A Kenyan firm, registered by Chinese officials, has been accused of using devious ploys and tricks in order to evade at least Ksh24 billion worth of tax owed to the Kenyan government.
An investigation by the International Consortium of Investigative Journalists (ICIJ) revealed that the company made money in Kenya but used fraud to divert the cash, including taxes, to Mauritius.
The scam involved fake loans, payments to shell companies, and fictional imports to businesses in Mauritius with the help of bankers and other professionals. The Kenyan firm reportedly made payment through Mauritius for the funds to be bleached white.
"Money is made in Kenya and routed through a series of phantom entities and transactions,” ICIJ stated.
Four suspicious companies in Mauritius, which were linked to the Kenyan firm, proved to only exist on paper as they did not have identities of employees or permanent office addresses.
Only one Chinese national was identified as a director, according to Mauritius public records. The foreigner, based in Beijing, holds a high office in the Standard Gauge Railway (SGR) project in Kenya built by state-owned China Communications Constructions Company (CCCC).
Over the years, past investigations have revealed that the CCCC had paid over Ksh24 billion to shell companies tied to the Kenyan firm.
Individual invoices revealed that the Chinese company transferred Ksh943 million to shell companies between 2018 and 2020.
Media reports had revealed that the millions were aimed at fueling studies on train tunnels and concrete.
A past audit by the tax authority revealed that the Kenyan firm was behind the multimillion scheme for tax evasion by having corporate structures that were facilitated by bankers and other professionals.
ICIJ revealed that the Kenyan firm was fined Ksh943 million in penalties and fines which they are yet to pay. The officials of the Kenyan firm alongside the Chinese national did not respond to comments from the media by the time of going to press.
Mauritius has been on the spot following ICIJ's revelation in the Mauritius Leaks investigation in 2019 that detailed how the island attracted businesses in Africa that sought to pay fewer taxes.
"Mauritius offers companies secrecy, low tax rates and a network of bilateral treaties that critics allege allows profitable corporations to avoid paying taxes in some of the world's poorest countries. The government of Mauritius denies the island nation is a tax haven."
The leaked report prompted African countries such as Senegal, Zambia and Lesotho to sever ties with the island.
