A tax suit has revealed how the Kenya Revenue Authority (KRA) raided Mombasa billionaire businessman Mohamed Jaffer over a suspicious tax evasion scheme among his chain of companies across oil, grains and liquid petroleum gas industries.
In October last year, the taxman obtained a court order and went on to grab documents from the companies for analysis.
In filed court papers, KRA claims that the preliminary findings revealed that the companies, One Petroleum Limited, Africa Gas and Oil Company Limited, One Gas Ltd and Grain Bulk Handling Limited had cheated the taxman of Sh68 million.
“Through Mombasa Misc Application No. 314 of 2020, KRA obtained search orders ... It proceeded to conduct a search and seizure operation, and the preliminary analysis of the recoveries made pointed at African Gas and Oil Ltd as an importer of LPG, and a reseller of the same to the various purchasers including One Petroleum ,” KRA lawyers said in court papers. “KRA avers that preliminary finding of the analysis of the Ex Parte Applicant revealed massive under declaration or omission of sales occasioning the respondent a revenue loss of Sh68 million,” the lawyers said.
Tax compliance certificates
KRA withdrew tax compliance certificates for Jaffer’s companies on the basis that the companies were owned by the same families and investigations will involve all of them.
The companies have shared directors including; Mutjaba Mohamed Jaffer, Ali Abbas Jaffer and Mohamed Husein Jafer.
The companies got off the hook on technical grounds, which leaves to question the fate of documents which the taxman had demanded to hold for six month for a thorough investigation.
The court threw out KRA orders cancelling the tax compliance because the taxman withdrew the certificate via email without notice or offering the billionaire a chance to defend himself.
The rare raid comes as a surprise to outsiders as the family is believed to have close ties to powerful politicians in and out of the government.
The family has been fighting off parliamentarians seeking to cut its grain handling monopoly at the Mombasa port serving Kenya, Uganda, DRC and the World Food Programme.
A report by the Finance Committee in November last year reported Grain Bulk controls 98 per cent of all grain imports and has been in operations since 2002.
Under the contract terms with Kenya Ports Authority, it operates exclusively at berth 3 and 4 which expired in 2008 which stepped up a fight to open up the lucrative trade to other players including Kilindini Terminals Limited, Kapa Oil Refinery, Africa Ports and Terminals, Multiship international and Kipevu inland container EPZA.
It brought efficiency at the port cutting down time for offloading and limiting spillage and has grown its storage capacity of 200,000 metric tonnes with the additional 125,000 metric tonnes at the 33 large silos at the Inland Container Depot in Nairobi.
