On Wednesday, August 28, X influencer Francis Gaitho exposed serious allegations against Blue Nile Rolling Mills, accusing the company of fraudulently obtaining tax exemptions and disrupting the industry through deceptive practices.
According to Gaitho, former Agriculture CS Peter Munya and National Treasury CS Ukur Yatani played pivotal roles in aiding the company in securing tax exemptions worth over KSh 145 billion, despite the company’s modest investment of just KSh 2 billion.
Gaitho’s claims suggest that Blue Nile Rolling Mills, a major player in the industry, manipulated the system to obtain substantial tax breaks, raising questions about how such a small investment could justify exemptions that typically require a minimum investment of KSh 10 billion.
Blue Nile Rolling Mills employees. Photo: Blue Nile Rolling Mills Source: Facebook
The investigation, as per Gaitho’s claim, implicates several government bodies, including the Ministry of Industry, Trade and Investment (MITI), the National Treasury, and the Office of the Auditor General (OAG), which endorsed these exemptions.
NEMA, which approved the establishment of the plant, initially valued the project at KSh 700 million. However, this valuation reportedly ballooned to USD 14 million with World Bank involvement and further inflated to USD 19 million, or KSh 2 billion, by the time it was approved by former MITI CS Peter Munya and former Treasury CS Ukur Yatani. The agreements were later amended to transfer any adverse tax implications onto the government.
A confidentiality clause in these agreements was breached, with parties involved discussing the case publicly, revealing discrepancies in the claims and dealings.
Blue Nile Rolling Mills company worker. Photo: Kenya Association of Stock Brokers Bank Source: Facebook
Juma Mukhwana, PS for MITI, stated that the tax exemption was granted to facilitate Blue Nile’s application for an IFC loan, highlighting a potential conflict between advocating for increased taxes for the public and providing significant exemptions to select entities.
Historical context reveals that Blue Nile Rolling Mills and Blue Nile Wire Products merged in 2018, around the time the SOFA legislation was enacted to attract foreign investment through tax exemptions.
However, neither the company nor its shareholders are considered foreign investors. The investigation uncovers a broader scheme to exploit tax exemptions by manipulating the project’s valuation to secure funding from IFC.
Gaitho’s revelations call for scrutiny of the involved parties, emphasizing that despite the significant fraud, no legal actions have been taken against them.
