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Tech giant HP winds up East Africa unit

SCI & TECH
By Wainaina Wambu | September 11th 2020

Liquidators say move was voluntary and not due to business challenges.

Giant American technology firm Hewlett Packard has wound up its East African subsidiary as part of an “internal re-organisation”, its liquidators said yesterday.

It emerged that Hewlett Packard East Africa Ltd was dormant and had been operating as a shell company for years.

This is despite court documents showing that the firm had been embroiled in a Sh232.8 million tax dispute with the Kenya Revenue Authority (KRA) for the years 2005 to 2011 for providing services to Switzerland-based Hewlett Packard Europe BV (HP Europe), its mother company.

PricewaterhouseCoopers (PwC) Business Recovery Services Partner George Weru, who was appointed as a joint liquidator with his colleague Muniu Thoithi, said the technology company was conducting some internal changes that prompted the winding up, and this had nothing to do with debt distress or any other business challenge.

“Hewlett Packard East Africa is a dormant subsidiary of HP and is being liquidated as part of internal re-organisation,” he told The Standard.

Weru added that the subsidiary was just a shell company, meaning it had no assets to be sold off, perhaps to pay creditors as is done under normal liquidation.

However, this was not clarified in a notice published in the dailies yesterday that called on creditors to file claims.

The notice said a special resolution had been passed last week at an extraordinary general meeting.

It was a members’ voluntary winding-up, meaning there was no court involvement.

“Creditors of the company are required on or before October 9, 2020 to send full particulars of all the claims they may have against the company to the undersigned, the joint liquidators, personally or by his advocates, to come in and prove their debts or claims ... or in default thereof, they may be excluded from the benefit of any distribution made before such debts are proven,” said the notice.

It further added that the liquidation would not affect entities affiliated to Hewlett Packard East Africa.

According to a company profile by Bloomberg, the business activities of Hewlett Packard Europe BV include the management of funds, trusts and foundations organised for purposes other than religious, educational, charitable, or non-profit research.

KRA had conducted a tax audit and maintained that the services rendered by the firm to HP Europe were subject to value-added tax (VAT).

Hewlett Packard East Africa had also gone to the Tax Appeal Tribunal, which judged that the firm was liable for payment of “undeclared VAT for the year 2012 and VAT on continuous supply for the period November 2011 – October 2015”, a matter which HP appealed.

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