the release, transfer, payment or other dealings involving the money held by the company at Barclays Bank of Kenya, Standard Chartered Bank, NIC Bank and Bank of Africa pending determination of the suit.

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KRA says the Chinese company is engaged in tax evasion and money laundering through the creation of “briefcase companies” who have no physical presence in Kenya and used to syphon millions of shillings from the country.

According to preliminary findings of investigations done by KRA and presented before the court, it revealed that the company has evaded taxes amounting to sh2,243,781,488 between 2015 to 2017.

Playing their cards smart, Majority shareholders and beneficial owners of Housemart are foreigners and corporations with foreign addresses which are suspected to be tax havens, therefore, making it difficult to repatriate the funds once they exit Kenyan borders, a line of argument raised by KRA’s lawyer Sylvester Okello.

According to an affidavit filed by KRA forensic investigator Cyrell Wagunda, they received information in January that six companies were registered and used to open bank accounts in which proceeds from sales by Housemart Ltd were being channelled.

The companies include Colila Ltd, Akubi Ltd, Nkemm Ltd, Obest Ltd, Sunda Industrial Company Ltd and Wise Databank Ltd.

He swore that he discovered tax fraud and money laundering through diversion of sales and using fictitious forms to claim VAT refunds.

“We discovered they were using their employees or security groups contracted to transport cash totalling sh4 billion. Once the funds are transferred to the six companies’ accounts, they then wire it to another company based in China without declaring their tax,” swore Wagunda.

In one instance, the KRA official stated that a total of Sh515 million was deposited to Colila Ltd, Akubi Limited received Sh241 million, and Wise Databank Limited received Sh3.5 billion between 2015 and 2017.

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Separately, Housemart’s MD Mr Ye Wei was also caught in the same problem, the Chinese national was charged in a Nairobi court with three counts of tax evasion. Mr Ye was arraigned at the Milimani Law Courts where he was jointly charged with others not before court evading on payment of tax amounting to over Ksh 800 million and an additional count of failing to declare sales amounting to more than Ksh 3 billion.

He denied the charges and was released on a Ksh 2 million bond with a surety of a similar amount or a cash bail of Ksh 1 million. The case will be heard on November 21, 2018.

Between 1st January 2016 and 30th June 2017, he is alleged to have willfully defaulted in paying Ksh 154,328,071 being income tax payable to the Commissioner of Domestic Taxes in contravention of the Tax Procedures Act.

In the second count, Mr Ye is alleged to have defaulted in paying Ksh 583,353, 575 between 1st January 2016 and 30th June 2017, while in the third count, the defaulted income tax is indicated as amounting to Ksh 85, 082, 282. This is for the period between 1st January 2015 and 30th January 2017, according to the charge sheet.

In the fourth count, Mr Ye is alleged to have deliberately defaulted on an obligation to declare sales amounting to Ksh 3, 232, 584.773 for the period covering 20th January 2016 and 20th December 2017 to the Commissioner of Domestic Taxes as required by the Value Added Tax.

A look into this raises a serious concern over the levels of money laundering going on in the country more specifically with Chinese firms which I gather are very rampant. Outright, all these can’t hapoen without complicity and conspiracy with local authorities. It’s in this backdrop that as investigations advances, those KRA officials who’ve helped the company engage in this scam must also be investigated.

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Kenya can’t afford to humbly stay in a relationship with China when its not symbiotic. I doubt if there could be leniency if a Kenyan engaged in such scams in Beijing. Companies like Housemart and directors like Ye Wei ought to have their operation licenses withdrawn and conspirators like the fraud manager Ye and alike be thrown in jail.

Goodnews is the accounts are frozen even though Housemart has sued KRA for their action. While denying any link to the alleged malpractice, the firm noted that the caveat placed on its bank account has crippled its business operations and pleaded with the court to lift the freeze order.

Lemme say in my opinion, they deserve to suffer and even be thrown out of the country and operations if they can’t pay taxes and laundering money to tax havens. Doing business with such a company is also another risk one need to consider before inking any deal because you can imagine how many businesses have been now stalled with the accounts frozen. They should remain frozen until taxpayers recover their stolen money.

Money laundering and tax evasion is now becoming a real issue and Kenya Insights is dedicating efforts to highlight and expose scamming companies like Housemart, we’re therefore appealing for any useful information and tips on this topic so we can expose these frauds. Send me an email ([email protected])


Kenya Insights allows guest blogging, if you want to be published on Kenya’s most authoritative and accurate blog, have an expose, news, story angles, human interest stories, drop us an email on [email protected] or via Telegram
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Investigations

Riverside Suicide Bomber Was Recruited At Masjid Musa Mosque And The Tactical Error He Made That Saved Many Lives

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Mahir Khalid Riziki

Kenyans we’re left in shock after the CCTV footage showing the moments when the Dusit first attacker blew himself up, in what seems to be the first suicide bombing mission in Kenya.

