Kidero loses court case to KRA over Ksh.423 million campaign fund
Dr. Evans Kidero will be forced to pay the Kenya Revenue Authority (KRA) over Ksh.427, 269,795.00 in taxes.
This is after he failed to prove before the court that the funds wired to him in past elections were utilized for campaigns.
The large deposit of Ksh.423 million into Kidero’s personal account raised concern and was flagged by the KRA.
David Majanja, a High Court judge ruled that the governor had failed to defend his allegation that the money had been donated by a well-wisher and was actually utilized for the same purpose during his fight for the gubernatorial seat in the 2017 campaigns against Mike Sonko.
Audits carried out by the Commissioner established that the proceeds from fundraisers by the former governor were being deposited together with other business proceeds into his personal bank accounts.
When tasked to avail a bank account for his campaign funds, Dr. Kidero furnished the Commissioner with names of various contributors and a single page document titled ‘Statement of Receipts and Expenditure’ indicating the monies received and expended on various items.
Dissatisfied with this information, the Commissioner raised a tax assessment for Ksh.427,269,795.00 precipitated an appeal at the Tax Appeals Tribunal (TAT).
The Tribunal returned a verdict in favour of Dr Kidero holding that he had showed the source of the funds and that it was up to the Commissioner to establish if the funds had been utilised for the campaigns, thus shifting the burden of proof to the Commissioner.
The Commissioner, aggrieved by the judgement of the Tribunal moved to the High Court on appeal challenging the holding by the Tribunal.
In his judgement, the Hon. Majanja faulted the Tribunal’s judgement and held that the burden of proof was on Dr. Kidero to demonstrate that the funds raised for the campaigns were actually utilized for that purpose. This would not constitute taxable income. On the other hand, if the money was retained or diverted to his own personal use, it would be taxable income to him and liable to income tax.
Having failed to discharge this burden, the Court held in favour of the Commissioner and allowed KRA to proceed and recover the sum of Ksh.427, 269,795.00.
The recent ruling is in parallel to a three-judge bench at the Court of Appeal which granted an injunction against the anti-graft agency EACC’s push to search property belonging to Kidero and his wife Susan Mboya pending the hearing and determination of civil appeal No.242 of 2020.
The former Nairobi county boss rushed to court after EACC issued him with fresh orders in July last year, seeking to visit several of his properties with plans to inspect and value them. The properties targeted include Gem Investments, Gem Apartments and Gem Suites.