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Court upholds stringent anti-tobacco laws

The High Court has delivered a landmark ruling allowing the Tobacco Amendment Act (2014) to take effect after a protracted legal battle with cigarette manufacturing companies.

The stringent anti-tobacco laws were published on December 5, 2014 and expected to take effect six months later but this did not happen owing to court cases lodged by tobacco companies led by British American Tobacco Limited opposing the laws.

On March 24, 2016, Lady Justice Mumbi Ngugi upheld the laws and ordered them to be deployed six months after the date of the ruling.

A High Court panel comprising of Judges Festus Azangalala, Hannah Okwengu and Fatuma Sichale have upheld Justice Mumbi Ngugi’s ruling, thereby giving the Tobacco Amendments Act (2014) life.

Delighted by the ruling, Kenya Tobacco Control Alliance (KETCA) coordinator Thomas Lindi, urged the government to implement the laws comprehensively, arguing that there are currently 6,000 tobacco-related deaths annually and more than 220,000 children exposed to tobacco smoke.

Tobacco firm ‘paid bribes’ to wreck health treaty

THE Serious Fraud Office is investigating British American Tobacco (BAT) over alleged corruption after documents and secret tape recordings were passed to its staff in Kenya and South Africa.

The company, whose brands include Benson & Hedges, Dunhill and Lucky Strike, was allegedly involved in bribing politicians and government officials from at least five African nations in a covert campaign to undermine a United Nations public health treaty.

Kenya’s anti-corruption commission said last week it was working with the Serious Fraud Office (SFO) and Britain’s National Crime Agency to investigate alleged “bribery and tax evasion”.

It is understood that officials are also examining claims that payments were made by a BAT intelligence unit in London to a network of people in Africa, including police officers, to disrupt the activities of commercial rivals

Kenya: Lighting Up

Last year, the British parliament, despite fierce lobbying from tobacco companies, decided that from May 2016 cigarettes would be sold only in plain packaging in the UK.

Anti-smoking campaigners in that country were quick to declare it as the latest nail in the coffin of an industry that has seen consumption of its products shrink inexorably in the West over the past three decades.

But while it is true that health concerns, public education, and increasingly stringent controls on the advertising, sale and use of tobacco have brought about that decline in North America and Europe, anyone thinking to write the obituary of Big Tobacco had better think again, because elsewhere in the world, especially in the developing world, smoking is increasing dramatically.

Nearly 80 percent of the world’s one billion smokers now live in low- and middle-income countries, a figure that continues to rise year on year. In China, for example, an estimated 350 million adults are hooked on tobacco; smoking in Indonesia has more than quadrupled in the past four decades; and in Russia around a third of all teenagers will have tried their first cigarette by age 12.

But it is Africa that is probably most critical to the long-term future of the multinational tobacco firms, because it is relatively unexploited. For all the continent’s other woes, Africa has traditionally had some of the lowest smoking rates in the world, largely because most people can’t afford it. That, though, is now changing as parts of the continent become more prosperous, disposable incomes increase and populations mushroom.

It has become an enticing target for a profit-hungry industry as other routes to growth have been closed off by rules, directives and worries about life-threatening diseases.

With the most smokers in sub-Saharan Africa, Kenya is one of the biggest prizes on offer.

The problem for the industry is that Kenyan health officials are as aware as anyone else about the dreadful menace smoking poses to their nation’s health. Kenya was the first African nation to ratify the World Health Organization’s Convention on Tobacco Control. One of its key sections, Article 5.3, says that countries must “protect their tobacco control and public health policies from commercial and other vested interests of the tobacco industry”.

It gave officials the impetus to work with legislators on drafting strict regulations. These include putting graphic images on cigarette packets, banning advertising, promotion and sponsorship of tobacco and the imposition of a 2 percent health tax on every packet.

Professor Peter Odhiambo, chairman of the Tobacco Control Board, said: “We are already sitting on an epidemic of the cancers from tobacco. The tobacco problem is the most silent undeclared disaster in Kenya and therefore the more we delay the more we will see Kenyans dying.”

But as investigative journalist Purity Mwambia and filmmaker Giovanni Ulleri have been finding out, the industry hasn’t been slow to fight back, going to court in Kenya to argue about the legality of the rules and the proposed timetable for their introduction.

And now, most recently, disturbing allegations about the bribery of government figures have begun to emerge.


