Kenyan MP Accused of Sh153 Million Fraud

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Pay-television operator MultiChoice Kenya Ltd has taken an MP to court for allegedly defrauding the company of Sh153 million through a clearing and forwarding firm.

The DStv owners have jointly sued Kandara MP James Maina Kamau and his logistics company Mainkam Limited, alleging breach of contract and fraud.

MultiChoice is urging the court to order the legislator to remit the Sh153 million it alleges he fraudulently obtained to the Kenya Revenue Authority to clear satellite dishes, smart card dish kits and decoders used to access DStv services.

The case is yet to be allocated a hearing date.

Mr Kamau, named in court documents as the managing director and proprietor of Mainkam, is accused of having falsified and forged documents to clear the imported goods without paying customs duty and value added tax.

Witness statement

“MultiChoice paid Mainkam a total of Sh287.6 million for the consignments, of which Sh239 million was indicated by the logistics firm as payment for customs duties and other taxes, but KRA said it only received Sh47 million,” says MultiChoice’s finance manager, Ms Janet Oyugi, in a witness statement filed in court.

The MP and the company have denied the allegations by the digital satellite provider, arguing that if the full customs duty had not been paid to the taxman, “then the goods would not have been released to Mainkam to deliver to MultiChoice”.

The logistics firm, through Mukuria and Company Advocates, has also denied that it is guilty of fraud as alleged or that it received Sh153 million to pay KRA.

“Mainkam ... has been in operation for the last 22 years and was not formed for fraudulent, illegal or improper purposes as alleged.”

Through Daly and Figgis Advocates, MultiChoice says it engaged Mainkam in 2009 to assist in the clearing of various imported goods and the company acknowledges the fact that it cleared various consignments.

Court documents indicate that Mainkam was to advise MultiChoice of the amount assessed as due to the KRA and would raise an invoice for the total amount including the taxes and charges and other costs payable to third parties incurred in the clearance process.

MultiChoice states that it made payments on each invoice raised.

However, in March, KRA, on a routine investigation into the tax affairs of MultiChoice, discovered that various imported goods were cleared without tax payment, or falsified and forged documents had been used.

KRA provided MultiChoice with import documents through its online system that showed that the papers provided by Mainkam were either not within the system, bore different importers and goods or were declared by other clearing and forwarding agents.

“It was an implied term of the agreement that Mainkam was duty bound to take reasonable and proper steps to carry out its mandate as MultiChoice clearing agent and demand payment of sums duly assessed by the taxman and remit the money to procure the clearance,” says MultiChoice.

The pay-TV provider stated that Mainkam wrongfully breached the agreement by refusing to render to the company a true and detailed account of the money it had paid the logistics firm.

To avoid further sanctions by the taxman, MultiChoice allegedly paid Sh153 million to KRA to cover the amount which had already been paid to Mainkam.

MultiChoice claims it has suffered loss and damage because of Mainkam’s failure to exercise due diligence and carry out its mandate correctly.

Adequate documentation

Ms Oyugi says that after the alleged fraud was discovered, she attempted to engage the MP in discussions and to provide the company and KRA with adequate documentation to prove payment of import duties, but he declined and shifted blame to his employees, saying they had defrauded his company.

MultiChoice adds that it later discovered that Mr Kamau had gone to the Registrar of Companies and filed annual returns on June 4, indicating that he had resigned as a director of Mainkam in 2008, a year before the company had been contracted as MultiChoice’s logistics agent.

MultiChoice lawyers said that when they first made a search at the Companies Registry on May 21 to establish the company’s status, the Mainkam Ltd file could not be traced.

“The timing of the filing and the alleged dates of change of directorships are suspect as the filing only took place after KRA made its demand and ... Mr Kamau and Mainkam had been notified of this fact,” said Ms Oyugi. - Sunday Nation

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