Unraveling the Sh 120 Million Tax Evasion Scandal: Joel Ndungu Mbugua’s Case

Joel Ndungu Mbugua finds himself at the center of a significant legal saga involving the Kenya Revenue Authority (KRA). Allegedly, between September and November 2023, KRA incurred losses amounting to over Sh 120,000,000 due to a sophisticated tax evasion scheme. This intricate operation reportedly implicated taxpayers, tax agents, brokers, and even KRA staff members.

Entry into Integrated Customs Management System (ICMS)

The scheme operated by lodging Entry numbers into the ICMS, followed by the generation of E-Payment slips (E-Slips) for customs duty payments.

Deception of Taxpayers

Taxpayers were misled into believing in an organization with a credit line exclusively for customs duty payments. They were encouraged to allow this organization to settle their customs duties, paying only 50% upfront and purportedly saving the other 50%.

Role of Tax Brokers and Unauthorized Access

Tax brokers then entered the picture, accessing KRA systems through unauthorized means to manipulate Entry statuses to “under control” without actual tax payments.

Financial Transactions and Fraud

Following the manipulated status change, brokers demanded 50% of the customs duty from taxpayers. Money was transferred to M-PESA and bank accounts of rogue brokers, who then distributed the funds among scheme participants.

Legal Proceedings and Investigation

Arrest and Forensic Analysis

Joel Ndungu Mbugua was apprehended on October 19, 2023, and his mobile phones seized for forensic investigation by the cyber forensics unit.

Prosecution’s Allegations

Investigators believe Mbugua played a pivotal role as a rogue tax broker, facilitating the unlawful transition of entries to evade tax payments. He faces charges under Section 268 of the Penal Code for theft of public funds.

Operational Crackdown and Pursuit

An extensive operation conducted by the Directorate of Criminal Investigations (DCI) in Nairobi and Mombasa aimed to apprehend suspects and confiscate communication devices linked to the tax evasion scheme.

Legal Defense and Bail Request

Representation and Defense

Joel Ndungu Mbugua is represented by lawyer Jacob Okoth, who argued for favorable bond terms during court proceedings.

Prosecution’s Opposition

The prosecution contended that Mbugua poses a flight risk and has accomplices yet to be apprehended, seeking extended detention to prevent evasion of justice.

Also Read: The Arrest of Prominent Lawyer Joel Kyatha Mbaluka on Child Defilement Charges: A Community in Shock

The unfolding saga involving Joel Ndungu Mbugua highlights the complexities and consequences of financial malpractice within governmental systems. As investigations continue, the case serves as a stark reminder of the importance of integrity and oversight in financial transactions and tax compliance.