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Il

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lIC

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\IES

BY ClIARTERIl

OUSE

BA~K A~D RELATE

D

CO

l

\

lPANIES

(Upda

t

ed

fr

o

m

the

iz

"

Nove

mb

e

r

200

-

l int

e

rim

report

,,

,

it!;

l

a

tes

t

find

i

ngs

)

I

NTRODUCTION

Th

e

ta

s

k f

o

r

ce

m

e

t

o

n

28

l

h

and 29

th

Oc

t

obe

r

200

4

to appraise

them

s

e

l

ves

with the task

a

nd draw lip an a

c

ti

o

n

pla

n

.

OBJECT

I

VE

.

:

~

Th

e

t

e

am d

e

fin

e

d

th

e

ir

o

b

jec

tives

a

s

:

1

.

1

To

in

s

titute

an e

co

n

o

mi

c

cn

r

n

c

in

ves

ti

gat

i

o

n

agai

n

s

t

th

e

compa

n

ies

m

e

nti

o

n

e

d

b

e

low

w

ith a vi

e

w to id

e

ntif

y

i

n

g

p

o

t

e

nti

al

T

a

x eva

s

ion

,

illega

l

,

mon

ey

tran

s

f

e

r

s

or vio

l

ation

o

f Banking

A

c

t

wit

h

th

e co

nni

vance

o

f

Ch

a

rt

c

rh

ouse

B

a

nk Ltd

.

Th

e

c

om

pani

es

a

re:

_

r

1

.

1

.

1

C

r

e

ati

ve

f

l

J

J

I

U

V

ali

u

J

ls

L

t

d

.

1.1

.2

S

ail

cs

h

Pr

a

japati

1

.

1

.

3

D

.

S

h

a

h

1

.

1

.

4

K

a

riuki Muigua

&

Co

.

(Cli

e

nt

s Acco

u

n

t

s)

I

..

I

{

,

l

'

1.1.

5

W

. E.

Till

ey

(M

u

thai

g

a)

Ltd

I

.

]

.G

Pao

l

o S

att

a

nino

1

.

1

.

7

T

u

s

k

e

r

Ma

ttr

esse

s

Ltd

1

.

2

To estab

li

s

h

w

h

e

th

e

r

th

e

Bank aid

e

d the s

a

id c

o

mpanie

s

in

co

mm

it

t

i

n

g

ccononuc

cn

r

ncs

1

.

3

To id

e

ntify

the Direc

t

o

r

s

o

f

C

h

a

r

tcrho

u

sc

Ba

n

k

an

d

es

t

abl

i

s

h

a l

ink wi

th

th

e

relat

e

d

c

o

mpa

n

i

e

s

in a po

ssi

ble

ne

t

wo

rk

[

o

r

co

mmi

t

t

i

n

g

e

co

n

o

m

i

c

c

rim

es

w

i

th a

v

iew t

o

breaking

it

MET

H

ODO

L

OGY

T

h

e

t

a

s

k f

o

rce u

n

de

r

took

the following

s

t

ep

s to achieve

its

o

bjec

tive:

~

-

'

--.

:

-

_

-----------

-

f

f

1

.

4

Ca

rri

ed

ou

t a

sea

r

ch

a

t t

he

R

eg

i

s

t

ra

r

of Companies

off

i

ces

for detai

l

s of

the companies

r

eferred

above to obtain thei

r

registration

details.

T

r

ace

d

the p

hysical

ad

d

resse

s

o

f

t

he said companies

to establish

thei

r

locations.

1

.

5

1

.

6

Carried

ou

t

a surprise

visit to Ch::1lie

r

house

Bank to obtai

n

bank account

d

eta

il

s

i

n

r

espect

of various

accounts

held by the above

listed companies

and

i

ndividuals

I

.

