Police have linked the poisonous sugar being impounded around the country to a company owned by a billionaire businessman from Eldoret.
At the same time, West Kenya Sugar has denied any link to the semi-raw sugar that has found its way into the market before being processed for human consumption.
Managing Director Tejveer Rai yesterday issued a statement denying that the sugar impounded in different parts of the country is part of its imports.
He said the company was willing to provide any assistance to on-going investigations and had voluntarily allowed the anti- counterfeit multi-agency team to inspect its facilities at the Kakamega factory and depots in Nairobi, Nakuru and Webuye in Bungoma.
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Last week, security agents recovered sugar in the godowns of Rai Paper — formerly Panpaper Mills — in Webuye, which is a sister company to West Kenya and Sukari Industries.
The company later issued a statement saying the sugar was being stored awaiting testing in its plant which produces the Kabras brand.
Police in Kisii yesterday impounded 15, 000 kilograms of contraband sugar from distributors and traders in the area. Area OCPD Francis Nguli said that they netted 105 bags of 50 kilograms, another 85 of 25 Kg and 400 packets of 2 kg each during the impromptu raid.
Addressing the press in his office the impromptu operations to get rid of sugar that is not fit for human consumption will continue.
“Today we have managed to impound 105 bags of 50 kilograms, another 85 of 25 kgs and 400 packets of 2 kgs from traders and distributors in Kisii Town,” Nguli said.
He said that the successful operations is being undertaken by officers from Kenya police service, AP, CID and the office of the County commissioner.
He said that they have since arrested for suspects whom he said they are considering to free on a police cash bail pending the probe.
On Monday evening the police confiscated 185 bags of suspected contraband sugar from Kisii Discount Stores owned by Harikrushna Bhanubhai Patel who they freed on police cash pending investigations.
In the latest seizure, Police in Kisii yesterday impounded 15,000kgs of contraband sugar from distributors and traders and arrested several people.
On Monday, 185 bags were nabbed from Kisii Discount Stores owned by Harikrushna Bhanubhai Patel. Police believe the sugar that has been seized is part of the imports by Amnav Ltd, pursuant last year’s window for importation of powder milk and sugar to bridge the deficit caused by prolonged drought last year.
Correspondence from the Kenya Bureau of Standards, shows that Amnav was among four sister companies allowed to import sugar duty-free contrary to claims by top government officials, among them Interior CS Fred Matiang’i and IG Joseph Boinnet, that the sugar was smuggled into the country.
Boinnet, together with the head of the multi-agency team on counterfeits, Wanyama Musiambo, visited DCI headquarters to inspect 2,000 bags of sugar nabbed by police at a go-down in Eastleigh.
They claimed that the sugar was smuggled into the country by unscrupulous traders who did not pay taxes and who knew that the products that they had imported were unfit for human consumption. Matiang’i later revealed that tests by the Government Chemist on the contraband sugar had revealed traces of mercury and copper and that the sugar was not fit for human consumption.
On May 11, 2017, National Treasury CS Henry Rotich had through a Gazette Notice allowed importation of sugar and milk without paying duty.
The government also authorised importation of 9,000 tonnes of milk powder by milk processors with the authority of the Kenya Dairy Board.
“The drought and famine in parts of Kenya is a national disaster, duty shall not be payable for the following items,” read the gazette notice, which provided for importation between May 11 and July 31.
On August 4, three days after the period lapsed, the Kenya Bureau of Standards (Kebs) responded to a request by Amval Ltd to import brown sugar from the Kingdom of Swaziland.
In a letter dated March 4 addressed to the import inspection firm SGS, the Kebs director of quality assurance Eric Chesire authorises the importation on condition that it be bagged at the port of entry in bags “marked with pre-entry information and transported to their factory for processing before being packed in the bags that are compliant with the relevant standards.”
The factory referred to is West Kenya.
In his letter to SGS’s Andrei Koval and copied to the managing director of Amnav Ltd, Chesire directs the company to “undertake inspection and testing of the sugar and issue a certificate of conformity if the sugar complies with the requirements of KSEAC 749:2010” except for packaging and labelling.”
