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Simba system faulted long before recent tax evasion fraud

By Moses Michira | March 21st 2016
Times Tower building that houses Kenya Revenue Authority offices. 

Long before the extensive tax evasion syndicate involving tax collecting agents and Kenya Revenue Authority (KRA) officials came to the fore, it had been clear that the now obsolete Simba system was easy to manipulate.

A fierce battle, including court cases, had been staged against the deployment of a more effective system that should have gone live early last year.

So widespread is the abuse of Simba, the system used in clearing imported cargo, that more than Sh68 billion is now feared to have been stolen by staffers of commercial banks in collusion with KRA officials.

“The system currently experiences downtime of 11 hours a week due to outdated hardware and software,” TradeMark East Africa (TMEA) - a regional not-for-profit firm - said of the Simba system.

The firm described the Simba system as having basic modules and another 14 sub-systems interfaced with the core system.

“This kind of system architecture means there are multiple points of authentication for users and multiple points of system failure,” TMEA added, in a sentiment that has been vindicated following the prosecution of two bankers over a Sh124 million tax evasion scam at the Namanga border.

The Namanga crossing point is not nearly Kenya’s busiest customs office considering the volume of trade with Tanzania, as Uganda is a much bigger trading partner.

Chris Kiptoo, previously the country manager of the firm, and currently the Trade permanent secretary, said TMEA had set aside about Sh1.1 billion to help KRA find a replacement to its faulty revenue collection system.

“We at Trademark have partnered with the National Treasury through Kenya Revenue Authority to replace the customs management system with a budget of Sh1.1 billion that we will use to roll out a new system within the next 18 months,” Dr Kiptoo said in November 2013. TMEA, which is funded by several European donor institutions, was to finance the entire cost of the project.

Even before the revenue agency invited bids for the project, MPs were already questioning the involvement of TMEA in the procurement process.

“This is a grant, 100 per cent funded by Trade Mark East Africa. There are no cost implications and we are not going to pay anything,” John Njiraini, the KRA director general, told members of the Public Investments Committee in March last year.

20 firms sent in their expressions of interest at the start of the procurement process in January 2014, but only seven met the minimum requirements set out by the KRA and TMEA. Eventually, only three made it to the short-list.

Bull Bas Ltd, the eventual winning bidder scored highest on technical evaluation at 86 per cent, against Webb Fontainne Group’s 49.23 per cent and 28 per cent for PWC Technology. Swiss-owned Webb Fontaine Group, which had submitted a pricier financial bid of $12.8 million would protest the award to Bull Bas, which bid $10 million, at the Public Procurement Administrative Review Board.

The review board threw out Webb Fontaine’s application, albeit on a technicality, prompting the applicant to challenge the decision in a pending suit at the Court of Appeal.

So far, installation of the new system remains in abeyance in what could be calculated resistance to a system that might deter revenue leakages that are enriching only a few people at the expense of the country.

On top of the list of the illegal beneficiaries are KRA’s own senior officials who have amassed immense wealth by compromising the customs-clearance system.

The president has issued a directive ordering a lifestyle audit on all KRA staff.

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