By Giovanni Ulleri

Around the town of Migori, beside the dusty country roads, you’ll find them: groups of farmers sharing a social moment away from their football pitch-sized plots of tobacco. Here, in one of the most important agricultural regions in Kenya, tobacco is king but, as I discovered in making Lighting Up, this is a crop that demands a high price from those who grow it and those who smoke it.

When I got a phone call from my former boss over the summer about me directing a film on tobacco in Kenya, I hesitated before saying yes. Not because I didn’t want to do it, but because of a potential conflict of interest; I was a former smoker – and in my eyes, once a smoker, always a smoker.

I was fully aware of all the known cancer risks of smoking and I had tried to quit many times over the years, but like most addicts I kept falling off the wagon and stealing a cigarette from friends. I had starting smoking as a stupid act of rebellion as a teenager behind the bike sheds at school and here I was heading off to Kenya to see how they have been trying to prevent other youngsters from doing what I did – lighting their first cigarette and starting down a path that could eventually lead to an untimely death.

On arriving in Nairobi and meeting up with my colleague Purity Mwambia, the first thing I noticed walking around the streets was how few people smoked in public.

Unlike any high street in the UK, where you see smokers huddled up in doorways of offices and in the cold and rain trying to light up, here in Kenya you are allowed to smoke only in designated smoking zones which, I imagine, makes the city centre of Nairobi one of the largest no-smoking zones in the world.

There’s even a 50,000 Kenyan shilling ($490) fine if you are caught smoking outside these zones. But despite this, eight billion cigarettes are smoked in Kenya every year and the government is trying to introduce new regulations to try to prevent what it fears is just around the corner: a veritable host of tobacco-related diseases.

However tobacco companies view Africa as one of their largest growing markets.

They are eager to keep their market share and to persuade policymakers, not to penalise them. We spoke to a young MP, Stephen Mule, who sits on the Kenyan parliamentary health committee. He told us that he was offered an expenses-paid fact-finding trip to the UK from Kenya’s largest tobacco manufacturer, British American Tobacco. What BAT didn’t know was that Mule’s father had died of a tobacco-related disease and nothing would ever weaken his resolve to introduce strict tobacco control regulations back home.

I also met his mother, who told me how she looked after her dying husband and how she tried to get him to stop smoking. She is rightly proud of her son, whose aim is to stop other Kenyan families from suffering the way his family did caring for a smoker.

But everyone involved in tobacco regulation in Kenya knows they have a fight on their hands. They are up against a rich and powerful industry, battle-scarred from years of similar confrontations in Europe and the US and determined to protect its burgeoning African businesses from government interference.

The more we began to look into this story, the more we began to realise exactly what that determination meant in practice.

BAT scandal: We received letter from Raila office, no action was taken, says KRA

No action was taken to suspend freezing Mastermind Tobacco Kenya’s accounts as asked by the Office of the Prime Minister, KRA has said.

CEO John Njiraini said tax demands against MTK were legitimate and “are not influenced by any party and will be defended at the right forum in the Tax Tribunal courts”.

“Tax matters are handled strictly in accordance with the legal provisions of which taxpayers or their appointed tax consultants are well appraised,” Njiraini said in a statement on Thursday.

In a letter dated May 4, 2010, former PM Raila Odinga “intervened” to stop Kenya Revenue Authority from freezing Mastermind’s accounts over non payment of taxes amounting to billions.

Njiraini urged all parties who feel aggrieved by the commission’s demands to avoid advancing partisan positions and “to await the rulings of the property mandated organs”.

“We consider ongoing public commentary on MTK tax issues to border on contempt of the property constituted judicial processes.”

This comes after the office of the Prime Minister wrote to then KRA boss Michael Waweru to “immediately suspend notices issued to Mastermind Kenya asking for payment within 50 days”.

Raila was Prime Minister at the time.

“You are requested to put on hold the enforcement action you have instituted against Mastermind Tobacco Kenya Limited in order to facilitate further review of the matter,” read the letter signed by acting PS Andrew Mondoh.

On December 23, the EACC said it will investigate the scandal surrounding British American Tobacco and MTK after they were invited by KRA.

Njiraini said the Authority held discussions with EACC after media reports highlighted “alleged unethical relations between staff of BAT and unspecified staff at KRA.

