The Directorate of Criminal Investigations has launched a hunt for one of the country’s most reclusive tycoons on suspicion of evading taxes.
A raid on Mr Humphrey Kariuki’s Thika-based African Spirits Ltd plant by Flying Squad officers Friday found smuggled ethanol, 312,000 litres of illicit liquor and 21 million fake Kenya Revenue Authority stamps.
Some of the popular brands produced by the plant include Bluemoon vodka, Legend brandy and Glen Rock whisky.
Through its subsidiary — Wines of the World Beverages — the firm also imports and distributes leading brands of wines and premium whisky from North America and Europe.
The brands include Zappa, Bacardi and Southern Comfort.
Kenya Revenue Authority commissioner of intelligence and strategic operations Githii Mburu, who was part of a high-powered government team that raided the factory, said the plant has not been remitting Sh3 billion in taxes every month.
Those in the team included Inspector-General of Police Joseph Boinnet and DCI head George Kinoti.
“We found about 21 million counterfeit stamps at the factory. That means the commission would have lost Sh1.2 billion. In one production shift, the amount of tax lost is about Sh93 million,” Mr Githii told reporters.
The government gets about Sh200 in tax from a litre of ethanol, the main ingredient of alcoholic beverages.
Mr Githii added that for every 20,000 litres of smuggled ethanol, the government loses about Sh4 million.
Mr Kinoti ordered investigations into how the businessman has been smuggling ethanol from neighbouring Tanzania.
He also ordered a chemical analysis along the chain, right from the source.
That, the DCI boss added, would establish what kind of alcohol the company has been selling to consumers.
“We want to establish the exact components used in making the concentrates, their sources as well as quantities,” Mr Kinoti said.
“A report on how the plant has been supervised by relevant agencies for all those years must also be prepared. State officials found to have taken part in this scheme will face many charges, possibly even murder.”
KRA officials said the plant initially operated on Mombasa Road, Nairobi before being moved to Thika in Kiambu County where it began large scale production began in 2014.
Mr Kinoti said the charges that await the billionaire would serve as an example to businesses using unorthodox means to operate and make profits.
Mr Boinnet said Mr Kariuki’s is a case of massive tax evasion.
“The plant made fake products that may have destroyed the health of thousands of Kenyans,” the police boss added.
Last year, the government scuttled Wine of the World Beverages bid to exclusively import and distribute exotic wine and spirit brands from seven international suppliers to avert a monopoly.
In a statement, the Competition Authority of Kenya said the company’s exclusive distributorship agreements with the distributors would have seen it dominate the market and lock out rivals at the expense of consumers.
It is not the first time the businessman finds himself on the wrong side of the law.
He was linked to money laundering claims at Charter House Bank.
In 2001, his company, Crucial Properties Ltd, was given a Sh2 billion credit.
The funds were later frozen by the Central Bank of Kenya on suspicion of money laundering and later by the Anti-Narcotics Police Unit.
Charter House Bank has since collapsed.
At the time, Mr Kariuki was running Green Corner Restaurant at Tumaini House in Nairobi.
He later told journalists that the unusually large transfer was legitimate, adding that it was part of a Sh11 billion his company had negotiated with foreign lenders to be invested in Kenya.
According to WikiLeaks, the transaction raised suspicion that Charter House Bank was in the business of laundering the proceeds of illegal trade.
Mr Kariuki and his senior employees went into hiding soon after officers from the Flying squad raided the premises on Thursday last week.
Three workers were arrested during the raid.
Two of them were released by a court, which said they had no connection with the illegal activities at the plant.
After seizing the alcohol, a team comprising officials from the DCI and KRA conducted checks at he plant, leading to the stickers and drinks find.
KRA has served a notice to the company to explain why its licence should not be suspended.
Mr Kinoti ordered the guards at the factory to leave when employees fled. The plant is now an active crime scene.