Jubilee MP pocketing Sh28,000 salary in trouble over debt

Lamu West MP Stanley Muthama

Lamu West MP Stanley Muthama. Court papers indicate the MP’s monthly salary was Sh28,000 as at August 2021 due to deductions for loans.

Photo credit: Pool

A businesswoman wants Lamu West MP Stanley Muiruri Muthama arrested and detained in a civil jail for failing to pay a Sh10.9 million debt accrued seven years ago from a business transaction involving his trading company, Stansha Limited. 

Ms Alice Cheruiyot has asked court to issue a warrant of arrest against the lawmaker, in a commercial dispute that has revealed financial difficulties facing the politician who three years ago was fighting a Sh487 million tax evasion case in Eldoret.

Court papers indicate that his monthly salary was Sh28,000 as at August 2021 due to deductions for loans advanced by a sacco.

According to the Salaries and Remuneration Commission (SRC) the basic salary of a member of the National Assembly is Sh621,250, plus a number of allowances, such as sitting (House and Committee) and travel, and mortgage.

Ms Cheruiyot, the director of Saunett Enterprises, in an application filed yesterday before the Milimani Commercial Court deputy registrar, says Mr Muthama has breached an agreement that required him to be making a monthly instalment of Sh750,000 until the debt is settled.

The agreement, which was recorded and adopted in court on September 30, 2021, provides that in default of any single instalment, the entire balance will fall due and a warrant of arrest against Mr Muthama will automatically ensue.

According to the agreement, the warrant of arrest is supposed to be executed by the officer commanding police station in Lamu or at Parliament.

"Mr Muthama and his company, Stansha Ltd, have persistently breached the consent (agreement). They defaulted to pay Sh1,550,000 before September 30, 2021, but only remitted Sh750,000 and issued post-dated cheques. They have failed to pay a sum of Sh750,000 that was due on April 1, 2022," says the businesswoman through her lawyer Robinson Kigen.

The agreement was adopted after the court allowed Mr Muthama's request to liquidate the decretal amount of Sh10,927,469 in instalments since he had no capacity to offset the entire amount in a lump sum, owing to financial hardship.

In an affidavit dated August 23, 2021, he informed the court that his company, Stansha Ltd, closed operations in 2019 as a result of tax arrears amounting to Sh36.2 million.

He added that he was facing financial difficulties owing to the Covid-19 pandemic and his net salary was Sh28,874, which was not sufficient to sustain him and his family.

He annexed his payslips, bank statement and correspondences from the Kenya Revenue Authority (KRA) to support his request.

Mr Muthama added that he stood to suffer irreparable damage and his name would be tarnished if he was to be arrested and committed to the civil jail.

During adoption of the agreement, the court noted that the KRA letters indicate Stansha Ltd had a high turnover in 2018 and 2019, hence the huge amounts in tax arrears.

"Mr Muthama's payslips, which have been filed, clearly show that he has deliberately over committed his salary by applying personal development loans yet he still knew he owed Saunett Ltd money which accrued back to 2015. He is currently servicing several personal development loans advanced by his sacco but has not explained how he utilised the said funds," said Senior Principal Magistrate Dennis Mburu while allowing the monthly instalment.

The debt arose from a transaction involving supply of hardware goods and materials by Saunett Ltd to Stansha Ltd on diverse dates in 2014 and 2015.

Stansha initially owed Saunett Sh17.3 million but it made partial payments. Failure to pay the balance prompted Saunett to sue, leading to a judgment in its favour on December 4, 2020.

In 2019 Mr Muthama was charged by KRA in court for allegedly evading payment of taxes amounting to Sh487 million between 2013 to 2017.