Business highlights – You broke the rules, Deloitte tells whistleblower who exposed Shelter Afrique scandal


You broke the rules, Deloitte tells whistleblower who exposed Shelter Afrique scandal

  • The accountant who exposed accounting and lending irregularities at Shelter Afrique acted in breach of professional guidelines.
  • Whistleblower, Godfrey Waweru had prepared the mortgage lender’s financial statements and written directly to the board and financiers.
  • A forensic audit report by Deloitte has stated that this was in breach of accountants code of ethics.

The Deloitte report says Shelter Afrique’s former Head of Finance, Godfrey Waweru’s decision contravened rules on reporting and confidentiality.

The forensic audit report states that Mr Waweru was in contravention of the code of ethics as provided for by the Institute of Certified Public Accountants of Kenya (Icpak).

READ ALSO: Kenya police to benefit from Sh18 billion Shelter Afrique deal with Government

Mr Waweru defended his decision to write to Shelter Afrique’s financiers such as African Development Bank, European Investment Bank, French development agency Agence Française de Développement, German Reconstruction Bank (KfW), and Islamic Corporation for Development.

Shelter Afrique’s board of directors is set to meet in Nairobi on Tuesday, January 31, 2017 for an extraordinary meeting to discuss and adopt the Deloitte forensic audit report, and seek ways of raising fresh capital for the cash-strapped lender.

Public to decide on amendments to Income Tax Act

  • The Treasury has invited the public to submit views on the intended overhaul of the Income Tax Act.
  • The move implies that proposals to amend the law could be included in this year’s budget.
  • Those wishing to make submissions on amendment of the Act have until February 24, 2017 to do so.

Treasury Principal Secretary Kamau Thugge confirmed in a recent address that the National Treasury had commenced the review of the present Income Tax Act in order to make it productive, simple to comply with and supportive to the growth of the economy.

He noted that the review will also involve developing an Act that embraces international best practice and aligned with the changes in the present business environment.

READ ALSO: Rotich absolves Treasury from blame in NYS scam

The income tax law has not been reviewed comprehensively for decades. The government reviewed the VAT Act in 2014, and followed it up with a review of the Excise Duty Act in 2015. Experts said the review is timely and would eliminate contradictions in the income tax regime.

The current Income Tax Act came into force in 1973. Each year amendments are made in the budgets and subsequent Finance Acts but the government has not consolidated all these changes.

Banking Act slows growth of Nairobi land prices

  • The price for land in Nairobi suburbs increased by 0.8 per cent in the fourth quarter of 2016.
  • A survey by HassConsult shows that this is the slowest growth in eight years.
  • The slight expansion is mainly attributed to the Banking (Amendment) Act, 2016, enforced on September 14 last year after President Uhuru Kenyatta signed it into law on August 24.
  • The rate cap is believed to have subdued performance resulting in slow growth in credit.

HassConsult Head of Research and Marketing, Sakina Hassanali said the drop in asking prices is a result of a sluggish macro-economic environment that has witnessed corporate layoffs and a slow uptake of despite the introduction of the interest rate cap.

She said mortgage uptake stood at one per cent after the amendments, as commercial banks have been She said this is increasingly driving developers in Nairobi and its environs to seek international financiers to fund their projects. Hassanali noted that the interest rate cap was supposed to capitalise lending but it has failed to live up to expectations.

READ ALSO: Banking sector braces for layoffs as lenders move to cut costs

Commercial banks are more conservative in their lending, Hassanali said.

The quarterly report shows land in Upper Hill remained the most expensive with asking price growing 5.1 per cent annually to reach Sh537.1 million an acre. Kilimani was second with asking price for an acre at Sh427.5 million, followed by Parklands at Sh408 million.

An acre in Westlands was selling at Sh404.8 million as of December 2016, while Kileleshwa, the fifth most expensive area to buy land, an acre was costing an average Sh288.7 million.

For the quarter under review, Gigiri was the best performing Nairobi suburb with the average asking price increasing by 3.13 per cent to an average Sh224.8 million an acre from Sh217.9 million in quarter three. The survey shows satellite towns performed better with land prices rising by an average of 2.3 per cent between October and December. Ruaka remained the most expensive satellite town with an average value of Sh77.8 million an acre up from Sh74.7 million during the previous quarter.

Cost of milk likely to rise as drought hits dairy farming areas

  • Milk processor Brookside has announced it will pay farmers three shillings more for each kilo of milk delivered to the plant.
  • The move, which takes effect tomorrow, sets a fresh battle for the control of raw milk market.
  • The price increase comes on the back of ravaging drought that has hit major milk producing zones.

General Manager for Milk Procurement and Extension Services, Mr. John Gethi said the move serves as an incentive meant to cushion farmers from the effects of adverse weather experienced in the country over the past two months.

It will help farmers to recover their milk production costs, and enable them to prepare adequately to grow and conserve feeds as we approach the long rains, he said yesterday.

Gethi explained that the increase will apply to all its contracted raw-milk suppliers. Some milk companies pay differentiated prices for raw milk, with varying rates for different counties. Gethi termed the price increase a show of commitment by the firm to farmers.

Last year, Brookside paid a Sh10 billion to farmers from milk delivered.The move by Brookside, which commands 45 per cent of the national raw-milk market, is seen as a strategy to retain farmers’ loyalty and woo new suppliers.

The Ruiru-based processor has a daily peak milk intake capacity of more than 1.5 million litres from its nearly 160,000 suppliers.

The move is likely to trigger price wars from New KCC, Buzeki, Sameer and Githunguri dairy firms, which is likely to increase further the prices of raw milk, a win for farmers.

Gethi said commercialisation of the dairy enterprise is key to increasing incomes for smallholder farmers, who account for over 70 per cent of daily raw milk supply volumes.

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