Raila entangled in BAT’s grand bribery of senior KRA officials

From left, former Prime Minister Raila Odinga and former acting PS Andrew Mondoh. Whistleblower Paul Hopkins says senior officials in Mr Odinga’s office ordered the KRA to freeze multi-million shilling tax demands issued to Mastermind Tobacco. PHOTO | FILE

From left, former Prime Minister Raila Odinga and former acting PS Andrew Mondoh. Whistleblower Paul Hopkins says senior officials in Mr Odinga’s office ordered the KRA to freeze multi-million shilling tax demands issued to Mastermind Tobacco. PHOTO | FILE


According to Mr Hopkins, Mr Odinga’s office ordered the KRA to freeze multi-million shilling tax demands issued to Mastermind Tobacco – the maker of the Supermatch brand of cigarettes.
Mr Odinga’s office wrote to the then KRA boss Michael Waweru asking him to immediately suspend agency notices issued to Mastermind Tobacco’s bankers, according to a letter seen by the Business Daily.

Former Prime Minister Raila Odinga has become the latest high-ranking politician to be entangled in the ongoing revelations of bribery involving British American Tobacco (BAT), Kenya Revenue Authority (KRA) officials and Mastermind Tobacco.

Whistleblower Paul Hopkins says in his latest revelations to a British newspaper the Independent that high-ranking officials in Mr Odinga’s office intervened to stop the KRA from freezing Mastermind’s accounts over non-payment taxes worth billions of shillings.

Mr Hopkins told the UK newspaper that the senior officials in Mr Odinga’s office ordered the KRA to freeze multi-million shilling tax demands issued to Mastermind Tobacco – the maker of the Supermatch brand of cigarettes.

“When KRA wrote to Mastermind’s bankers threatening to freeze accounts until the outstanding amounts were paid, officials in the office of former Kenyan Prime Minister Raila Odinga stepped in and ordered them to suspend the demands,” the report says.

Mr Hopkins, who worked for BAT in Africa for 13 years, has admitted to offering KRA officials hefty bribes for access to rival Mastermind Tobacco’s tax files and directing the taxman to demand the amounts due.

Mr Odinga’s office wrote to the then KRA boss Michael Waweru asking him to immediately suspend agency notices issued to Mastermind’s bankers, according to a letter seen by the Business Daily.

“You are requested to put on hold the enforcement action you have instituted against Mastermind Tobacco Kenya Limited in order to facilitate further review of the matter,” says the letter dated May 4, 2010 and signed by Andrew Mondoh, who was the acting permanent secretary in Mr Odinga’s office.

Mr Odinga in October appointed Mr Mondoh to lead a team of administrative advisers working in his private office as he prepares for the 2017 presidential poll.

The involvement of Mr Odinga’s office in the BAT bribery scam are contained in a dossier Mr Hopkins forwarded to the UK’s Serious Fraud Office (SFO), according to the Independent.

Mr Odinga was yet to respond to our queries by the time of going to press.


Mr Odinga is no stranger to allegations of his meddling in tax matters having faced a similar storm in April 2012 when an MP accused him of meddling in the KRA’s affairs in order to shield Mastermind from paying its rightful share of taxes.

The then Mutito MP Kiema Kilonzo filed a question in the House seeking to know whether Mastermind had been remitting taxes to the KRA since 2007 and accused Mr Odinga, then Prime Minister, of shielding the cigarette firm from paying taxes.

“The court case that exists challenges issues up to April 2010. What about penalties, taxes and interest thereafter? I table a letter from the PM instructing that the company’s taxes should not be collected,” Mr Kilonzo told the House.

But then Finance assistant minister Oburu Oginga, who is Mr Odinga’s elder brother, hit back, saying Mr Kilonzo had on two occasions demanded Sh6.6 million from Mastermind to drop the question — suggesting that Mr Kilonzo had attempted to extort money from the tobacco firm.

Mr Kilonzo was in August last year appointed Kenya’s first ever ambassador to Turkey.

The KRA yesterday confirmed having received the letter from the former PM’s office, saying it did not in any way affect its pursuit of Mastermind for taxes.

“In the particular case of the letter from the former PM, KRA is aware that such a letter was written, but it had no influence whatsoever on the tax demands,” the KRA said in a statement.

The taxman declined to provide details on how many other orders from the PM’s office it received seeking to stop collection of taxes, citing rules of confidentiality.

“The law prohibits KRA from divulging details regarding the affairs of any taxpayer,” said the KRA statement.

The claims that the KRA has been acting on the whims of top bureaucrats and multinationals instructing the agency on tax matters come in the wake of the agency’s failure to meet revenue targets in the first quarter (July- September) of the current fiscal year. The Treasury has partly blamed the revenue shortfall for the recent cash crisis in government.