The bomber can be seen walking and standing outside the Secret Garden Restaurant seconds before detonating. He seemed unsure of his steps and while ordinarily, it would be expected he blow himself up in a crowded place, the attacker blew himself up outside.

Intelligence officers have now identified the attacker as Mahir Khalid Riziki who apparently has been on ATPU radar since 2014 where he was amongst the many youths charged with killing officers in Coast. He was recruited into Al Shabaab by Ramadhan Hamisi Kufungwa while attending prayers at Masjid Musa, a mosque that has been accused of radicalizing faithfuls and recruiting for Al Shabaab.

Mahir’s ID

Masjid also happens to be where the radical cleric Abud Rogo who was fell by police bullets and accused of being an Al Shabaab operative and used the Masjid mosque to recruit youths into the terrorist group in Mombasa.

In 2015, Hamisi fled to Tanzania after the police circulated his image as a wanted criminal, he would later confess to his family of joining Al Shabaab before moving to Somalia.

He had been under training in Somalia until Mahir, according to detectives, sneaked back into the country last week, through Elwak in Mandera county then to Takaba and boarded a Moyale Raha bus in Marsabit town heading to Nairobi.

He then moved to Guango estate, Mucatha in Kiambu county where the attack ring leader Ali Salim Gichunge resided, and received instructions on his role in the 14 riverside drive attack.

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On the attack day, Mahir arrived at the scene ahead of his team and was in touch with Gichunge who was the operation commander and was to take position inside the restaurant, blow himself up, kill as many and the blast to signal the assault team positioned outside and kill civilians fleeing.

According to intelligence, a time disconnect and tactical failure by Mahir led to saving of many lives. The initial plan apparently was for him to detonate from inside and not outside for maximum casualties.

“The attack strategy was for him to detonate his suicide vest to kill people at the Secret Garden restaurant and signal incoming attackers. Then, as people scamper for safety towards the main entrance of Dusit complex, the other four attackers were supposed to embark on a killing spree targeting the fleeing crowd,” a source said.

Moments when Mahir blew himself up.

Mahir fortunately blew himself up at the wrong place and before his colleagues would arrive as planned letting many people escape and leading to many lives getting saved. His other colleagues stormed in minutes later behind schedule when scrores Of civilians had escaped. Unfortunately, they managed to kill 21 civilians in their shootings.

Suhaila Mwalim Bakari, was taken into police custody following the identification of her husband, Mahir Khalid Riziki, as the suicide bomber in the Tuesday attack.

It is not clear whether Suhaila became radicalised, but investigators say she was a  confidant of her husband, lending her ears to his trials and tribulations while in Somalia everytime he called her, demanding details about her current life while he remained in hinding.

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For a man who has been in police radar since 2015, questions arises as to how he perfectly evaded surveillance, communicated with his wife in Mombasa, sneaked into the country, moved through Nairobi and walked into Riverside with bomb vest without detection.


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Investigations

NAIROBI CLUB CONTROVERSY EXPOSES ROT AT THE EXCLUSIVE MEMBERS CLUB

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Justice (Rtd) Mary Ang'awa.

Controversial former Judge Lady Justice (Rtd) Mary Ang’awa is one of four prominent Kenyans at the centre of an ugly showdown at the Nairobi Club, that threatens to expose unseemly financial dealings at East Africa’s oldest members club.

An ugly scene engulfed the club on Thursday 27th Dec, when Justice Angáwa alongside 3 prominent members of the club, who were fired by members from the Club Main Committee on 11th December, attempted to force their way back into office and issue resolutions claiming to be the bonafide club officials.

According to eye witnesses, Justice Angawa, Prof Joseph Keiyah and Ms Jane Thirikali were forced to flee the club shortly after 10am after the club’s management with beefed up security barred the ex-Committee members from conducting any meeting within the premises.

Prof Joseph Kieyah.

In a strongly worded press statement issued by the Interim Club Main Committee  Elected after the incident, the club condemned four of the recalled committee members Lady Justice (Rtd) Mary Angawa, Mr David Aduda, Mr Prof. Joseph Keiyah and Ms Jane Thirikali, terming their effort to retake their offices by force as an illegal attempt to “usurp the club’s authority”.

The statement also pointed an accusing finger at the 4 ex Committee members attempt to retake their offices as a clear effort to interfere or obstruct an ongoing audit ordered by club members after details of financial scandals were unveiled mid 2018.

