Detectives questioning Kenyan-born billionaire Humphrey Kariuki over tax evasion were taken by surprise Thursday evening after it emerged that he is a citizen of Cyprus.
The realisation further complicates their attempts to unravel the shareholding structure of his various firms.
The Nation exclusively learnt that Mr Kariuki was questioned on the dual citizenship and on why he had not disclosed it as required by law.
Besides his Kenyan passport, Mr Kariuki travels on a Cyrus passport, number K0627485, issued on May 19, 2016.
While Kenyans have a right to become dual citizens, the Citizenship and Immigration Act declares that “every dual citizen shall disclose his or her other citizenship in the prescribed manner within three months of becoming a dual citizen”.
The law further says a citizen who fails to disclose the dual citizenship … “commits an offence and shall be liable, on conviction, to a fine not exceeding five million shillings ($50,000) or imprisonment for a term not exceeding three years or both.”
Asked whether Mr Kariuki will be charged in court, Director of Criminal Investigations George Kinoti retorted: “Why not? This is an offence.”
Thursday evening, officials from the Department of Immigration handed over Mr Kariuki’s file to investigators.
Although unrelated, the questioning of Mr Kariuki came a day after the Cyprus Cabinet announced it would tighten its citizenship for the investment scheme, which will see tycoons invest €2.5 million ($2.82 million) in exchange for a Cyprus passport.
Previously, investors would part with the equivalent of $2.26 million to become Cypriots.
Those interested will also make a mandatory donation of €75,000 ($84,600) to the Research and Innovation Foundation and a second $84,600 contribution to the Cyprus Land Development Corporation to be used for affordable housing.
While a Cypriot passport enables one to do business throughout the European Union, since Cyrus is a member, its investor citizenship has of late been criticised by other EU members and Transparency International, who fear it could become a “gateway to Europe for corrupt people and money laundering”, according to TI’s report released last month.
Within the EU, Bulgaria, Cyprus and Malta are the only countries that grant investors citizenship without the obligation of physical residence.
The European Commission said on January 25, 2019 in its first report on investor citizenship and residence schemes operated by the three EU countries that such schemes may pose risks such as security, money laundering, and tax evasion, as well as lack of transparency.
Mr Kariuki has, however, not been charged with any of these — and there is no evidence, at the moment, that he took his Cyprus passport for money laundering purposes or for tax evasion.
But Cyprus has been under pressure from the EU commissioner for justice, consumers and gender equality, Vera Jourová, to tighten entry of foreigners into the scheme.
“We want more transparency on how nationality is granted and more cooperation between member States. There should be no weak link in the EU, where people could shop around for the most lenient scheme,” she said.
The matter of Mr Kariuki’s Cypriot citizenship emerged after he was summoned to the DCI headquarters Thursday following the discovery of smuggled ethanol, 312,000 litres of illicit liquor and 21 million fake Kenya Revenue Authority stamps at the Thika-based African Spirits Limited on January 31, 2019.
Mr Kariuki’s London-based lawyers say that he is a “venture investor” at the firm and holds no directorship.
KRA has sealed the premises, which manufactures Blue Moon vodka, over what the company says is an “alleged tax dispute”.
“We are doing everything in our power to ensure that we can return to business as soon as possible … and are closely co-operating with the relevant authorities to ensure that we get to the bottom of this matter,” the company said in a statement.
At the DCI headquarters, Mr Kariuki, accompanied by lawyers, appeared before economic crimes detectives with five others for interrogations.
Sources told the Nation that the billionaire arrived in the country following the DCI summons.
It is an offence under Section 52 (2) of the National Police Service Act 2011 to fail to comply with summons.
Mr Kariuki is the owner of the luxurious Mt Kenya Safari Club in central Kenya and the Hub Mall in Nairobi's upmarket Karen, and is a shareholder of Dalbit Petroleum, among others.
He has interests in energy, real estate and hospitality, and this is the second time he is facing legal trouble after he was accused of money laundering charges.
Mr Kariuki had in 2001 surprised the country after his company Crucial Properties Ltd received a staggering $20 million through Charterhouse Bank, now defunct.
The transfer raised the attention of the local police and the US Federal Bureau of Investigations after it was wired from Liechtenstein.
Central Bank froze the account, demanding more information on where the money had come from.
Mr Kariuki told the media that the unusually large transfer was legitimate and was part of a $150 million package the company had negotiated with international lenders to be invested in Kenya.
On May 10, 2001, Justice Samuel Oguk lifted the freezing orders, allowing Mr Kariuki to withdraw the money and before the Attorney-General could appeal the order, Mr Kariuki withdrew $16 million within hours.
Justice Oguk later refused to order investigations into the withdrawal, blaming the AG Amos Wako for the delay in presenting his application to court.