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MPs set stage for Sh37 billion budget cut

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The stage is set to trim the 2018/19 budget by Sh37 billion this afternoon even after MPs differed over the cuts on Thursday morning.

The National Assembly agreed with the Supplementary Budget proposed by President Uhuru Kenyatta despite valid views from the members.

The passage of the Committee of Supply paved the way for the publication of the Supplementary Appropriation Bill, 2018, which will be tabled in the afternoon.

MPs will also consider the President’s Reservations to the Finance Bill, 2018, which contains various taxation proposals.

The Budget and Appropriations Committee has already tabled a report agreeing to lower the VAT on fuel from 16 per cent to 8 per cent as proposed by the President.

During the debate, Majority leader Aden Duale said MPs’ mileage, CDF and house allowances have not been touched.

“CDF is key me, mileage is key too, but those items have not been touched. I want us to engage from a point of facts and figures,” he said.

Duale said MPs are leaders who represent the people, and they should lead Kenyans rightly.

“Let us not lead the people from the middle, we should lead from the front. We should not give piriton or panadol for something that we can cure with amoxyly,” he said.

“Let us not give short-term statements… let us face this and look at the debt level that we have accrued.”

The Garissa Township MP said Kenyans should not blame the March 9 handshake between the President and Opposition leader Raila Odinga for the eight per cent value added tax.

“As I support this report, you know there are people who are blaming the handshake, however, the principal thing about the handshake is that we agreed to put the interest of the country first,” he said.

“When NASA leadership speaks and you are a member, you have to heed its call pleas for our national interest, let us all come together and solve this issue. I beg to support this.”

Minority leader John Mbadi, who also supported the report, said Kenyans have to think on how to maintain financial integrity as a country.

“I want to remind my colleagues that we have been attacked that we don’t engage our minds so seriously. I stand here to support the report on the supplementary budget estimates of 2018,” he said.

“I want to admit that we need to recognise that we are facing tough financial times. We have to really think on how to maintain our financial integrity.”

Details: Uhuru cuts VAT, opts to tighten spending

But Emuhaya MP Omboko Milemba opposed the President’s memorandum. He said MPs appear to have dumped citizens immediately their interests are taken care of.

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“The proposals before us are not good for Kenyans. I’m not happy when the leadership in the House directs the motion on this budget allocations and proposals,” Milemba said.

“I oppose in totality! It is wrong for the House leadership to create an impression that if our interests like CDF, affirmative action fund and salaries are taken care of, then we leave the rest of Kenyans to suffer- that would be selfish.”

Kisumu West MP Olago Aluoch said the tenet of modern democracy is that there should be no taxation without representation.

“If it was not for this committee, and we had left this in the hands of Treasury CS Henry Rotich and those mandarins at Treasury, where would the country be led?” Aluoch asked.

Earlier, Speaker Justin Muturi suspended the sitting for 30 minutes for members get a copy of two reports tabled in Parliament.

“Familiarise yourself so that when we resume, debates are informed by the reports,” he said.

The MPs softened their opposition after the government agreed not to slash the CDF and the National Government Affirmative Action Fund.

Proposed cuts in the two funds had angered most MPs who pledged to marshal the two-thirds majority required to overturn the President’s proposals..

Uhuru proposed several areas of taxation in his memorandum to the House and the Jubilee Party Parliamentary Group meeting on Tuesday at State House. He pleaded with his brigade to support it.

Raila also led his troops at Orange House to support the government. CS Rotich has robustly defended the cuts.

However, despite entreaties, defiant MPs from both Jubilee and the opposition pledged to vote against the President.

The proposed halving of the VAT rate on fuel has left the government with a funding shortfall, hence the cuts in spending.

Kenya’s economy is expected to grow by six per cent this year, recovering from a drought, slowdown in lending and election-related worries that cut growth in 2017, but investors and the IMF have expressed concerns over growing public debt.

Documents sent by Uhuru to Parliament ahead of the sitting underscored the debate in government over how to boost revenues without hurting the poor.

Uhuru is trying to reinstate several tax measures struck out by parliament, including a two percentage hike on excise duty for mobile phone money transfers to 12 per cent.

Kenya’s biggest mobile phone operator Safaricom said in June it was opposed to any tax rise on mobile phone-based transfers, arguing that it would mainly hurt the poor, most of whom do not have bank accounts and rely on services such as M-Pesa.

The President also asked parliament to double the excise duty on the fees charged by banks, money transfer services, and other financial institutions to 20 per cent.