7

C

arri

ed

ou

t

a surp

r

ise

v

isi

t

to the specified

compan

i

es

and obtaine

d

doc

um

ents

and

re

co

r

ds

r

eb

t

i

n

g

to their bus

i

ness

ac

t

ivities

for the peri

o

d

s

tar

ti

n

g

1

s

l

J

an

uar

y

1

999

t

o

4

th

Nove

m

be

r

200

4

T

h

e v

i

s

i

ts to

t

he com

p

a

ni

es'

pr

e

mi

ses

au

d

th

e ba

nk

we

r

e

car

r

ic

d

out simu

l

taneous

l

y.

1

.

8

Wro

te t

o

th

e

K

e

n

y

a Rev

e

n

u

e

A

uth

ori

t

y

and ob

t

ai

n

e

d

t

ax records

i

n respec

t

o

f th

e

c

o

m

pa

n

ies

l

is

ted a

bov

e

1

.

()

S

t

ar

t

e

d

si

ftin

g

thr

o

u

g

h

t

h

e

d

oc

um

e

nt

s

ob

t

ai

ned

fr

o

m

the companies

and

t

h

e b

a

n

k t

o

tr

y a

nd e

s

tabli

s

h

an

y i

ncid

ence

o

f

Y A

T

evas

i

o

n

S

J IORT

TEI{

J

\

I

SCOPE

The team se

t

ou

t

a s

h

ort-

I

cr

m

ob

j

ec

t

ive,

w

h

ic

h w

as to

tr

y a

nd

es

t

a

bl

is

h

an

y

li

ke

l

ihood

o

f

Y AT

eva

s

ion

by the said com

p

a

n

ies

fo

r th

e

p

e

r

io

d

b

eg

inn

i

n

g

2

nd

o

f

May 2003

t

o

September

2004

The rea

so

n

for this

s

hort-term

sco

p

e was to

t

ake into accoun

t

th

e fo

l

low

in

g

fac

t

ors:

I

.

To take advantage

of the

p

erio

d

Ke

n

ya

Anti - Corrup

t

io

n

Co

m

mission

became

o

perati

o

nal

and within which per

i

od i

t

can legally i

l

1\"est

i

gate and p

r

osecute

2

.

The

team

appre

c

iated

that

the exercise

is com

p

l

ex

and

w

i

ll

t

ake

l

o

ng

e

r

t

o

co

mpl

e

t

e

h

e

n

c

e it wa

s

necessar

y

to d

efine a s

h

o

rt term goal fo

r

immed

i

a

t

e

acti

o

n

w

hil

e

the

l

o

n

g te

rm o

b

j

ec

tive

wi

ll be pursued

syste

matically

as the invesugation

e

xp

a

n

ds

J

-

f

-

-

-

-

----------

r

f

I

:

'i

TERL\l

FIN

DI

I

\GS

CREATIVE I

;

\

i

\OVATIO

~S

LTD

F

r

o

m

t

h

e

d

ocu

m

ents

co

l

lect

e

d

f

r

o

m

the

c

o

mpany's

premis

es

and

from

Cha

r

te

r

ho

usc

Bank,

t

h

e fo

l

lowing

was

o

b

s

e

r

ved:

'

r

T

h

at th

e

COIllP:lI1Y

o

p

era

t

es

f

o

ur bank accounts

with the Cha

r

t

e

rh

o

u

s

e

Bank

»:

O

nl

y

tw

o

a

ccoun

t

s

a

r

e di

s

clo

s

ed

in

t

he company's

o

ff

i

c

i

a

l

r

ec

o

rds.

T

he

s

e arc

:

o

CA

.

0

1

- 00

1

000

00

9

o

C

1

\

0

1

- 000

1

00027

5

r

The

o

th

e

r

t

w

o

a

cco

un

t

s

as show

n

b

elow

wit

h

de

p

os

it

s

amo

u

n

tin

g

to Kshs

.

