While Kenyans were discussing the 2020/2021 Budget appropriations by the government, the members of parliament silently shot down the 20 percent excise duty on bets staked that was introduced last year, leading to the withdrawal of several betting companies from the Kenyan market.
The scrapping, interestingly, was proposed by a non-existent stakeholder group who identified themselves with a non-existent URL, shade.co.ke.
“In their (shade.co.ke) letter Ref: SMIDIR/002/2020 dated 15th May, 2020, they proposed that the Excise Duty Act should be amended to remove the 20% excise duty on the stakes placed by a punter on a platform provided by a bookmarker and the introduction of excise duty on the amount wagered or staked because it has made many betting firms cash strapped hence cutting down on their sponsorships to local sports clubs. (The proposal to remove excise duty on the stakes place by punters was adopted by the Committee. The reason behind this was that the high level of taxation had led to punters placing bets on foreign platforms that are not subject to tax and thereby denying the Government revenue),” the National Assembly Departmental Committee on Finance and National Planning noted in their report.
One of the 27 companies that stopped its operations is Sportpesa, which was the biggest sports betting company in Kenya and in the East African region.
The company lost its licence in July last year following the introduction of the law and tax demands from the Kenya Revenue Authority (KRA).
While Kenyans wonder why the government made a silent u-turn on the taxes, Kahawa Tungu‘s investigation reveal that the change in law was occasioned by the first family’s venture into the field.
Read: Win For Anti-Gambling Crusaders As Everton Ditch SportPesa
When the law was introduced last year, Interior CS Fred Matiang’i was so passionate even promising to ‘crush’ companies that refused to comply, and indeed he crushed them.
However, the CS who has severally been branded as the super CS, has been silent in the recent developments. In other words, he cannot touch his master.
Back to Sportpesa. Our investigations show that before Sportpesa exited the Kenyan market in July 2019, Uhuru Kenyatta’s kin Mr Peter Kihanya Muiruri acquired a 1 percent stake in Pevans East Africa in May 2019. Pevans is the holding company for Sportpesa in Kenya.
Later on, he became a director of the company.
Below is the shareholding of Sportpesa in January 2019.
Outside Kenya, Sportpesa trades under SportPesa Global Holdings Limited (UK), in which the little known Muiruri acquired a 0.5 percent stake. The ‘global’ company runs Sportpesa in countries like Tanzania, South Africa, Italy and Russia.
Read: Betting Firms Sportpesa, Betin Halt Operations Over Harsh Regulations
Muiruri also acquired a 3 percent stake in SportPesa Holdings Limited (Isle of Man). Financial Uncovered describes this company as an offshore entity which receives SportPesa’s revenues from bets staked in the UK.The Isle of Man is known to be a tax haven, and little information is available on the company. He acquired the stake in December 2019, according to multiple sources.
Muiruri’s mother is Uhuru Kenyatta’s first cousin. His grandfather was the younger half brother of Jomo Kenyatta Uhuru’s father and Kenya’s first President.
In November 2016, President Kenyatta attended the funeral service of Muiruri’s father, the late Mzee Josphat Muiruri Kihanya.
The betting industry is so lucrative for investors in Kenya with leaked data showing that punters part with over Ksh30 billion every month. This is according to May 2019 data from the Betting Control and Licensing Board (BCLB).
Sportpesa alone reported a Ksh20 billion worth of bets placed in just one month, pointing to a possible Ksh240 billion in cumulative bets per year. This is over 66 percent of the cumulative stakes placed in all companies per year.
A part from Mr Muiruri, other President Uhuru Kenyatta’s cronies who have shares in Sportpesa include Paul Wanderi Ndung’u and Asenath Wachera Maina.
Paul Wanderi contributed to Jubilee political party’s campaign funds during the 2017 election alongside Asenath Wachera.
Asenath is the widow of the late Dick Wathika, a former Nairobi mayor who was a long-time friend to the late Mzee Jomo Kenyatta, President Uhuru Kenyatta’s father.
Asenath owns 21 per cent stake in Sportpesa, which was previously owned by a US citizen, Gene Grand. Paul Wanderi on the other hand owns a 17 percent stake in the firm.
Guerassim Nikolov, a Bulgarian, owns a 21 per cent stake in Pevans, becoming one of the biggest shareholder in the firm.
Pevans CEO Mr Ronald Karauri alias ‘Captain’ owns a seven per cent stake.
Other shareholders include Valentina Nikolaeva Mineva (three per cent), Leadwood Holdings Limited (three per cent), Robert Kenneth Wanyoike Macharia (three per cent), Ivan Stoyonav Kalpakchiev (two per cent), Peter Kihanya Muiruri (one per cent) and Francis Waweru Kiarie (one per cent).
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