Israeli-Owned Road Construction Firm SBI Holdings On KRA Radar Over Sh1 Billion Tax Evasion

While local firms and companies are closing down because of a tax burden under Jubilee administration, Solel Boneh International (SBI) Holdings, a road construction company and a subsidiary of Shikun & Binui based in Israel have been cleared of bribing Kenyan officials in September 2018 to get the tender to construct Mau Summit-Kericho-Kisumu Highway.

The taxman has SBI on their radar after a former employee, Shay Skief, exposed the hood that kept the secrets of the multinational firm that has evaded close to Ksh1 billion in taxes.

A report authored by Partnership for African Social& Governance Research dubbed Illicit Financial Flows in Kenya: Mapping of The Literature and Synthesis of the Evidence,a Non Governmental Organisation, it was revealed that SBI, in a case that was first mentioned on December 5, 2012, sought interim orders prohibiting its former finance manager from disclosing its trade secrets and other confidential information that would have exposed it to scrutiny and charged for defrauding the Kenya Revenue Authority.

In the case, it emerged that the SBI had not been deducting or remitting the compulsory income tax from the Finance Manger’s pay perks. The Court was also told that his pay perks were cleverly divided into two to avoid KRA’s suspicion.

According to documents presented in court, SBI paid the former finance manager a net monthly salary of Ksh994,117 and a gross monthly local salary of Ksh383,000. The court was also informed that “were it not for the contractual fall out between the firm and former finance manager, it would have been difficult to detect SBI’s tax evasion schemes.”

This comes days after the same SBI has been cleared by Israeli Authorities on their bribery case. SBI had been accused of bribing 20 senior government officials including a former roads minister to win the Ksh14 billion Mau Summit- Kericho- Kisumu tender in 2010.

“According to the evidence collected, in Kenya alone where the investigation focused … bribes totaling tens of millions of shekels were transferred, generating projects and benefits worth hundreds of millions of shekels,” Police and the Israel Securities Authority (ISA) were quoted Reuters saying at the time.

Previously, the company has been probed by the World Bank Integrity department over projects in Guatemala, although a report has not been issued since 2016, according to Shikun & Binui.

In February last year, the World Bank opened investigations into the tender, including visits to the Kenyan offices.

“The audit procedure has begun, including the collection of evidence by the World Bank, inter alia, by way of a number of visits to the branch in Kenya to review materials and request additional materials,” Shikun & Binui said in its annual report.