He adds: “In addition, kindly note that the sugar will be subjected to further processing at West Sugar Company Limited and Sukari Industries Ltd after importation to ensure that the final product released to the market complies with the hygiene requirements of the standard.”
Police sources told the Star yesterday that investigations had revealed that none of the above guidelines to the importers were followed, leading to the flooding of unprocessed sugar in the market.
They said only a few bags of the imported sugar had been taken to the factories for processing and the rest of the semi-processed sugar had been released into the market without certification. But West Kenya denied any connection and said they support the crackdown.
“We enthusiastically commend the ongoing eff orts by the various government agencies that are working to clamp down on these illegal traders. We support all genuine eff orts to ensure that the culprits of such acts are brought to book,” Rai said.
He disclosed that last year, the applied for and was licenced to import bulk brown sugar by the Agriculture and Food Authority (AFA) due to the extended drought experienced in Kenya in 2016-2017 causing retail prices for sugar to shoot up.
“In view of the exceptionally reduced supply of cane available from our preferred local farmers caused by that drought, West Kenya Sugar Company Limited along with several others, imported sugar which is undergoing testing,” the company said.
“Importation of sugar involves Pre-Export Verification of Conformity certification from the Kenya Bureau of Standards who work with international quality assurance companies to certify that the sugar conforms to Kebs standard,” Rai said.
Highly placed sources told the Star that four companies, all linked to the same traders, had imported nearly one million bags. Amnav, according to police sources, was entitled to import 34,100 bags of 50kgs.
The three other companies also brought in a similar number of bags. Security agencies have been put on alert across the country to search and recover the sugar. Hundreds of bags have been recovered from godowns in Nyahururu, Nairobi, western Kenya and Mombasa.
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DEFICIT
Trade in sugar has been transformed into a gold hunt because of consumption that surpasses the national production. Local production capacity stands at 600,000 tonnes per year against a consumption of over one million tonnes.
Last year, production fell to a record low of 377,126 tonnes, with most factories out of operation due to heavy debt.
The situation has worsened with the closure of Mumias Sugar, which at its peak accounted for 50 per cent of the sugar industry market share.
The window allowed 971,212 tonnes of sugar imported, a drastic increase from 290,256 tonnes in 2016.
The Agriculture and Food Authority has licensed 233 firms to import sugar, including food, pharmaceutical, drink and confectioneries manufacturers like Bidco, Kevian, Trufoods, Patco, Coca Cola, Nanasi Limited and Glaxosmithkline.
While the shortage has been largely blamed on drought, it is also the results of farmers’ abandoning cane growing due to low and delayed payment and the collapse of factories due to competition from cheap imports. Rai Paper Mills came alive in 2016 when the Rai Group bought the collapsed Pan African Paper Mills (Pan Paper) for Sh900 million.
The paper mill and its assets were valued at Sh18 billion, but its debt load of Sh10 billion and its uncertain future were not attractive to investors.
With lenders baying for Pan Paper’s blood, the government struck a deal to pay short-term lenders Sh400 million to stop them from auctioning the mill’s assets. Among its largest creditors were the World Bank’s lending arm IFC (Sh2.5 billion), Deutsche Bank (Sh1.8 billion), PTA Bank (Sh682 million) and the East African Development Bank (Sh317 million).
In 2009 the firm was placed under receivership. At the time of its sale to the Rai Group, Pan Paper had not been in operation for 11 years. Th e Rai Group also owns RaiPly which manufac- tures chip boards, ceilings, blo+ck boards, parquet and wooden tiles and polythene bags for sugar companies.
It also has a stake in Menengai Oil, West Kenya Sugar and Sukari Industries in Kenya and Kinyara Sugar Works in Uganda.
The Rai Group is a family-owned business. Its patriarch is Tarlochan Rai. His sons Jaswant, Jasbir, Sarbjit and Iqbal Rai co-own the business empire. When Rai Paper Mills resumed operations in December 2016, it had 500 employees but the number was expected to grow to over 2,000.
Rai Paper Mills’ predecessor, Pan Paper, was the heart and soul of Webuye town in its heyday.
The mill employed thousands and helped hundreds of other businesses thrive in the town.
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