How Treasury Intern Operated an Illegal Paybill That Collected Ksh10M

Hello and welcome to the Money News Roundup Newsletter, where we are covering the arrest of a Treasury intern who collected Ksh10 million from Kenyans by operating an illegal paybill. We also cover the expansion of the token-based model for cooking gas cylinders 

Intern Among 4 Arrested Over Ksh10 Million Treasury Bribe

An operation by the Ethics and Anti-Corruption Commission (EACC) has unearthed a bribery syndicate at the National Treasury’s Pensions Department, leading to the arrest of four employees, including an intern.

As reported by Citizen Digital, the intern was accused of operating a paybill number used to collect over Ksh10 million in bribes over two years.

EACC explained that members of the public seeking services at the department were coerced into paying bribes to expedite their requests. 

Investigations revealed that the payments were channeled through a paybill account registered under the name of the intern’s mother.

This was done to effectively mask the operation as a private transaction. Officials then allegedly split the proceeds among themselves.

“Preliminary investigations have established a criminal syndicate involving pension officials who have been extorting members of the public seeking services at the Pensions Department,” read the statement in part.

“It is alleged that the officials demand payment of bribes through a paybill account operated by one Wilkens Muhando Mugatsia, an Intern at the Pensions Department, in return for expedited services.”

EPRA Mulls Over Expansion of Token-Based Model for Cooking Gas Cylinders 

EPRA is considering the expansion of the token-based model for LPG cylinders that will see Kenyans use cooking gas based on available cash

As reported by Business Daily, the new model, featuring smart meters, enables mobile money payments and automatic disconnection upon consumption of the amount bought.

The model is similar to the one used for power tokens, where Kenyans can purchase power based on the money they have.

EPRA believes that the model will be crucial for low-income households, offering a cleaner alternative to charcoal.

‍How Big Banks Overcharge Kenyans Taking Loans

As reported by the People Daily, large Kenyan banks are reportedly overcharging customers on personal unsecured loans, with analysts noting significant disparities in total credit costs despite similar loan terms. 

Some major banks charge over Ksh100,000 more than others for the same Ksh1 million loan.

Hidden charges, beyond interest rates, such as appraisal, insurance, and account maintenance fees, contribute substantially to these higher costs.

For instance, KCB lists a 13 per cent annual interest rate but also includes an appraisal fee of Ksh2,500, a credit life insurance fee of Ksh41,000, and an excise duty of Ksh11,330. These amounts raise the effective APR to 18.94 per cent. Equity Bank also charges 13 per cent in interest but includes Ksh2,000 for negotiation.

KRA Flags 4,000 Traders in Massive VAT Scam Costing 

In the Business Daily, it is reported that KRA flagged over 4,000 traders and launched internal investigations that led to major staff changes. 

At the center of this scandal were fictitious claims for VAT. This saw domestic VAT growth dip to 4.2%, the lowest in four years, collecting Ksh327.34 billion, down from 15.31% growth the previous year.

Officials say the fraudulent activities may have siphoned about Ksh2.5 billion monthly, with 475 officials reassigned after approving suspicious claims.

To combat the fraud, KRA deployed high-tech systems like the VAT Automated Audit (VAA) and the Electronic Tax Invoice Management System (eTIMS), which monitor and compare invoice data to flag inconsistencies. 

These tools require buyers to validate invoices or risk losing refund claims.

Road Maintenance Levy Collections Surge by 51% After Fuel Levy Hike

The Kenya Revenue Authority (KRA) has announced a sharp 50.9% increase in Road Maintenance Levy (RML) collections, hitting Ksh119.7 billion in the 2024/2025 financial year. 

This jump follows the July 2024 hike in the levy, which saw motorists pay Ksh25 per litre of petrol and diesel, up from Ksh18. The increase significantly boosted oil tax revenues, which rose by 12.1% to Ksh338.28 billion.

As detailed in the Standard, KRA collects the RML on behalf of the Kenya Roads Board, which distributes the funds to various road agencies for upkeep of the national road network.

However, the levy is now at the centre of heated public debate after National Treasury CS John Mbadi revealed that the money was used as collateral for loans. The Treasury aims to raise Ksh175 billion through the securitisation of the RML to settle pending bills in the transport sector and jumpstart stalled infrastructure projects.