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Sordid tale of the bank ‘that would bribe God’

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Bank of Credit and Commerce International. August 1991. [File, Standard]

“This bank would bribe God.” These words of a former employee of the disgraced Bank of Credit and Commerce International (BCCI) sum up one of the most rotten global financial institutions.
BCCI pitched itself as a top bank for the Third World, but its spectacular collapse would reveal a web of transnational corruption and a playground for dictators, drug lords and terrorists.
It was one of the largest banks cutting across 69 countries and its aftermath would cause despair to innocent depositors, including Kenyans.
BCCI, which had $20 billion (Sh2.1 trillion in today’s exchange rate) assets globally, was revealed to have lost more than its entire capital.
The bank was founded in 1972 by the crafty Pakistani banker Agha Hasan Abedi.
He was loved in his homeland for his charitable acts but would go on to break every rule known to God and man.
In 1991, the Bank of England (BoE) froze its assets, citing large-scale fraud running for several years. This would see the bank cease operations in multiple countries. The Luxembourg-based BCCI was 77 per cent owned by the Gulf Emirate of Abu Dhabi.  
BoE investigations had unearthed laundering of drugs money, terrorism financing and the bank boasted of having high-profile customers such as Panama’s former strongman Manual Noriega as customers.
The Standard, quoting “highly placed” sources reported that Abu Dhabi ruler Sheikh Zayed Sultan would act as guarantor to protect the savings of Kenyan depositors.
The bank had five branches countrywide and panic had gripped depositors on the state of their money.
Central Bank of Kenya (CBK) would then move to appoint a manager to oversee the operations of the BCCI operations in Kenya.
It sent statements assuring depositors that their money was safe.
The Standard reported that the Sheikh would be approaching the Kenyan and other regional subsidiaries of the bank to urge them to maintain operations and assure them of his personal support.
It was said that contact between CBK and Abu Dhabi was “likely.”
This came as the British Ambassador to the UAE Graham Burton implored the gulf state to help compensate Britons, and the Indian government also took similar steps.
The collapse of BCCI was, however, not expect to badly hit the Kenyan banking system. This was during the sleazy 1990s when Kenya’s banking system was badly tested. It was the era of high graft and “political banks,” where the institutions fraudulently lent to firms belonging or connected to politicians, who were sometimes also shareholders.
And even though the impact was expected to be minimal, it was projected that a significant number of depositors would transfer funds from Asian and Arab banks to other local institutions.
“Confidence in Arab banking has taken a serious knock,” the “highly placed” source told The Standard.
BCCI didn’t go down without a fight. It accused the British government of a conspiracy to bring down the Pakistani-run bank.  The Sheikh was said to be furious and would later engage in a protracted legal battle with the British.
“It looks to us like a Western plot to eliminate a successful Muslim-run Third World Bank. We know that it often acted unethically. But that is no excuse for putting it out of business, especially as the Sultan of Abu Dhabi had agreed to a restructuring plan,” said a spokesperson for British Asians.
A CBK statement signed by then-Deputy Governor Wanjohi Murithi said it was keenly monitoring affairs of the mother bank and would go to lengths to protect Kenyan depositors.
“In this respect, the CBK has sought and obtained the assurance of the branch’s management that the interests of depositors are not put at risk by the difficulties facing the parent company and that the bank will meet any withdrawal instructions by depositors in the normal course of business,” said Mr Murithi.
CBK added that it had maintained surveillance of the local branch and was satisfied with its solvency and liquidity.
This was meant to stop Kenyans from making panic withdrawals.
For instance, armed policemen would be deployed at the bank’s Nairobi branch on Koinange Street after the bank had announced it would shut its Kenyan operations.
In Britain, thousands of businesses owned by British Asians were on the verge of financial ruin following the closure of BCCI.
Their firms held almost half of the 120,000 bank accounts registered with BCCI in Britain. 
The African Development Bank was also not spared from this mess, with the bulk of its funds deposited and BCCI and stood to lose every coin.
Criminal culture
In Britain, local authorities from Scotland to the Channel Islands are said to have lost over £100 million (Sh15.2 billion in today’s exchange rate).
The biggest puzzle remained how BCCI was allowed by BoE and other monetary regulation authorities globally to reach such levels of fraudulence.
This was despite the bank being under tight watch owing to the conviction of some of its executives on narcotics laundering charges in the US.
Coast politician, the late Shariff Nassir, would claim that five primary schools in Mombasa lost nearly Sh1 million and appealed to then Education Minister George Saitoti to help recover the savings. Then BoE Governor Robin Leigh-Pemberton condemned it as so deeply immersed in fraud that rescue or recovery – at least in Britain – was out of the question.
“The culture of the bank is criminal,” he said. The bank was revealed to have targeted the Third World and had created several “institutional devices” to promote its operations in developing countries.
These included the Third World Foundation for Social and Economic Studies, a British-registered charity.
“It allowed it to cultivate high-level contacts among international statesmen,” reported The Observer, a British newspaper.
BCCI also arranged an annual Third World lecture and a Third World prize endowment fund of about $10 million (Sh1 billion in today’s exchange rate).
Winners of the annual prize had included Nelson Mandela (1985), sir Bob Geldof (1986) and Archbishop Desmond Tutu (1989).
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Monitor water pumps remotely via your phone

Tracking and monitoring motor vehicles is not new to Kenyans. Competition to install affordable tracking devices is fierce but essential for fleet managers who receive reports online and track vehicles from the comfort of their desk.

