Conviction Of A Swiss Firm Calls For An Overhaul Of Tax Stamp System

A MAJOR new corruption conviction against the Swiss firm at the center of Kenya’s ‘StampGate’ affair has brought fresh calls for an overhaul of the Kenya Revenue Authority’s (KRA) tax stamp system.

SICPA, which runs authentication systems for governments around the world, has been ordered to pay CHF81 million (about Sh12.4 billion) by the Swiss federal prosecutor for corporate criminal liability over the payment of bribes in several countries. A former sales manager of the company was also given a conditional prison sentence of 170 days.

The conviction comes only weeks after it was revealed that Kenyans are paying the highest fees in the world for tax stamps supplied by SICPA under its longstanding contract to administer the KRA’s Excisable Goods Management System (EGMS).

The contract is up for renewal and SICPA is among those that have submitted expressions of interest for the tender.

Stephen Mutoro, chairman of Stock Crime Kenya (StoCK), which has been campaigning for a full investigation into StampGate, said: “This latest conviction against SICPA throws further suspicion over its costly deal with KRA. The single-sourced and non-competitive procurement of SICPA has been shrouded in secrecy and controversy from the outset.

“It is clear that the current system is broken and is one of the reasons that revenue collection is so poor as we seek to meet a record budget of Sh3.6 trillion.

“SICPA should stand disqualified from the current EGMS tender on integrity questions in line with Chapter 6 of the Kenyan Constitution.

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“Instead of throwing good money after bad, now is the time to rethink the EGMS, develop a national policy and legislation to defeat illicit trade, and ease the impending heavy tax pressure on ordinary Kenyans. ”

SICPA has been mentioned in over 13 countries on allegations of questionable dealings. A former SICPA executive was jailed for 11 years and six months in Brazil in 2019 after being found guilty of bribing a tax inspector to the tune of Sh2bn. In the summer of 2021, the company paid Sh20bn to Brazilian authorities to end its legal problems and to keep doing business there.

According to a statement by the Office of the Attorney General of Switzerland on April 27, 2023, SICPA was “criminally liable” for failing to take all necessary and reasonable organizational precautions that “made it possible for employees of SICPA” to bribe foreign officials.

It ordered the company to pay a fine of CHF1 million and imposed an equivalent claim for compensation amounting to CHF80 million due to “identified organizational deficiencies”. This included weaknesses in corporate governance principles, risk management, and compliance.

The former SICPA sales manager had made bribes to high-ranking officials in the Colombian and Venezuelan markets between 2009 and 2011, according to the statement.

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