Court halts trial of tycoon Humphrey Kariuki in Sh17bn case

Humphrey Kariuki

Businessman Humphrey Kariuki at the Milimani Law Courts in Nairobi on October 25, 2021.

Photo credit: Dennis Onsongo | Nation Media Group

What you need to know:

  • Mr Kariuki's case came to the fore in February 2019 after officers from the Directorate of Criminal Investigations raided the premises of Africa Spirits Limited in Thika.
  • Last December Mr Kariuki and the o-accused persons were acquitted in case in which they had been accused of being in possession of uncustomed ethanol worth Sh7.4 million.

Liquor manufacturer billionaire Humphrey Kariuki has gotten a reprieve after the High Court temporarily stopped his criminal trial in a Sh17 billion fraud and tax evasion case.

In a ruling delivered by Justice Anthony Mrima, the court has directed the trial that was ongoing before Milimani chief magistrate Wendy Kagendo be halted pending determination of a constitutional petition filed by the businessman challenging legality of the case.

The judge found that Mr Kariuki jointly with his seven co-accused persons have raised serious constitutional issues which touch on the legality of the tax evasion matter.

“This court is persuaded that there is need to preserve the status quo in the criminal case as the court deals with the application. This court is alive to the need to fast-track the matter. That will, to a large extent, take care of the fear on the part of the respondents and interested parties that the matter is likely to take too long to be finalized,” said Justice Mrima.

The respondents in the pending petition are the Chief Magistrates Court Milimani, the Kenya Revenue Authority (KRA), the Directorate of Criminal Investigations (DCI) and the Attorney General. 

The interested parties are lawyers of the Kenya Revenue Authority listed as Sheila Sanga, Peter Mwenda and Irene Muthee.

Mr Kariuki's case came to the fore in February 2019 after officers from the Directorate of Criminal Investigations raided the premises of Africa Spirits Limited in Thika, a company he owns, over tax fraud claims.

Thereafter, the State opened three criminal cases against him. He was charged alongside other directors of Africa Spirits Limited (ASL) and Wow Beverages Limited (WBL) with various charges, including failure to pay taxes and being in possession of counterfeit excise duty stamps. They denied the charges and were released on bail.

But while the criminal case was pending determination, Mr Kariuki moved to the High Court with a petition containing four questions on constitutionality of his prosecution.

Among the questions is whether the DCI has legal mandate to investigate tax offences and whether it is legally acceptable for KRA to be the complainant as well as the prosecutor in a criminal case. 

Another question is the effect of the proceedings at the Tax Appeals Tribunal on the same matter that is the subject of the criminal case. 

At the tribunal, the alleged amount is Sh1 billion. The tribunal proceedings have since been suspended by the High Court following a separate Judicial Review application.

The third question is on the effect of investigations carried out by KRA which revealed unpaid taxes are Sh1 billion while the figure at the criminal case is Sh17 billion.

Mr Kariuki also wants the High Court to determine whether the respondents have variously disregarded court orders directing them to release some evidence which he intended to use in defence in the criminal case among several other issues.

Justice Mrima said the petitioners have established their rights will be prejudiced if the criminal trial proceeds.

“Without venturing into the heart of the application at this point in time, this court is persuaded that, on a prima facie basis, there is need to preserve the status quo in the criminal case as this court deals with the application,” ruled Justice Mrima.

He granted the temporary orders following the urgent request lodged by lawyers Paul Muite (senior counsel), Kioko Kilukumi (senior counsel), Cecil Miller and Gladys Mwangi saying the fundamental rights of their clients will be prejudiced if the magistrate court proceeds with the trial.

In urging the judge to grant temporary reprieve, Mr Muite told the court that the criminal case against the accused stems from a questionable tax claim of Sh1 billion sent by the KRA to Africa Spirits Limited (ASL) and Wow Beverages Limited (WBL) owned by Mr Kariuki.

The lawyer said the claim later mutated from Sh1 billion to Sh41 billion and later the amount dropped to Sh17billion, which KRA prosecutors told the trial court they will strive to prove the accused failed to remit to tax master.

The veteran lawyer further questioned whether the DCI can wade to probe tax payment defaults.

In the petition, whose hearing is scheduled to start on February 10, 2022, Mr Kariuki says his Thika-based factories were closed thus affecting the livelihoods of hundreds of his employees.

“Over 2,000 employees of ASL and WBL have been affected by closure of the Thika-based factories by the KRA and DCI officers," Mr Kariuki states in his affidavit in support of the petition.

Last December Mr Kariuki and the o-accused persons were acquitted in one of the cases that involved allegations of being in possession of 80 drums of uncustomed ethanol worth Sh7.4 million.

The ethanol had been found at Mr Kariuki’s Thika town beer factories.

While acquitting the accused, the magistrate court said the office of the Director of Public Prosecutions (DPP) failed to provide evidence yet the case had been pending in court for 16 months.

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