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Agricultural Development Corporation Chief Accountant Gerald Karuga on the Spot Over Fraud –

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Gerald Karuga, the acting chief accountant at the Agricultural Development Corporation (ADC), is on the spot over fraud in land dealings.

ADC was established in 1965 through an Act of Parliament Cap 346 to facilitate the land transfer programme from European settlers to locals after Kenya gained independence.

Karuga is under fire for allegedly aiding a former powerful permanent secretary in the KANU era Benjamin Kipkulei to deprive ADC beneficiaries of their land in Naivasha.

Kahawa Tungu understands that the aggrieved parties continue to protest the injustice and are now asking the Ethics and Anti-corruption Commission (EACC) and the Directorate of Criminal Investigations (DCI) to probe Karuga.

A source who spoke to Weekly Citizen publication revealed that Managing Director Mohammed Dulle is also involved in the mess at ADC.

Read: Ministry of Agriculture Apologizes After Sending Out Tweets Portraying the President in bad light

Dulle is accused of sidelining a section of staffers in the parastatal.

The sources at ADC intimated that Karuga has been placed strategically at ADC to safeguard interests of many people who acquired the corporations’ land as “donations” from former President Daniel Arap Moi.

Despite working at ADC for many years Karuga has never been transferred, a trend that has raised eyebrows.

“Karuga has worked here for more than 30 years and unlike other senior officers in other parastatals who are transferred after promotion or moved to different ministries, for him, he has stuck here for all these years and we highly suspect that he is aiding people who were dished out with big chunks of land belonging to the corporation in different parts of the country,” said the source.

In the case of Karuga safeguarding Kipkulei’s interests, workers at the parastatals and the victims who claim to have lost their land in Naivasha revealed that during the Moi regime some senior officials used dubious means to register people as beneficiaries of land without their knowledge and later on colluded with rogue land officials at the Ministry of Lands to acquire title deeds in their names instead of those of the benefactors.

Read Also: Galana Kulalu Irrigation Scheme To Undergo Viability Test Before Being Privatised

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“We have information that Karuga has benefitted much from Kipkulei through helping him and this can be proved by the fact that since the matter of the Naivasha land began, he has been seen changing and buying high-end vehicles that many people of his rank in government can’t afford to buy or maintain,” the source added.

“He is even building a big apartment for rent in Ruiru town.”

The wealthy officer is valued at over Sh1.5 billion in prime properties and real estate.

Last month, more than 100 squatters caused scenes in Naivasha after raiding a private firm owned by Kipkulei.

The squatters, who claimed to have lived on the land for more than 40 years, were protesting take over of the land by a private developer who had allegedly bought the land from the former PS.

They pulled down a three-kilometre fence that the private developed had erected.

The squatters claimed that the former PS had not informed them that he had sold the land and that the developer was spraying harmful chemicals on the grass affecting their livestock and homes built on a section of the land.

Read Also: DP Ruto Wants NCPB And Other Agricultural Bodies Merged For Efficiency

Naivasha Deputy County Commissioner Kisilu Mutua later issued a statement warning the squatters against encroaching on Kipkuleir’s land.

“They are illegally invading private land. We shall not allow the rule of the jungle to take root,” warned Mutua.

Meanwhile, a parliamentary committee recently demanded to know identities of 10 faceless people who grabbed 30,350 acres of land belonging to the parastatal, exposing the rot at the corporation.

ADC Chairman Nick Salat, who doubles up as the KANU party Secretary-General, denied knowledge of the individuals and has asked DCI to probe the matter.

Email your news TIPS to [email protected] or WhatsApp +254708677607. You can also find us on Telegram through www.t.me/kahawatungu

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William Ruto eyes Raila Odinga Nyanza backyard

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Deputy President William Ruto will next month take his ‘hustler nation’ campaigns to his main rival, ODM leader Raila Odinga’s Nyanza backyard, in an escalation of the 2022 General Election competition.

Acrimonious fall-out

Development agenda

Won’t bear fruit

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