A document by the Kenya Revenue Authority (KRA) has revealed how some companies violated regulations to import narcotic drugs into the country disguised as sugar.
The document, presented to the joint sitting of National Assembly’s Agriculture and Trade committees that have been investigating contraband sugar in the country, also states that the government lost about Sh36.5 billion in duty and Value Added Tax (VAT) exemptions on the sugar imported between May and December 2017.
That included Sh31.5 billion in import duty and Sh5.03 billion in VAT.
The two committees, co-chaired by Kieni MP Kanini Kega and his Mandera South colleague Adan Ali, are expected to table their preliminary report Thursday afternoon.
The committee has been sitting for the last five days and has met a number of witnesses, among them Cabinet Secretaries Henry Rotich (Treasury), Fred Matiang’i (Interior), Adan Mohamed (Industry and Trade) and Mwangi Kiunjuri (Agriculture).
The committee sat for six days to investigate fears that the sugar in the market is unsuitable for human consumption as it is laced with foreign materials, including heavy metals like mercury.
On Tuesday, KRA Commissioner-General John Njiraini told the lawmakers that in July 2016, a verification conducted by government agencies on one of the containers imported by Mshale Commodities Ltd — a company registered in Uganda — revealed that substances believed to be narcotic drugs were concealed in the bags of sugar.
“The verification led by anti- narcotics police unit found four unsealed polypropylene bags concealed within the bags of sugar with a substance packaged in block shape suspected to be narcotic drugs,” Mr Njiraini says in the report presented to the MPs.
He added: “The four bags yielded 90 blocks of the item and the marks on the blocks of the substance read ‘Lacoste’.”
Other than the Ugandan company, there is also Mshale Commodities Ltd, Mombasa, which is registered in Kenya.
According to the KRA report, the 90 blocks suspected to be narcotics were marked as exhibits and packed in evidence bags and detained by the Anti-Narcotics Police Unit and that all the four containers were secured.
The latest revelations by KRA could further compound fears of the sugar in circulation.
On May 12 last year, National Treasury CS Henry Rotich issued a gazette notice that allowed the importation of duty free sugar following a prolonged drought in sugarcane growing areas.
The notice No.4536 did not, however, specify the quality and the quantity of the sugar to be imported thereby permitting the entry of raw sugar which is unfit for human consumption, white sugar and industrial sugar duty free.
If Mr Rotich would have been specific in terms of the quality of sugar to be imported and by who, it would have saved the country the billions of shillings lost in taxes and the accompanying health risks on Kenyans.
This is because individuals exploited the window to import sugar for industrial use without paying the mandatory taxes.
According to the Agriculture, Food and Fisheries Authority regulations, duty-free sugar should have only applied to brown or table sugar used for domestic consumption.
The gazette notice also allowed even those who are not licensed to import the commodity, a move that may have compromised the quality standards of the commodity.
The notice expired on August 31 last year after Treasury realised that there was too much sugar in the country.
Mr Njiraini said KRA received requests to facilitate entry of duty-free sugar whose arrival was said to have been delayed by various logistical challenges.
He told the lawmakers KRA advised the National Treasury of its inability to admit the sugar duty-free given that the 4536 notice had expired.
“KRA intercepted an importation of 40,000 metric tonnes of brown sugar purported to have been originated from Brazil,” he said.
However, KRA declined to allow the importation on duty-free basis and demanded Sh2.5 billion in taxes upon verification of the import documents.
The importer objected to the demand and filed a case in court which is still ongoing at Supreme Court.