President Uhuru Kenyatta has responded to the crisis by ordering a lifestyle audit of all KRA employees in an effort to stop rampant corruption in the agency that costs the State billions of shillings in revenue leakages.

The KRA further argued in response to our queries that its acrimonious tax battle with Mastermind was before court, making it difficult for the agency to comment on the matter.

“A significant proportion of tax demands against Mastermind are the subject of court cases, and so any comment on them must take this into account,” the KRA said.


Mr Odinga, who served as Prime Minister between 2008 and 2013, now becomes the fifth Kenyan to be named in the mounting allegations that BAT operated an elaborate bribery scheme involving tax officials, legislators, rival company insiders and the United Nations representatives — all aimed at crippling rival Mastermind’s operations.

According to the Independent report, former Justice minister Martha Karua allegedly received £50,000 from BAT in bribes to block a rival firm from winning a multi-million pound contract at the KRA meant to fight smuggling of tobacco products.

Ms Karua has disputed the sum of cash received and its purpose, saying she received a Sh2 million “donation” to her presidential campaign.

“At no time did I ever discuss the award or influence of contracts/tenders whether at KRA or indeed within any other government entity with Paul [Hopkins] or anyone else,” Ms Karua said in response to the allegations.

The BAT bribe was supposedly paid to Ms Karua through her aide Mary M’Mukindia, currently a board member at the KRA.

Ms M’Mukindia, a former chief executive at State-owned oil marketer Nock, served as campaign adviser and fundraiser for Ms Karua’s unsuccessful presidential bid in 2013.

Julie Adell-Owino, a former BAT Kenya lobbyist, also left his job at East African Breweries (EABL) early this month after she was accused of organising payment of bribes to senior government officials, including former Trade minister Moses Wetang’ula, for reasons that were not explained.

Ms Adell-Owino resigned from EABL where she had taken a new job, indicating that the Diageo-owned brewer did not want to be associated with the corporate upheaval at BAT.

Taxman invites EACC to investigate staff over BAT bribery scandal


The British Broadcasting Corporation (BBC) in its investigative show Panorama reported that BAT executives paid bribes to Kenya Revenue Authority (KRA) officials to spy on Mastermind Tobacco — the manufacturer of Supermatch cigarettes — and hand over tax files.

The expose shows that the KRA officials were also paid to make numerous tax demands from Mastermind, a strategy whose aim was to intimidate and damage the reputation of the homegrown Kenyan firm.

“We have taken action to seek relevant details in support including the nature of information allegedly divulged, recordings if any of the bribery incidents, individuals involved on both sides (KRA/BAT), amounts paid/received and the evidence to support bribe taking,” KRA Commissioner General John Njiraini said in a statement released yesterday.

BAT is UK’s fifth-biggest company and last year it sold 667 billion cigarettes and made Sh693 billion (£4.5 billion) profit. It has big operations in Kenya.

The expose also accused BAT of bribing senior politicians and top civil servants in East Africa. One of the top politicians named in the scandal is Bungoma Senator Moses Wetang’ula, who has since denied the allegations.

The programme, dubbed ‘The Secret Bribes of Big Tobacc’, also names Julie Adell-Owino, a Kenyan lobbyist who allegedly arranged bribes totalling Sh2.6 million ($26,000) for three public officials in Rwanda, Burundi and the Comoros Islands. She is a former head of corporate and regulatory affairs at BAT.

Mr Njiraini maintained that KRA requires staff to maintain strict confidentiality as provided by law, in the handling of tax matters of any taxpayer as the grounds on which he would not comment on the substance of the allegations.

Njiraini said that he has declined to publicly comment on the agency’s tax enforcement actions against Mastermind Tobacco (MTK), for ‘confidentiality’ reasons.

Instead, the taxman says he has asked investigating agencies to look into the allegations with the view of taking action.

“We have invited other investigative agencies including the EACC to partner with us in unearthing any unethical practices, and wish to encourage those making the allegations to share them with ourselves and with the EACC at the earliest point,” Njiraini said.

The taxman has a long-running battle with Mastermind Tobacco over tax issues and the allegations give a new dimension to what could have motivated some of its staff to pursue the firm so furiously.

“We paid the KRA guy, the right KRA guy a shed load of money. He issued all the tax demands. I mean we have tax demands now,” says Paul Hopkins in a leaked recorded telephone conversation with then BAT Kenya boss Gary Fagan. Mr Hopkins worked for BAT Kenya for 13 years and was the man tasked with arranging and delivering bribes to tax officials. He has now turned into a whistleblower.

By Paul Wafula, The Standard