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Uhuru cuts VAT, opts to tighten spending

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PRESIDENT Uhuru Kenyatta on Friday bowed to public pressure and proposed to have the tax on petroleum products cut by half from the current 16 to eight per cent.

In a move aimed at placating donors while at the same time appeasing the public, Kenyatta said the decision will bring down the price of petrol from Sh127 to Sh118.

But as a trade off, the government will embrace cost-cutting measures and budget cuts to plug the deficit.

With the VAT down to eight per cent, the government will now collect Sh17.5 billon a month down from an earlier projection of Sh35 billion.

“But still we face a financing gap. This measure will not suffice to balance our budget, as required by law,” he said.

He accused MPs of playing to the gallery by sacrificing Kenya’s ambitions and instead resorting to bad politics.

The ball is now back with the same MPs who will, through a special sitting scheduled for next week, endorse Kenyatta’s proposal or stick to their earlier position and demand the entire 16 per cent be suspended until 2020.

The budget cuts target hospitality, foreign and domestic travel, seminars and training.

National Treasury CS Henry Rotich will prepare a supplementary budget to be tabled in the National Assembly on Thursday with a raft of Kenyatta’s suggestions to redistribute allocations.

MPs had on August 30 unanimously voted to delay, for a further two years, the 16 per cent VAT tax, which had already been postponed twice since 2013.

However, Kenyatta, who has been unusually silent over the debate yesterday explained his position in a live broadcast detailing why he has sent the Bill back to MPs.

Read: Uhuru cuts fuel VAT to 8%, State hospitality expenditure

“The Finance Bill 2018/19 brought to me yesterday (Thursday) fell short of this threshold. It protected the status quo and sacrificed the bigger vision. It took the easy path, instead of rising to the challenges of our time. It was good politics, but bad leadership,” he said.

MPs have the option of garnering a two-thirds majority or 233 MPs to overturn Uhuru’s decision and revert to their earlier proposal to suspend the law, pass the President’s proposals as contained in his memorandum or suggest amendments.

Uhuru said the country has no option, but to accept taxation on petroleum products to spur growth.

“Fellow Kenyans, we have a country to transform, and we must make bold decisions to achieve our vision. As President, it is my responsibility to put Kenyans first, those living today, and your children, who will inherit the country tomorrow,” he appealed.

This calls for a balance between short term pain and long-term gain.

He said traders must of necessity bring down the price of commodities and services in line with his new proposal.

To rally troops behind his budget cuts and eight per cent VAT proposal, the President and Deputy President William Ruto will on Tuesday morning meet all Jubilee MPs at State House, Nairobi.

“We will have our PG [Parliamentary Group] at State House. We want to speak in one voice and would want to listen to the President,” a Jubilee leader told the Star yesterday.

National assembly minority party ODM has also summoned its MPs for a PG on the same day to deliberate on the proposal and take a common position.

In an indication of a split in positions, ODM said it would rally its members to veto Kenyatta.

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“As minority leader and ODM chairman we are not going to accept any additional taxation. It is our considered opinion as a party that fuel products are already overtaxed, hence no need for further taxation,” said Minority Leader John Mbadi.

He added:“Even the eight per cent proposal is not good for our economy as it will have ripple effects which will trigger rise in prices of essential goods and services. As a coalition, we are going to ask our members to overrule the President on this.”

National Assembly Speaker Justin Muturi has convened a special sitting on Tuesday afternoon and two sittings on Thursday to consider the President’s memorandum on the Finance Bill as well as the expected supplementary budget.

Deatils: Uhuru remains silent on contentious fuel tax in first public appearance

The President said Kenyans should not be worried that their taxes will be misused as he has proposed to increase the budget of the Ethics and Anti-Corruption Commission, Director of Public Prosecution and the Judiciary to tighten the noose on corrupt elements.

Reacting to the President, ANC leader Musalia Mudavadi welcomed the concession saying completely removing the tax would have been counterproductive.

“He has heard Kenyans and done one better than Parliament in the reduction of VAT to eight per cent. He even bettered my proposed reduction to either 10 per cent or 12 per cent,” he said in a statement.

Gatundu South MP Moses Kuria while welcoming the reduction on VAT said MPs would further make budget cuts over and above what the President has proposed to raise over Sh100 billion.

“We are going to keenly look at the supplementary budget and make more savings. It is important that we do away with non-essential expenditures in favour of development,” he said.

Kitutu Chache South MP Richard Onyonka said while Kenyans continued to be burdened by taxes, the resources end up in a few people’s pockets.

“I disagree with the President on this one with due respect. We don’t need to tax Kenyans any more. We need to do away with big projects that are not making any returns and have no value to Kenyans,” said the MP who sits in the budget committee.

Onyonka said the President is being hypocritical in his proposal to reduce the tax from 16 per cent to just eight per cent without declaring how he will tackle corruption.

Also Read: Uhuru rejects Finance Bill shelving 16% VAT on fuel

“The problem with our country is not that we are not collecting revenue, the problem is that we are misappropriating resources,” he said.

ODM treasurer Timothy Bosire said MPs must explore alternatives of raising revenue without impacting negatively on the livelihoods of Kenyans.

“This was a reasonable reduction in VAT. MPs should scrutinise the supplementary budget properly to cushion Kenyans from high cost of living,” said Bosire.

Nyando MP Jared Okello said that taxation remained a burden even at eight per cent

“We shall continue to reject this proposal in the house until it comes down to zero. We are not beholden to International Monetary Funds fiscal proposals, or any other Bretton Woods institution.”

Nominated senator Rose Nyamunga said Kenyans are already overburdened and that on Tuesday MPs should vote with their conscience.

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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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