Corruption claims rock Kenya
2006-06-22 20:01
Nairobi - A sensational new scandal has been uncovered in Kenya, with allegations that its top supermarket chain has evaded paying millions of dollars in taxes, helping to put its main rival out of business.
In what could be one of Kenya's biggest corporate scandals, opposition politicians said that government officers had to have played a role in protecting the Nakumatt chain while its rival, Uchumi, went bankrupt as a result of unfair competition.
Shadow finance minister Billow Kerrow, from the Kenya
African National Union party, presented to parliament an
unpublished 2004 central bank report alleging fraud by Nakumatt.
"I believe there was complicity on the part of some
government officials to protect Nakumatt and the other
companies," Kerrow said.
The report said Nakumatt, which turned over much larger
volumes of merchandise than Uchumi, never reported a profit and
paid as much as 20 times less tax than its chief competitor.
It also said Nakumatt and six other firms used Charterhouse,
a small privately-owned bank, to cloak massive tax evasion.
Charterhouse denied wrongdoing.
Nakumatt officials were unavailable for comment.
Huge differences in VAT
Kerrow also presented a letter by ex-central bank governor
Andrew Mullei to the Treasury in March accusing Nakumatt of
avoiding tax.
"Organisations, including Nakumatt, would appear to have
evaded tax with the collusion of Charterhouse Bank to the extent
of about R292m in any one year," Mullei wrote, saying the fraud went on for six years.
Mullei, who earlier this year was suspended to face abuse of
office charges, also wrote to the finance ministry asking for an
investigation into huge differences in Value Added Tax
paid by Nakumatt and Uchumi.
Uchumi was declared insolvent earlier this month after
suffering huge losses.
The report on Nakumatt is another blow to President Mwai
Kibaki's government - rocked by graft scandals - that have forced three ministers to resign this year and a burgeoning case
involving two Armenian brothers deported earlier this month.
The opposition accuses the government of giving high-level
protection to the Armenians who were allowed into Nairobi
airport's closed customs area despite being armed, causing alarm among foreign countries about security standards there.