Months after Abdi Mohamed Ali had funnelled huge cash deposits into his various bank accounts — and after enduring the ordeal of replacing the old Sh1,000 notes with new ones and moving on to the routine of trading — the taxman came knocking.
On August 16, 2022, the Kenya Revenue Authority (KRA) asked Mr Abdi and his Eastleigh-based company, Mega Wholesalers, to pay tax arrears amounting to Sh712,215,161 for the period between 2015 and 2019.
The KRA’s investigative arm told the Tax Appeals Tribunal that it descended on Abdi after he was picked up by its “intelligence network for making huge bank deposits during the demonetisation period.”
According to the Commissioner of Investigations & Enforcement, Mr Abdi was among the persons who had been flagged by the Central Bank of Kenya (CBK) for making exceptionally large cash deposits between March and September 2019 when Kenyans were required to replace the old Sh1,000 banknotes with the portrait-free notes that were part of the ‘new generation’ series.
The Central Bank of Kenya.
Photo credit: File
The thinking within the ranks of the Uhuru Kenyatta administration was that there was some ill-gotten wealth hidden in homes.
The Jubilee government hoped that the demonetisation process would flush out individuals hoarding billions in illicit wealth, as the culprits rushed the hidden cash into the formal fold of the banking system, where it could finally be taxed.
At the end of the process in October 2019, the former CBK Governor, Dr Patrick Njoroge, said the financial regulator had flagged 3,172 suspicious transactions and forwarded the names of the individuals and entities involved to various law enforcement agencies which, besides the KRA, included the Directorate of Criminal Investigations, the Financial Reporting Centre, and the Asset Recovery Agency (ARA).
Mr Abdi, who also owns Mega Mall, was one of those caught in the demonetisation dragnet.
Abdi attempted to wriggle himself out of the taxman’s trap by telling the tribunal that the cash deposits to Mega Wholesalers came from related parties. But he did not offer any evidence.
“The Tribunal has gleaned through the Appellant’s (Abdi’s) pleadings and has neither seen any documentary evidence nor explanations to dispute the Respondent’s (KRA’s) allegations regarding its bank deposits, which were indeed substantive,” said the six-member tribunal, which was chaired by Erick Nyongesa Wafula.
We could not establish whether Wholesalers Limited had filed an appeal within the required 30 days. If it had not appealed, it could be forced to pay the tax debt.
The KRA could move to recover the full amount, including interest and penalties, under the Tax Procedures Act. The taxman can issue Agency Notices, allowing it to direct banks, tenants, and customers to pay money owed to the company directly to the taxman.
The KRA can also freeze bank accounts, auction company assets, and restrict directors from travelling until the debt is paid. But the most popular route for the KRA is to issue agency notices.
Since the ruling, Mr Abdi has navigated a series of crises, most recently suffering a Sh296 million loss after an employee—who is also a relative—allegedly siphoned funds from his bank accounts in what the prosecutors allege was a money laundering scheme.
This time, it was another one of his businesses, Mega Mall, that was in the eye of the storm.
The court heard that for seven years, between January 1, 2018, and September 2024, Mega Mall General Manager Mohamed Osman Abdille and another, not before the court, quietly stole the money from Abdi.
He is alleged to have channelled the money through his accounts and those of his company, Fatzam Enterprises Limited (FEL), before it was transferred to other firms and individuals in what investigators described as a deliberate attempt to conceal its origin.
As the alleged scheme expanded, some of the money was converted into foreign currency and routed through what the prosecution termed “commercial cover transactions”.
On August 20, 2024, at Absa Bank Eastleigh Branch, Abdille and Barre are accused of arranging a payment of $8,300 (Sh1,070,700) to Arabian Milling & Food Company, claiming it was for the purchase of spaghetti.
Prosecutors told the court the transaction was a smokescreen and that the accused knew the money was part of the stolen Sh296 million from Abdi.
But even before this bizarre incident in which the businessman’s accounts were wiped clean, it was clear that Mr Abdi was in a financial strait.
The cash crunch facing Abdi and his company, Mega Wholesalers Limited, was highlighted by a formal winding-up petition filed on January 9, 2024.
The petition, brought by the law firm of Ahmednasir Abdullahi Advocates LLP, was scheduled for a mention before the High Court’s Commercial and Tax Division on February 14, 2024.
“Any other creditor or contributory of the said company desirous to support or oppose the making of an order on the said Petition may appear at the time of mention in person or by his advocate for that purpose and a copy of the Petition will be furnished by the undersigned to any creditor or contributory of the said company,” read the petition.
Tellers at the Moi Avenue branch of the Kenya Commercial Bank with the old and new Sh1,000 denomination notes on September 30, 2019.
Photo credit: Diana Ngila | Nation Media Group
While the outcome of the winding-up petition remains unclear, the fact that Diamond Trust Bank moved to auction five of Abdi’s properties—including his private residence—on February 23 and another one earlier by Equity Bank suggests the petition might not have served its purpose of keeping creditors at bay.
Mega Wholesalers and related companies have been in a long dispute with Diamond Trust Bank over loan facilities secured by property, the lender having extended the loans which were secured by the five properties.
The row began after the bank sought to exercise its statutory power of sale over charged properties following alleged loan defaults.
Mega Wholesalers argued it had serviced its loans and that the auction process was unlawful and the debt inflated.
But the High Court, in an earlier 2025 ruling, dismissed its application.
In January 2026, the court granted a temporary injunction stopping the sale, provided Mega Wholesalers pays agreed monthly instalments and deposits Sh100 million into an escrow account pending full hearing.
DTB was allowed to auction the properties if Abdi and Mega Wholesalers did not meet either of the conditions within 30 days.
On February 23, DTB, through Dalali Auctioneers, went on to advertise the five properties, indicating that one of the two conditions—including the payment of a monthly instalment of Sh12 million—had not been met.
On July __, 2023, Abdi was charged before the Chief Magistrate, Susan Shitubi, with obtaining maize meal valued at Sh8,657,507 from Wakulima Millers by falsely pretending that he would pay at a later date. He denied the charges.
Mr Abdi is also fighting with Bidco Africa over an alleged unpaid debt of more than Sh75 million for goods supplied to his company, a dispute in which he has denied the claim, sought to amend his defence and raise a counterclaim, and the High Court has allowed his application to amend the pleadings so the case can proceed on its merits rather than be decided on summary judgment.
There is no doubt that Mr Abdi was at one point a high-flying entrepreneur, with interests in various sectors including wholesale and distribution, real estate, hospitality, and logistics.
Besides acquiring Mega Mall, he also bought United Textile Shopping Mall, also Eastleigh-based, from Hima Products Enterprises on December 30, 2022.
Mega Transporters Co. Limited, a subsidiary associated with the wholesalers, entered into a loan agreement with Equity Bank for the financing of 131 motor vehicles on November 24, 2021.
A similar deal was inked with Diamond Trust Bank (DTB) for various credit facilities starting in October 2018. The company’s director, Abdi Mohamed Ali, owned several properties around the country and had diligently been servicing the loans.
