Buoyed as the country’s first operational Special Economic Zone, Tatu City project, an envisioned new city with homes, schools, commercial and entertainment complex among other amenities characterised by different shades revolving ownership, controversial dealings and transboundary transactions suspected to be hallmarks of money laundering activities.
For a decade now, controversies that have seen multi-pronged investigations and court cases have not deemed investors’ appetite for a piece of the 5,000-acre property claimed by Russian investor through his company, Rendevour, Stephen Jennings.
Jennings is the founder of Tatu City through his firm, Rendevour, where he serves as the Executive president and Chief Executive Officer (CEO).
On Tuesday this week when he hosted them for a meeting at State House, Nairobi, president William Ruto touted Tatu City Special Economic Zone as a project that exemplifies novel way that Kenya must from now on conduct business, incubate companies and stimulate economic activities.
During the meet, president Ruto said the national government has set aside more than Sh5billion for the undertaking and each will receive Sh110million.
“A major pharmaceutical among other companies are expected to set up at. Tatu Industrial Park, bringing to the country billions worth of investments.
Each of the 47 counties will set up an industrial park in its economic activity of specialisation.” A media brief from State House read in part.
Jennings was accompanied by Rendevour Executive Vice President who also serves as the Tatu City Country Head Mandenhall Preston Marshall alongside Tatu City Executive Vice President Solomon Mahinda.
The Informer Media Group now delves into the inner Tatu City dealings to lay bare as the convoluted tale a project haunted by its own shadow.
Right from inception, the project was rocked in protracted and still active ownership row, fraud claims, money laundering and tax evasion cases amid the now emerging allegations of racism allegedly being perpetuated by expatriates against locals employed by the property management and development franchise.
Despite the murky controversies surrounding the noble idea, some developments have so far been initiated.
In April last year, the High Court had allowed the anti-graft body, the Ethics and Anti-Corruption Commission (Eacc) to investigate the multibillion- shilling Tatu City real estate project in Kiambu over claims of tax evasion and money laundering.
Justice Esther Maina granted the go-ahead saying the anti-graft agency had the powers to investigate the offences.
Eacc said Tatu City was practicing a form of money laundering known as loan back scheme.
The taxman, Kenya Revenue Authority (KRA) also raised issues with the real estate firm.
The commission said tax evasion and money laundering were effected through paper transactions involving a chain of interlocking companies, nominee shareholders and purported loans and financing structures.
A sister company- Kofinaf- for example incorporates special purpose vehicles such as Purple Saturn Properties, with shareholding and directorships held by its nominees specifically to hold parcels of land.
It then entered into a sell agreement with SPVs and purports to advance them loans- in effect Kofinaf finances its SPVs to finance its own properties.
“It is my finding that in this case the matters being investigated transcend the dispute between the individual shareholders and the petitioners as they revolve around the commission of the offences of tax evasion and money laundering,” the judge said.
Tatu City and Kofinaf Company filed the suit in 2019, seeking to quash letters sent to the Lands PS seeking the State to place caveat or purchase warning on 33 pieces of land.
Eacc also sought from the government documents including survey plans, maps, valuation reports and official searches.
However, Tatu said Eacc had no powers to order issuance of caveats on tax disputes nor investigate money laundering claims.
The companies argued that claims of non-payment of taxes are civil in nature and not under Eacc’s mandate.
The commission started the investigations accusing Tatu City of undervaluing property that is later transferred to related firms to allow payment of lower stamp duty-tax equivalent to 2 percent of land transfer value.
The land pieces were later transferred to newly formed foreign-registered companies as shares with the non-Kenyan firm disposing the plot at market value locally, ultimately escaping paying stamp duty because it was not listed in Nairobi.
Eacc said the chain of transactions on the sale of land and corporate special vehicle created were intended to separate, screen and conceal the control of the real owners over the funds generated from the property deals.
Some of the companies involved, Eacc adds, were registered in Mauritius and used to deny KRA taxes.
Lately, racism claims targeted against Kenyan workers have rocked the real estate firm with locals accusing their foreign manager, a United States of America (USA) national Preston of racism and harassment.
Now, a section of workers wants the immigration department not to renew Preston’s work permit.
According to documents seen by The Informer Media Group, the disgruntled staff members wrote to the Department of Immigration asking officials there not to renew the work permit that was due to expire on June 30, 2022.
Preston is the Executive Vice President of Rendeavour Service Limited, a firm that runs Tatu City and owned by Jennings.
He is in Kenya on a two-year work permit that started on June 30, 2020.
Yesterday, attempts to establish whether his work permit has since been renewed proved futile.
The complainants also wrote to the Ministry of Labour citing unfair labour practices manifested in arbitrary dismissals.
There are 208 cases in labour office for dispute resolution.
Additionally, they also claim that there are Illegal expatriates with work permits obtained through misrepresentation.
One of the complainants has been identified as Nima Hussein who has since been summarily dismissed for allegedly raising the complaint formally with the management.
She said there was persistent harassment and bullying and Islamophobia by the said manager.
Sources who spoke to The Informer Media Group on condition of anonymity said they are looking into the case and a decision will be arrived at the right time.
According to the company, Preston has more than 20 years’ experience in emerging markets.
For Rendeavour, he leads sales, marketing and business developments across the company’s new city developments.
At Tatu City, he manages daily operations of the 5,000-acre Special Economic Zone in the country.
Previously, he was Head of Marketing and Public Affairs for Renaissance Group, the Moscow-based emerging markets investment firm.
Prior to Renaissance, Preston was Vice President for Strategy of Russian Standard, Russia’s leading global consumer brand with interests in financial services and alcohol beverage production and distribution.
From 1993-2006, he was a producer and correspondent for NBC News, covering global events in the Soviet successor states, Europe, Central and South Asia, Africa and the Middle East.
Preston is a graduate of Cornell University and Phillips Exeter Academy.