262,

1 U

5,659

a

r

c

n

o

t di

s

c

l

ose

d

in th

e

co

mp

a

n

y

'

s

Ba

l

a

n

ce

S

h

ee

t

f

o

r

t

h

e pe

ri

o

d

un

d

e

r r

ev

i

ew (

i

e f

r

o

m

2

nd

May

200

3

to Oc

t

ober

200

-

+

).

o

CA 0

1 -

0

1

00007

4

o

C1

\

0

1

- 0

1

000206

K

s

h

s.2

3

7

,

268,640

K

s

h

s,

2

4

,8

3

7,0

1

9

262,105,659

'

;

-

I

I

i

s ev

i

de

nt

that th

ese

d

e

p

o

si

ts

a

rc co

mp

a

n

y

in

co

m

e

fr

o

m

s

al

es a

n

d have n

o

t

bee

n

a

s

se

s

se

d

fo

r

VAT a

nd I

nco

m

e

Tax

s

in

ce

th

ey

ar

e

n

o

t di

sc

l

ose

d

in th

e companies

of

f

icia

l

recor

d

s

I

l

.

)

.

;

-

The fig

ur

e

s

h

ow

n

above is

f

or

t

he

p

e

ri

o

d

un

de

r r

eview sta

rtin

g

f

ro

m M

ay 2003 to

October

200

4

.

I

t wi

ll

ce

r

tai

n

ly

grow once

th

e

p

r

i

o

r p

e

ri

o

d i

s

c

o

mput

e

d

r

C

omput

e

d

VAT

eva

s

ions

p

l

us

pe

nalti

es

f

o

r

t

he

pe

r

io

d

a

m

o

unt

to Ks

h

s

.

2

02,4lJ1,4

9

8

f

o

r

t

ha

t

p

e

riod

.

;

.

..

T

he c

o

rre

s

p

o

nding

VAT an

d

Additiona

l

Tax

l

iabi lit

y

for t

h

e period Ma

y

2

00

3 to

Oct

o

b

e

r

200

4 i

s

K

s

h

s.

44,

8

39

,

492.

01

1

1

C

I

O

ob scrva tio

n

S

r

Th

e

c

o

mpany

ma

i

n

ly

d

ea

l

s

with im

p

o

rts

11

10s

t

o

f whi

c

h

i

s s

upp

l

i

e

d

t

o Na

k

u

m

at

t

I

I

o

l

d

i

ngs

Lt

d.

I

t was observed

t

hat

the

c

o

mpany

in

re

s

p

e

ct

o

f th

es

e

s

u

pp

li

es

t

o

,

'

\akull1attl

1oJ

dil1gs

mainta

i

n

s

1

10

proper

docume

ntatio

n

o

Prime Catch Ltd

Tanza

n

ia

~

~

~

~

-

-----------

[

.

r

'

f

.

.

"

r

It has al

so come t

o t

he Co

mm

iss

i

ons

k

nowledgc

tha

t

the company

lS

a majo

r

su

pplie

r

o

f

certai

n

o

i

ls

/

lubricants

to the follow

i

ng

corpo

r

a

t

i

ons

the

i

n

co

me o

f

which may

n

ot have

been di

sclos

ed

in thei

r

boo

ks

o

Keny

a P

orts Auth

ority

o

Keny

a

A

ir

ports

Auth

o

rit

y

o

K

en

y

a Powe

r

8

:

.

L

i

g

htin

g

C

o

mpany

Next course

of action

;

..-

Co

mpil

e

a

ca

s

e

fi

l

e

and

recommend

charges

o

n

the

Di

r

ectors

o

f Creat

i

ve

I

n

n

o

vati

o

n

s

f

o

r fai

l

ure

t

o

p

ay VA

T

and Add

i

tio

n

al

T

ax

in t

he tune of Kshs.

4

4,

8

3

9

,

4

92

t

o

th

e

K

e

n

y

a

Reve

nu

e

A

uth

ori

t

y

in th

e

p

e

ri

o

d

fr

om March 2

0

03

t

o

Oct

o

b

e

r

200

4

.J

•

r

"

!

r

T

he

Ken

ya

R

eve

nu

e

Auth

or

it

y

t

o

r

ecove

r

fr

o

m

Cr

ea

tiv

e

I

n

n

ovations

Lt

d t

he

a

m

o

unt

s

owe

d in

V

AT

an

d

A

dditional

T

ax.

