A giant Chinese phone manufacturer in Kenya is being investigated for alleged multibillion shilling tax evasion.
Transsion Holdings, the Chinese-based smartphone maker behind popular brands; TECNO, Infinix, itel and smart accessories brand oraimo is currently under probe by Kenya Revenue Authority (KRA) for over Sh400 billion alleged tax evasion, we can authoritatively confirm.
According to impeccable insider sources speaking to this writer, KRA’s Commissioner General Humphrey Wattanga has constituted a special team of skilled investigators to follow up on the whistleblower claims that have clouded the internet in the past two weeks of the Chinese firm’s alleged involvement in massive tax fraud.
“The Tecno issue had brought a lot of heat and the boss (Wattanga) got furious given the scale of fraud claimed. There was an emergency meeting today including top intelligence officials,” the source said
This came in the height of other claims that had linked the Commissioner General to the fiasco.
The team will be digging through the company’s financial records in the past five years that it has been active in Kenya.
Curiously, the firm is alleged to have been strict with transacting using cash in what is viewed as a red flag for possible fraud.
Three senior KRA officials on Friday led in a raid at the firm’s headquarters in Cardinal Otunga Plaza where it had also been alleged to be the epicenter of criminal activities in the firm including handling huge sums of cash daily without wire and paper transfers.
Transsion that dominates the smartphone market in Kenya and among top profit making companies in Kenya has raised eyebrows since it doesn’t appear among top taxpayers despite making billions in the rich market.
Ray Fang, the firm’s country director is said to be bragging to whoever cares to listen that he’s not disturbed by the ongoing media scrutiny as he has deep pockets and has under his wrap unnamed powerful political godfathers who have assured him and the company of protection from the current storm.
“I will buy my way out of this, I understand the situation and the language of the officials (implying bribery), let the bloggers continue writing I don’t care,” a source quotes him.
Accusations against Tecno
In a series of articles published online and whistleblower accounts serialized by bloggers Les by Nyakundi, the firm has been marred in serious claims of massive tax evasion, smuggling of undocumented Chinese workers and serious labour abuses in Kenya.
Despite not being listed among Kenya’s top tax-paying companies, Tecno allocates a significant Kshs. 3 billion annual marketing budget to Kenya.
The company manufactures devices for local brands like Safaricom and JTL.
However, there have been allegations that Tecno conducts salary and other payments in cash, potentially skirting typical financial reporting.
Market Dimensions Limited that offers Human Resource (HR) Services to Transsion is also alleged to being a conduit in the larger tax evasion scheme.
One of Tecno’s suppliers has alleged to have experienced favoritism towards Chinese suppliers, upfront payment, and flexible timelines, while Kenyans were pushed to fund projects and wait 30 days.
He claims the Tecno managers dictates costs and constantly ask for kickbacks, which could frustrate his work. He adds that they pay suppliers cash, and their finance office, Cardinal Otunga Plaza in Nairobi, has a safe with Sh30 million daily transactions, where marketing and brand managers look for kickbacks.
Racial discrimination
There are reports that the Chinese employees at the firm are paid better than the locals a clear cut that has raised discrimination concerns.
Transsion is facing internal tensions with Kenyan employees due to ongoing harassment and a decline in morale.
The firm has been accused of infiltrating the workforce with undocumented workers cheaply procured from China, while the firm had panicked and started sending others back home to evade scrutiny, the government has already identified and deported over 30 Chinese workers who were working in the firm without working licenses.
The Chinese expatriate-run low-end mobile phone firm were said to be ‘racist’ and anti-Kenyan staff.
In a complaint filed against the firm published by blogger Cyprian Nyakundi on X (former Twitter) platform.
“Hi Nyakundi. I am Zack was recently dismissed from Tecno under Carlcare. Worked for 10 years and never received even a warning letter but was dismissed like a dog without my years of service and without proper reasons for dismissal.
“These companies are taking Africans for granted, whereby we bring money to the company and later are treated as trash. Received my P9 form recently with lots of months which were not paid for yet deductions were made from my payslip last year. Kindly help push the government to help find justice for us”, screamed one of the complainants.
“Did my internship over there and I swear heri upelekwe hamas vita than there…I was a software engineer/administrator.with first class honours and additional certs from moringa school.I knew my credentials meant nothing the day joseph sent me to pick his trousers river road.
Global syndicate
The company is notorious with global cases of millions of cheap smuggled phones. The firm always bribes many customs and revenue officials to smuggle substandard or even contraband phones and other electronics into Africa.
Customs officers in Idenau, South West Region of Cameroon have in the recent past seized thousands of itel and Tecno mobile phones which were being smuggled into the country.
The case is not different in Kenya. No import duty, VAT are ever paid.
Where they are paid, the cargo is grossly under-valued.
Petition
We have information on a petition being prepared by a vocal Kenyan MP that is set to be tabled parliament seeking for answers on the allegations against the Chinese firm from The Treasury.
All eyes will now be on the team constituted by the Commissioner General if they will deliver and make the firm accountable or if this will remain a lip job.
KRA Miss Targets
The new developments comes when KRA has recorded its highest shortfall in tax collections from employees despite the introduction of two new tax bands targeting top earners, even as the Treasury projected that the taxman would miss this year’s targets by about Sh300 billion.
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