Nairobi Securities Exchange listed Brewer, East African Breweries Limited (EABL) is under investigation over allegations of possible tax avoidance according to a petition filled at the National assembly.
The plea by Gem Member of Parliament Jakoyo Midiwo alleges that the listed firm could be involved in a scheme to move out of the country silently, leaving over 3.5 million employees jobless.
A forensic investigation has been called for by a competent independent authority with a view to safeguard public investment and public interest at EABL.
“EABL’s continued existence as a going concern in the short term is questionable. Its balance sheet is wanting. The company has been engaging in ‘creative’ accounting to deceive the public and the regulator,” reads part of the petition.
The Kenya Revenue Authority (KRA) has since been urged to investigate the pricing arrangements between EABL and Diageo PLC.
Figures reveal that assets were valued at Sh42 billion as at 30 June 2015 against non-current liabilities of Sh28 billion, an indication that the firm was facing huge liquidity problems leading to massive borrowing to finance other debt and hoodwink the regulator.
The company is feared to be off-loading its fixed assets with an aim to suspend its activities in Kenya. EABL is said to have sold 15 acres at its Ruaraka headquarters, and its glass bottle manufacturing subsidiary company.
Sources reveal that the firm has sold its Kisumu, Mombasa, Nairobi, Thika Depot, Garden City Mall, the head office land and building, the canteen and the bottling plant among others.
“The firm has also been transferring deposits from local banks to the UK and other EU Nations, while borrowing heavily locally,” whistleblower, Kelvin Wanderi Kinyua said in a sworn statement presented in Parliament.
Mr Wanderi pointed out that local staff believe European investors may be intending to freeze the company, dispose of most of its local assets such as land and buildings, stealthily repatriate revenues to Europe and then leave it as a financial skeleton.
“The amount of tax remitted to the Kenya Revenue Authority does not correspond with their net revenues for the financial years 2014 and 2015 indicating a possible engagement in tax evasion practices in clear violation of the Tax Procedures Act, 2015,” reads the dossier.
Source; X-News Print