Offence

likely

to he di

s

closed

F

a

ilure

t

o

pa

y

ta

xes

co

ntr

a

r

y

t

o sec

t

io

n

45

(

1

)

(

d

)

o

f t

he A

nti

-Co

rnl

pt

i

o

n

and

Economics

A

c

t

o

f

2003

\V E TILLEY

(MUTIIAIGA)

LTD

From doc

um

e

nt

s

ob

t

a

in

e

d

fr

o

m th

e b

ank and

t

h

e

c

o

mp

a

n

y

'

s

pr

e

mi

ses,

t

h

e fo

l

lowing

h

as

bl:(

;

l

lob

s

erved:

;

..-

The company

is a fis

h p

roce

s

s

in

g

finn

wi

th

ex

p

o

rt

s

f

on

nin

g

95% of

t

heir sa

l

es

and the re

m

ai

n

de

r

5

%

be

in

g

l

oca

l

sa

l

es

;

.

from

the above obse

r

vatio

n

s

i

t

fol

l

ows

th

a

t th

e

bulk

o

f th

e

ir

sa

l

es

p

roceeds a

r

c i

n

foreign currency i.e

.

US Do

l

lars

r

The compan

y

has three other

r

e

l

at

e

d c

o

mpa

ni

es

f

o

r

w

h

ic

h

th

ey al

l

e

ge to handle

t

h

e

ir

e

x

p

o

rt

thr

o

u

g

h

Ken

y

a

.

The dir

ec

t

o

rships

a

r

e

th

e same

fo

r

al

l

t

h

e f

o

ur

co

mpanie

s.

Th

e

three c

o

m

p

ani

e

s

arc

:

o

Ma

ra F

is

h Pa

c

k

e

r

s

L

t

d

Tanzan

i

a

o

V

ict

o

r

i

a Fi

sh

P

a

c

ke

r

s

&

P

r

ocessors

Ltd

Uga

nda

r

:

T

he compan

y

ope

r

ates

six bank a

ccounts spread as s

ho

wn

be

lo

w

5

-

[

-

'

-----

--

-----

o

Chart

c

rh

o

u

s

c

B:

:

l

I1

k

•

CAO

I

-6

0

01

78

•

C

A 0

1

-

0

1

0006

30

us

D

O

LLAR A

C

C

UL

'

N

T

KSHS. A

C

COUN

T

o

Im

pe

ri

a

l

Commerci

a

l

Bank

•

1

0

0805

1

62

•

1

0080

5

O

O

G

U

S DOLL

A

R

ACC

O

UN

T

K

SHS

. ACC

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o

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eli

t

y

Com

m

erc

i

a

l

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u

n

t

•

115

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2

442

U

S DOLL

A

R

AC

CO

UN

T

K

SHS

.

AC

C

O

UN

T

;

;

..

The

t

o

tal credit

s

for the p

e

riod

Januar

y

t

o S

e

ptemb

e

r

2

00

4 into

t

h

e s

i

x ac

counts

amount

to K

s

h

s

5

,8

93,464,

79

8.

Th

i

s figure is not adju

s

t

e

d

b

y

op

e

n

i

n

g

a

n

d

c

lo

s

in

g

d

e

bt

o

rs

although

the d

e

p

os

its

s

till appear to b

e o

n th

e

hi

g

h

e

r

s

ide

r

The t

o

tal sal

e

s f

o

r

the

s

ame period am

o

unt

to K

s

hs 1,351,

87

4

,

2

6

9

:

,-

Th

e

n;

are num

e

r

o

u

s

t

rans

f

ers

from doll

a

r

a

c

count

s

to

s

h

il

lin

g

acco

u

nt

s

1

11

th

e

sa

me bank

and a

c

ro

ss

t

he other b

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s

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ing

th

e

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oss

ibilit

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ou

b

le

.

cr

e

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s

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g

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e

abo

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e fi

g

ure

r

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nce

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y

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e

i

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r

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ncy

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t

he co

mpan

y

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s

everal

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o

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aus

i

n th

e

cit

y

)

.:

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e

c

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claim

s

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lated

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the comp

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bank

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