The Kenya Revenue Authority (KRA) is facing scrutiny over the disappearance of 9.68 million excise stamps, raising concerns about potential tax evasion and the sale of counterfeit goods.
Auditor-General Nancy Gathungu flagged the loss in a new audit for the financial year ending June 2024, noting that no evidence was provided on the type of stamps lost, when they went missing, or any investigations into the matter.
The Kenya Association of Manufacturers has warned that the lost stamps could fuel the rise of counterfeit goods, further hurting local manufacturers.
Kenya has long struggled with illicit trade, which accounts for 40 percent of all traded goods, with some products disguised as low-value imports or diverted from transit to evade taxes.
Excise tax collections have been growing, but the influx of counterfeit goods has hindered revenue from alcohol and cigarettes.
The missing stamps add to concerns raised by President William Ruto in 2022 when he questioned the discrepancy between the government’s sale of 2.9 billion excise stamps against a projected 12 billion.
In other news, Local businesses continue to struggle due to high taxes, poor infrastructure, and expensive electricity.
However, pending bills from government contracts remain the biggest challenge, forcing some firms to shut down or lay off workers.
The government owes businesses billions, with the Treasury estimating the amount at Ksh650 billion, while private sector claims exceed Ksh1 trillion.
The Pending Bills Verification Committee, chaired by former Auditor General Edward Ouko, has found that nearly half of the claims reviewed so far could be fraudulent.
Treasury CS John Mbadi has announced plans to clear verified SME bills in the upcoming supplementary budget, with significant payments in the roads sector expected in February.
However, delays in settling these debts have eroded business confidence, slowed economic growth, and encouraged corruption, as only firms willing to pay bribes are willing to work with the government.
Finally, A forensic audit by PricewaterhouseCoopers (PwC) has uncovered a massive Sh13.3 billion fraud at the Kenya Union of Savings & Credit Co-operatives Ltd (Kuscco), including the forging of a deceased auditor's signature on 2022 financial statements.
The investigation revealed that top executives, including former managing director George Ototo, finance manager George Owino, and chairman George Magutu, were involved in cooking books, large-scale theft, bribery, and unexplained bank withdrawals, leaving Kuscco insolvent by Sh12.5 billion.
The audit exposed Sh9.3 billion in misstated accounts, Sh6.5 billion in concealed interdepartmental lending, and Sh3.7 billion in hidden expenses, putting Sh24.8 billion in deposits from 247 saccos at risk.
Additional findings include Sh500 million in potentially misappropriated commissions and Sh821 million in overpayments to insurance brokers, including Baobab Insurance agency, which was majority-owned by a former Kuscco managing director.
When approached for interviews regarding the findings, the implicated executives either declined or remained silent.
The systemic vulnerabilities plaguing cooperative ecosystems globally is weaponized by lax oversight which enables executives to weaponize member trust for personal gain.
Cooperative fraud traces to structural flaws in self-regulatio - Tanzania’s 2023 SACCOS crisis and Malaysia’s 1980s Cooperative Central Bank collapse reveal how weak governance transforms member-owned institutions into vehicles for “Cowboy Capitalism,” akin to the U.S. savings-and-loan debacle.