On 11th December 2018, Nairobi Club Members held a Special General Meeting (SGM) in which the entire 9 member Club Main Committee (Lady Justice (Rtd) Mary Angawa, Mr David Aduda, Mr Prof. Joseph Keiyah and Ms Jane Thirikali) was recalled (removed) and an Interim Club Main Committee Elected to spearhead the running of the club and to institute a Forensic investigative Audit into the mismanagement of Club funds.

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In the stormy SGM, serious corruption and mismanagement allegation were levelled at Committee. The then Vice Chairman  Prof Joseph Keiyah received the brunt of club members ire as incidents of his involvement in shocking procurement malpractices were read out to members. Among the accusations were;

a. While Chairman of Works and project sub-committee, he influenced a variance to works of Ksh 3,833,792.00 which was not budgeted and without the involvement of the Club management. Arm twisting the club to cancel a billboard contract awarded to Backlite and award it to Adsite whose cost of Ksh 2,000,000.00 was more expensive to Backlite’s Ksh 1,750,000.00.

b. Lobbying and canvassing for a Ksh 6,410,000.00 cost to purchase a generator set and cabling services which the Club management had not sought contrary to Club management procurement policies.

c. Presenting and canvassing for a quote Ksh 3,405,516.40 claiming that it was the amount required to cable the generator set to the Tennis Pavilion which the Club management has not sought.

d. As Gymkhana captain, he personally procured a music system for Zumba classes at an inflated cost of Ksh 284,700.00 as opposed to the procurement cost of Ksh 74,500.00 which had been already negotiated by the Club management

According the those who attended the stormy SGM, the members singled out Prof Keiyah and Justice Mary Angawa as those who had cultivated a cartel like approach to Nairobi Club’s procurement matters.

The sordid revelations at the club mark yet another disgraceful chapter for both Prof Keiyah and Justice Angawa whose exist from public service seem to have left them in limbo.

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Prof Keiyah was appointed in 2016 by President Uhuru Kenyatta to be a member of the Coffee Sector Implementation Committee. His term expired in May 2018 and was not renewed.

The controversial judge was removed from the judiciary by the Judges and Magistrates Vetting board in December 2011 and has since been in and out of court fighting the decision. Her attempt to become Muthaiga Golf Club’s lady Captain was rejected as members objected to the cloud over her removal and her widely reported abrasive personality.

Nairobi Club in 1912.

At the Clubs SGM on 11th Dec 2018, the ex judge was accused on high handed decision ie threatening the Club CEO and other senior administrative officials with removal if they did not align to her camp. She is also accused of forcing the club to cancel a valid contract with a billboard company to advance a different company supported by herself and Prof Keiyah.

The members resolved to call the matter to a vote as per the bye laws. The vote to sack the entire committee was 104 votes in favour against 32 votes. The Club Main Committee that was recalled was as below:

(1) Mr Julius Koros- Chairman (Had resigned earlier before SGM)

(2) Mr Fred Odhaimbo (Had resigned earlier before SGM)

(3) Prof Joseph Keiyah

(4) Lady Justice (Rtd) Mary Angawa

(5) Mr David Aduda

(6) Ms Jane Thirikali (Co-opted)

(7) Ms Lilian Kagwiria

(8) Mr John Wali

(9) Mr Ken Mwindi

After proposals and secondments of various Club members, the following interim committee was elected:

Chairperson-Ludmila Shitaka

Vice Chair- Dr Luke Musau

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Leonard Mudachi

Hon.Alice Ndegwa

Yvonne Tharao

Michael Monari

Francis Maina

In the process, Nairobi Club also managed a first – elect its woman Chairperson Ludmila Shitaka, since the club’s inception in 1902.

In the meantime, the outcome of the financial audit threatens to burry the reputations of several notable members of the Club.

Nairobi Club. One of the oldest members clubs in East Africa. Founded in 1902. Now at the centre of procurement controversy.

According to inside the sources Nairobi Club has an accumulated debt of KShs 100 million which has raised serious concerns about the well being of a club patronised by an exclusive group of Kenya’s high and mighty.


Kenya Insights allows guest blogging, if you want to be published on Kenya’s most authoritative and accurate blog, have an expose, news, story angles, human interest stories, drop us an email on [email protected] or via Telegram
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Investigations

Call Into Action For DPP To Revive Case And Arrest Stephen Githaiga The Fraud TARDA Boss Who Falsified His Birth Dates To Extend Term In Office

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Former TARDA boss Steven Githaiga.

Githaiga was one of the beneficiaries of a failed, compromised judicial system and his close contacts to the owners of power made him get away with a criminal act, that of falsifying his identification data. Stephen Maina Githaiga, which is his name captured on his national ID card he changed to Stephen Ruimuku Githaiga on his passport.

