Nairobi Securities Exchange-listed cigarette manufacturer British American Tobacco Kenya has dismissed reports of tax evasion and profit under-declaration running into billions of shillings.
This follows an analysis conducted by The Investigative Desk and published by the University of Bath’s Tobacco Control Research Group (TCRG) in collaboration with Tax Justice Network Africa, which allegedly uncovered a $93 million (Sh12.1 billion) discrepancy in revenue reported by BAT Kenya for 2017 and 2018.
However, BAT Kenya’s managing director, Crispin Achola on Tuesday dismissed the claims as “conjecture” and accused the investigative team of misrepresenting the company’s operations.
The report by Investigative Desk analysed six years of annual reports by the cigarette maker and compared this to production data the company supplied to the Kenya Revenue Authority (KRA), internal government documents, and data on cigarette consumption and prices.
BAT Kenya in it’s defence dismissed the claims stating that its financial reports comply with local regulations and international standards and are audited by external firms as well as regulators.
“It is disheartening to see that The Investigative Desk chose to ignore the facts in favour of sensational and misleading reporting. BAT Kenya is weighing its options regarding the impacts of this erroneous reporting,” said Achola.
“As a public company listed on the Nairobi Securities Exchange, BAT Kenya publishes financial disclosures in its annual reports and audited financial statements in line with the applicable local regulations and international reporting standards.”
The Investigative Desk report said that the financial statements of BATK are riddled with contradictions and discrepancies.
“The company claims it sells fewer and fewer cigarettes every year. Data obtained by The Investigative Desk on BATK’s production shows that it produced much more than it claims to have sold,” the report reads in part.
The report claims that for instance in 2017, the cigarette maker said in its annual report that it sold seven per cent less cigarettes.
While production data shows that it actually manufactured 2.3 per cent more cigarettes. “Their estimated retail value amounts to Sh13 billion (around 126 million USD at the then-current exchange rate (Sh76), which is 37 percent more than the Sh9.5 billion in revenue the company reported in its annual reports),” the report reads in part.
BAT K in its defence said that both the Company’s external auditor and the regulator audit its books, including in 2017 and 2018, the years in question per the report.