Kenya's Assets Recovery Agency (ARA) has frozen bank accounts and property belonging to Eastleigh Mall – a Nairobi-based trading complex that is owned by Kenya’s ambassador to Saudi Arabia Mohamed Mohamud and his partners.

The ARA, backed by the Kenya Revenue Authority (KRA), last week obtained a court order barring directors of Eastleigh Mall from interfering with its assets, pending determination of a Ksh385 million ($3.7 million) tax evasion suit the agencies have filed against the shopping complex.

The order effectively bars directors of the company from selling, transferring shares and winding up processes that may lead to dilution or disposal of the disputed property.

“An order is hereby issued restraining the sale, transfer of shares, change of directorship, winding up or any other dealing in respect of the Eastleigh Mall Limited to avoid dissipation of or disposal of the property,” says the court order. Eastleigh Mall’s owners have since last year been fighting the taxman over the multi-million shilling tax bill that is now the subject of tax evasion charges before Nairobi’s Milimani Chief Magistrate’s Court.

The ARA says in court papers that the mall owners have been transferring cash from Eastleigh Mall’s 18 bank accounts, leaving a paltry Ksh626,000 ($6,124) by mid-last week.

The Assets Recovery Agency says it fears the mall’s owners may try to dispose of the establishment’s assets and needed to be stopped.

Neither Eastleigh Mall nor its directors have responded to the suit.

Varying turnover

KRA filed a criminal suit against the mall and its directors on April 13, 2015 and got orders allowing it to retrieve from the premises import-export documents, books of accounts and money, data storage devices including CCTV cameras and other records that would facilitate a tax investigation for the period between 2007 and 2015.

The taxman reckons that while the mall files income tax and VAT returns regularly, a comparison of the declared turnover showed huge variations each year, adding that while the mall is a commercial building it has never filed rental income returns.

Mr Mohamud and his co-directors last year filed a suit seeking to stop their prosecution for criminal offences over the alleged tax evasion, but the suit was dismissed paving way for a trial.

The other directors are Abdi Ali Raghe, Abdinasir Daud, Mohamed Shakul, Noor Ahmed Noor, Abdi Karim Hassan, Osman Ali Salat and Siyaad Rahma Shuriye.

Muthoni Kimani, the ARA director, says in court papers that KRA first obtained a freezing order against Eastleigh Mall’s 18 bank accounts in July last year when they had a balance of more than Ksh14 million ($136,896), but the firm’s owners have somehow managed to withdraw almost all the money.

Six of the bank accounts frozen by the KRA and the ARA are run by Eastleigh Mall while the other 12 are owned by Mr Mohamud and his business partners.

Ms Kimani wants the court to order the opening of a joint escrow account in the name of KRA and Eastleigh Mall, and that the mall’s owners deposit $3.7 million in it as security in the event they are found guilty of tax evasion.

Business Daily