In April this year, Justice Mugure Thande barred the Treasury from demanding the contested tax after the lender moved to court. [iStockphoto]

The High Court has ordered the Ministry of Lands to lift the veil on its recommendation to the Treasury to exempt NIC Group PLC and Commercial Bank of Africa (CBA) from paying stamp duty.

Justice Lawrence Mugambi found that it was unfair and illegal for the ministry to withhold the information from Busia Senator Okiya Omtatah.

According to the judge, public information ought to be available for any Kenyan. He is of the view that the ministry’s behaviour is against openness and accountability. 

“Why would the State agency concerned then conceal such crucial information on a matter of public finance made for the benefit of the public by shielding it away from eyes of same public it is to benefit?” said Justice Mugambi.

Further, the judge said that the ministry ought to have given Omtatah the information within 21 days. 

In the case, the ministry argued that the information sought by the Senator was only available for the Treasury Cabinet Secretary.

The ministry argued that the information sought involved national security and was protected by the law.

However, Justice Mugambi disagreed.

“This claim came through submissions from the bar and was not backed by any evidence that indicated that there was an evaluation which was done by the first respondent and this conclusion arrived at. It is thus a speculation that deserves no further consideration.”

Omtatah had in 2020 sued the government over the NIC and CBA merger arguing that Kenyans lost Sh300 million in the process. He claimed that the merger was done secretly.

According to the senator, the former Treasury CS Ukur Yattani violated the law by exempting the bank from paying taxes. 

“The petitioner posits that the first respondent’s (Yattani) arbitrary decision to exempt the instruments executed in respect of the transactions relating to the merger of NIC and CBA from tax is invalid, null and void ab initio,” he argued.

The two banks announced a planned merger in 2029, in which NIC Group shareholders would own 47 per cent of the merged entity while CBA shareholders would get the rest.

NCBA was then the seven biggest bank in the country, controlling a 6.05 per cent market share.

NIC, on its part, controlled 4.62 per cent. Combined, the two moved to market share of 10.67 per cent, which placed NCBA above Cooperative Bank (9.93 per cent) and below KCB Bank (14.14 per cent)

In court, Omtatah claimed the tax waiver was not disclosed to the public. He said the public would not benefit from the sale as the two lenders are private.

In April this year, Justice Mugure Thande barred the Treasury from demanding the contested tax after the lender moved to court. 

On March 16, the Kenya Revenue Authority wrote to the National Treasury, asking CS Njuguna Ndung’u to revoke the tax exemption on the transfer of shares, assets and liabilities during the merger.

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