A multi-agency team investigating contraband sugar was contemplating last night the arrest of senior government officials, politicians and business people linked to tonnes of sugar impounded countrywide.
The team suspects that officials of the Kenya Revenue Authority and the Kenya Bureau of Standards conspired with owners of the companies used to import the sugar, sources have told the Star.
Already 25 people have been arrested across the country and will arraigned in court today.
Yesterday, the man leading the crackdown on sugar and counterfeit goods Wanyama Musiambo said the sugar impounded in Eastleigh, Nairobi; Machakos; Ol Kalou, Nyandarua; Bungoma; Kitui and Meru is worth Sh1.8 billion.
The latest raids were in Meru, Nakuru and Eldoret yesterday when KRA officials
seized 3,000 bags of contraband sugar at a godown in Meru town and another 400 bags in Nakuru.
Meru county commissioner Wilfred Nyagwanga said the sugar imported from Brazil, was being repackaged into bags labelled to indicate it was sourced from Zambia.
In Eldoret police impounded more than 12 tonnes of suspected contraband sugar at a warehouse belonging to a leading chain store in the North Rift region.
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The officers and KRA officials intercepted a truck laden with 50kg bags; it was being offloaded to the warehouse owned by a supermarket.
There have claims that some of the sugar is contaminated with mercury and copper.
The recent crackdown on contraband sugar team has sent shock waves through the sugar industry, leading in a daylong stakeholders meeting in Nairobi yesterday.
Farmers have welcomed the crackdown, arguing that it could direct public attention at what they term as an intentional attempt to sabotage cane farming.
The Federation of Sugarcane Farmers Association, a lobby with nearly 100,000 members, praised the crackdown but said it should only be the first step in cleaning up the industry.
Lobby CEO Francis Waswa said the duty-free window was designed to allow cheap imports to flood the market for the benefit of a few elite politicians and businessmen at the expense of farmers.
“Normally imports are at around 200,000 tonnes annually but last year alone there were almost one million tonnes imported. State-owned sugar millers usually pay Sh80-100 per kilo of sugar but the imports come in at Sh30 per kilo. It's a free market without regulation and the tribunal died with the repeal of the Sugar Act in 2015. We have no recourse.”
Once there were more than 600,000 Kenyan farmers, but now there are fewer than 100,000. Mills
should be crushing 35,000 tonnes of sugar cane daily but now they only crush 3,000 tonnes, Waswa told the Star in an interview.
Farmers say laws should be enacted to help farmers sell their cane in the face of cheaper imports.
Sugar directorate acting head Solomon Odera was stuck in a daylong meeting about the ongoing crackdown on counterfeits. "Am in a meeting with stakeholders. We have a crisis in the industry so give me a couple of minutes,” Odera said when reached for comment.
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PRIVATISE
Faced by perennial losses, the government has decided to
privatise five sugar millers —SoNy, Muhoroni, Miwani, Chemelil and Nzoia.
But the move has faced stiff opposition from Western Kenya leaders who instead want them bailed out by the government.
Privatisation Commission acting CEO Jacqueline Muindi told the Star yesterday that there was no specific date when the process is expected to be completed.
“Stakeholder negotiations are still going on but it has now gone political and we have to cater for all political interests. There is no expected completion date yet,” she said.
TUSSLE
The seven-month-long battle between importer Darasa Investments and the Kenya Revenue Authority has provided insights into the intricacies of the sugar business.
Darasa sued the taxman in December to stop a Sh2.5 billion tax demand for a 40,000 tonne sugar consignment it had imported two months earlier.
The suit is now lodged in the Supreme Court, where Darasa is seeking to stop the tax demand.
The firm said its sugar was shipped in from Brazil when the national Treasury had opened a window for duty-free imports of the product from the South American country.
But KRA has filed documents indicating that Darasa could have altered import documents to show that the sugar was from Brazil, when it was instead from Dubai.
Darasa has said the sugar was loaded onto a vessel, the MV Iron Lady, and shipped to Mombasa.
But the revenue collector said it has evidence from the United Arab Emirates Federal Customs Authority and the Dubai Chamber of Commerce indicating that Darasa's sugar was produced by Al Khaleej Sugar Company — the world's largest stand-alone sugar refinery.
“Take notice that this court will be moved...that the KRA be granted leave to lodge the attached affidavit and annextures containing communication from the UAE Federal Customs Authority showing that the MV Iron Lady was on October 17, 2017, loaded with 40,000 tonnes of brown sugar, produced by Al Khaleej Sugar Company; contrary to Darasa Investment's assertion that the sugar originated from the Brazilian port of Santos on July 15, 2017,” the KRA said in court papers.
While the suit between Darasa and the taxman is yet to be concluded in the Supreme Court, the proceedings provide a glimpse into the depth of the scheming that ends with the import of contraband sweetener.
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