He altered his birth year from 1953 to 1958 to illegally extend his tenure. In this period, Githaiga earned Sh10 million illegally as salary which is outright criminal that he must be held into account for.

Githaiga also faced accusations of hiring 37 employees without the board’s approval. In a court petition filed earlier this year in March, they want him to pay Sh13.7 million, the total basic pay earned by the 37 he allegedly hired. Here’s a man who practiced nepotism at the highest grade and employed only his family members and close friends.

For long, Githaiga ran Tana & Athi River Development Authority(TARDA) as his own household. Stephen Githaiga First off, his initial and actual name on the ID card number 1901968 is Steven Maina Githaiga date of birth 1953, and he fraudulently changed to Steven Githaiga Ruimuku birth date 1958 in his passport no A1593455 acquired on 02/02/2011. By this, he reduced his age by five years as a scheme to allow him to serve more years in the industry.

The open irregularity was spotted by the Auditor General Ouko in the accounts of financial year 2013/14, and the matter was taken to EACC for investigations but knowing the nature of things in Kenya, the embattled MD compromised the commissioners. Intel reached Kenya Insights then indicating that the parastatal was set to receive about Sh.6B for Athi River conservation and upgrade projects, and it was for that purpose that Githaiga structured ways to buy time and tap into this cash. He used that allocation as the bargaining point with the EACC and anyone who dared raise a voice on his irregularities.

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In his 2013/14 report, the Auditor General noted that TARDA had lost Sh717,088,891. In his 2017 report, the AG said that the authority had received Sh.247,572,911 but couldn’t account for Sh.32.637,973 which in Kenyan terms is looted money. We’ve not even gotten into 2016/17 when the authority had multi billion projects but we will break it down in our subsequent series. Irregularities in tender awards which was also put on Githaiga cost the company huge loses.

Githaiga was interdicted for misappropriation of Ksh.190M for ESP programme in TANA DELTA which he has never accounted for to date. EACC detectives Eunice Hinga and Ibrahim Lorot who were handling his cases were accused by staff members in their report to the US of having been heavily compromised such that his disobedience to EACC summons went unpunished and his fines left to catch dust, they must therefore be investigated as well.

Githaiga bucket of lies included him holding a PhD from CUEA, however, our investigations revealed otherwise, he only went to Mosoriot TTC where he went for his P1 course and that’s the furthest he went. In his bio, he claims to be a lecturer at USIU in the business department, Kenya Insights has reached to the university who disowned and certified that he was not a lecturer in the school as claimed.

Also, an area that should interest the investigators, the 165 square kilometre High Grand Falls Dam, that was to cost Sh150 billion, and expected to hold over 5.6 billion cubic metres of water that to irrigate over 250,000 hectares of land and produce over 700MW of electricity. The devil is in the details.

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We’re now calling upon the ODPP and DCI to revive this case in which Kenyan taxpayers money must have been embezzled in billions and recover the stolen loot. Masinga Dam Project which was to be constructed at a tune of Sh.6B and what was one of the main reasons Githaiga extended his term by falsifying his age was also his fraud scheme. In fact , the Treasury had at one point refused to approve funds.

Interestingly, given his embezzling nature, Githaiga is alleged to have had approached Chinese Construction Cartel for the construction of his dam. They even bribed him with his current V8 car as a tip to be awarded the tender. These accusations should give investigators the leads they need.

Githaiga is also accused of having stolen from TARDA a LandRover Discovery Reg No. KAD 266D which he sold to current National Assembly Speaker, Justin Muturi who doubles as his closest friend. Githaiga’s relationship with Muturi explains why the unresolved issues on audited accounts have never been handled despite having been tabled to the Public Investment Committee several times. It were unfortunate that the speaker could have used his position to block out the petition and opted to protect his friend and if anything, Muturi himself is a beneficiary of the Githaiga’s looting since he sold him the car.

As we embark on a long term campaign to revive TARDA looting amongst other forgotten files, we believe in the competence of the DPP Noordin and DCI Kinoti that the likes of Githaiga who for long thought they’re untouchable and looted public funds without hiccups, need to be brought to books and more importantly the illegally acquired wealth be recovered and such characters be thrown into jail.

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Githaiga’s case is special because he’s for long fronted that he’s untouchable given his close relationships with the DP Ruto and President’s cousin Muigai. He even made contributions in millions to the Jubilee campaign kitty as a way of buying himself security. This is going to be one of the tests and we’re challenging and watching which way the ODPP and DCI are going to take given the open illegalities that took place in Githaiga’s tenure, he must not get away with this and we’re keen to realize justice.


Kenya Insights allows guest blogging, if you want to be published on Kenya’s most authoritative and accurate blog, have an expose, news, story angles, human interest stories, drop us an email on [email protected] or via Telegram
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