Understanding Illegal Business Practices in Kenya: A Comprehensive Analysis

Saint Paul University

Faculty of business and communication

Course: Company law

Registration number: Bcommlr133823

Unit code: BML414

Assignment

Due date:18TH March,2024

INTRODUCTION
Illegal business operations are a major problem in Kenya's commercial environment,
compromising social stability and economic integrity. This essay examines the many criminal
activities that are common among Kenyan enterprises, including tax evasion, corruption, and
environmental infractions. Through analyzing these problems, we hope to comprehend their
ramifications and put up suggestions for improving the moral and legal climate in which
businesses operate. We can overcome these obstacles and advance sustainable development in
Kenya by working together.
Tax evasions
Tax evasions is the illegal and deliberate attempt to obtain a tax benefit by intentionally
subverting the rule of law to pay little or no tax.(Tax Avoidance and Tax Evasion: A Tale of Two
Errors - KRA, n.d.).
Forms of tax evasions include : Bribery ,Submitting false tax either by filling incorrect
income returns , The use of offshore “tax-havens” and money laundering (“Tax Fraud & Tax
Evasion,” n.d.),Evasion of payement.
Impact of tax evasions on government revenue is that it reduces the amount of revenue
that was supposed to be collected by the government weakening the governments ability to
control financial stability . It can also hamper economic development due to the reduction of
government revenue .
Corruption
Corruption refers to the abuse of entrusted power for private gain.(What Is Corruption?,
n.d.) Within the realm of business, corruption encompasses several forms of misconduct such as
deceitful or fraudulent financial reporting, embezzlement, bribery, and more.
The consequences of corruption include : financial loss harm to the company's reputation,
focus, and resources being taken away from providing essential services to the community and
its primary business, as well as greater control, regulation, and scrutiny.
Environmental violations
Environmental regulations are set in place to cope up with the existing environmental
violations These regulations forbid making any loud, irrational, needless, or unexpected noise
that bothers, disturbs, damages, or jeopardizes the comfort of others. Wal-Mart Stores Inc.
pleaded guilty today in cases filed by federal prosecutors in Los Angeles and San Francisco to
six counts of violating the Clean Water Act by illegally handling and disposing of hazardous
materials at its retail stores across the United States. (Office of Public Affairs | Wal-Mart Pleads
Guilty to Federal Environmental Crimes, Admits Civil Violations and Will Pay More Than $81
Million | United States Department of Justice, 2013)

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 Understanding Illegal Business Practices in Kenya: A Comprehensive Analysis

Labor violations
The rights and duties of employers and employees in the workplace are governed by a
body of laws, rules, and standards known as labor laws. Numerous topics are covered by these
regulations, including as employment contracts, working hours, minimum wages, entitlements to
leave, health and safety requirements, and the settlement of conflicts between employers and
workers.(Labor Laws in Kenya - A Comprehensive Guide, n.d.). labor violations can occur in
ways like having your pay withheld at the source , having someone else handle your pay and
documentation being kept apart and/or given false information by maltreatment, both physical
and psychological being the target of intimidation or threats of physical harm , being made to
labor long hours without rest periods.
Fraudulent activities

Business fraud is simply the intent or the act of misrepresentation to cause a gain or loss
(Business Fraud and How to Prevent It, n.d.). One of the most notorious cases of corporate fraud
is the Enron scandal. At its height, Enron, a major energy company, was raking in billions upon
billions in profits. However, when the company began to face declining revenues and debt
troubles, company executives hid the facts through massive accounting fraud.(Corporate Fraud,
n.d.). Victims of fraud may also have long-lasting physical and psychological distress.
Businesses and people lose out on possibilities as a result of fraud.
Intellectual Property Infringement
Ideas, innovations, and creative expressions that the public is ready to grant property
status to are considered intellectual property rights, or IPRs. In order to enable the owners of
intellectual property to profit commercially from their creations or reputation, intellectual
property rights (IPR) grant the owners of that property certain exclusive rights. There are several
forms of intellectual property protection, including trademark, copyright, and patents. Intellectual
property infringement is thus the violation of IPRS. Marcantonio Raimondi v. Albrecht Dürer
Artist Albrecht Dürer discovered in the early 1500s that a fellow engraver by the name of
Marcantonio Raimondi was copying one of his most famous works, a woodcut series of
engravings called the Life of the Virgin. To make his prints, Raimondi carved detailed replicas of
Dürer’s wood blocks. The prints, with Dürer’s “A” above “D” signature, could pass as Dürer
originals, and Raimondi made considerable profits off of them. Dürer took issue and brought his
case to the court of Venice. Ultimately, the court ruled that Raimondi could continue making
copies, as long as he omitted the monogram.(Magazine & Gambino, n.d.).

Conclusion

The prevalence of illegal business operations in Kenya poses significant challenges to

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 Understanding Illegal Business Practices in Kenya: A Comprehensive Analysis

illicit practices underscores the urgent need for reform and enforcement of laws. These
illegalities not only undermine government revenue and environmental sustainability but also
erode public trust and hinder economic development. However, combating illegal business
practices requires a multifaceted approach involving government agencies, businesses, civil
society organizations, and other stakeholders. Strengthening regulatory frameworks, enhancing
transparency and accountability, and promoting ethical business conduct are essential steps
towards creating a more conducive business environment in Kenya. By addressing these
systemic challenges and fostering a culture of compliance and integrity, we can pave the way for
sustainable development and prosperity in Kenya. It is imperative that concerted efforts are made
to uphold the rule of law, protect the rights of workers and consumers, and ensure fair
competition in the marketplace.

In essence, by collectively confronting illegal business operations and promoting ethical

References

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