Imported sugar being offloaded onto a flatbed truck within the port of Mombasa.
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Questions over web of sugar importers with dark legal past
The Kenya National Trading Corporation (KNTC) dished out lucrative sugar import contracts to a network of companies with a dark legal past and which are linked to politically exposed individuals, in a move that casts doubt on the State agency’s good governance structures.
Despite being at the centre of a consignment of highly contaminated sugar in 2017 and having an active criminal case regarding tax evasion, businessman Samuel Mburu Kamau – the spouse of Nakuru governor Susan Kihika and close ally of President William Ruto – bagged lucrative sweetener import deals from the KNTC.
By March 2023, Landmark Freight Services, Tootsie Limited and Fast Conveyors Suppliers had imported 37,300 tonnes of sugar, or 46 per cent of Kenya’s imported sugar at the time.
Two other companies – Pectoral Limited African Retail Traders (2005) Limited – imported 19,392 tonnes of sugar.
Through KNTC, the government had planned to import 115,000 tonnes of sugar to void a shortage that has seen retail prices skyrocket to an average of Sh200 per kilogramme.
The government programme has, however, opened the door for well-connected individuals to bag import contracts.
In 2017 Mr Kamau imported 25,580 tonnes of Brazilian sugar from Dubai through Landmark Freight Services.
Mr Kamau is listed as the sole shareholder in Business Registration Service records.
Initially, the firm got a clean bill of health from the Kenya Bureau of Standards (Kebs) and the Kenya Revenue Authority (KRA).
But a multi-agency team tasked with impounding contaminated sugar raided the warehouse where Landmark had stored its sweetener.
The multi-agency team suspected that there may have been collusion with Kenya Bureau of Standards (Kebs) and Kenya Revenue Authority (KRA) officers to alter declaration documents so as to sneak contaminated sugar into the country.
The investigators examined the sugar and found that it had higher levels of yeast and mould than legally accepted.
In June, 2019 Landmark Freight Services sued the KRA, Directorate of Criminal Investigations (DCI), Ministry of Trade and the Attorney-General seeking release of the sugar.
The firm argued that the approvals from the KRA and Kebs were evidence that it followed the law and imported sugar that met local quality standards. But the government agencies held that inspection documents in Dubai also showed that the sugar had high yeast and mould levels.
Justice Weldon Korir, and the Court of Appeal, dismissed Landmark’s case by holding that the government followed the law in impounding and ordering the destruction.
Justice Korir had ordered for tests on the sugar following Landmark’s request. The test, colony forming unit (CFU) per 10 grammes, is used to determine the level of invasive organisms such as yeast and mould.
Kenyan standards allow a maximum level of 50 CFU per 10 grammes of sugar but the Landmark Freight Services sugar returned results of 60 and 70 CFU per 10 grammes.
In November 2019, Landmark filed a fresh suit seeking damages of Sh609 million from the government for the seized sugar.
Two years later, Justice Hedwig Ong’udi ruled that the suit could not be entertained as the claims had been handled by the High Court and Court of Appeal when Landmark sought to have the sugar released.
Kebs had argued that Landmark Freight Services did not challenge its loss in the earlier case hence could not be allowed to do a backdoor appeal through the fresh suit.
Despite having a history with importing sugar that the authorities found to be unfit for human consumption, the KNTC still handed Landmark Freight Services and other companies associated with Mr Kamau contracts to import Brazilian sugar from Dubai.
The government early this year gazetted the importation of 200,000 tonnes of sugar through KNTC.
The Ministry of Agriculture also indicated that it approved the importation of 280,000 tonnes of sugar, but had no records of importation.
Under the KNTC programme, records show that by end of March, a total of 80,815 tonnes had been imported into the country, out of the 115,000 tonnes allocated to 35 companies for importation.
However, only five companies imported 70 per cent (56,692 tonnes) of the total sugar imported by March and whose volumes were at least 2,000 tonnes each.
Interestingly, the five companies have tainted figures as their directors, including some who have had brushes with the law on areas around tax disputes, fraud allegations and even cases where some have performed government tenders in other sectors such as energy, raising questions on their specialty.
Some companies also have shared postal addresses raising indicating a possibility that they could be linked.
Fast Conveyors Suppliers Limited, which imported the most sugar (20,888 tonnes), has also won a Sh9 million contract by the Rural Electrification and Renewable Energy Corporation (Rerec) in 2020.
While the company’s current postal address as held by the Registrar of Companies differs from the address it indicated during the Rerec tendering process, the directors, Widah Omari Nasta and Ibrahim Twahir Mohamed, have been the same. The company’s registration PIN is also the same- CPR/2014/1492 21.
In the same year — 2020— the company also won a Sh28 million contract at Kenya Power for “procurement of overhead fuse cutout 400 A” under tender number “KPI/9A.3/OT/13/20-21”, Kenya Power records show.
Tootsie Company Ltd imported the second largest volume of sugar (14,412 tonnes).
A recent search at the Registrar of Companies shows that its directors are Harrison Ngigi Muchiri and Jones Luambo and its postal address 2163.
But while the address differs with one appearing at the Rerec 2020 tender awards for the same company when it won a Sh14.8 million contract, one of the current directors, Harrison Ngigi Muchiri, was a director and the company registration certificate number matches.
Landmark Freight Services Limited, a company owned by Mr Kamau imported 2,000 tonnes of sugar.
While the company was not a winner during the Rerec 2020 tender awards, Mr Mburu was, using a different company, Enzi Zetu Contractors Limited, through which he was awarded a Sh23.4 million contract on May 28, 2020.
But the two companies, Landmark and Enzi Zetu, share the same city postal address (8685-00200), an indication that they are closely linked.
During the Rerec tender awards in 2020, Tootsie Company Limited, then owned by Mr Harrison Ngigi Muchiri alone, also used the same postal address (8685-00200) — same as the one Enzi Zetu used and the one Landmark currently uses.
This is a strong indication of links among the three companies, and thus their directors, Mr Mburu, Mr Muchiri and Mr Luambo, the other director of Tootsie.
Mr Mburu, Mr Muchiri and Mr Twahir — one of the co-director of Fast Conveyors Suppliers Limited, which imported the largest volume of sugar — were charged with tax evasion in 2019 alongside two companies — Gendipe Enterprises and Rupai Trading Limited.
They were charged alongside former Kebs managing director Charles Ongwae and three KRA officials for colluding to disguise imported Hayat palm oil as machinery so as to attract lower taxes.
The case is still ongoing.
Still, the trio of investors is bagging multimillion-shilling government contracts.
When Landmark Freight Services sued the government in 2019, Mr Twahir filed affidavits in court on behalf of the company, meaning there is a direct business link between him and the Nakuru governor’s spouse.
Interestingly, Mr Ongwae’s successor at Kebs, Bernard Njiraini, was in May charged alongside others for irregularly releasing condemned sugar worth Sh20 million.
Mr Njiraini’s prosecution is an indicator that the standards agency has a bad history with imported sugar, and could have over the years allowed Kenyans to consume sweetener risky to their health.
Pectoral Ltd, which imported 9,394 tonnes of sugar by March 31, 2023, also won a Sh14.7 million tender at Rerec in 2020, with its director being Elisha Nyanginja Okello.
African Retail Traders (2005) Ltd, owned by Hafeez Amin Manji and Amin Akber Habib Manji imported 9,998 tonnes of sugar . Mr Manji was implicated in a Sh34 billion siphoning of funds from the Imperial bank seven years ago.
Kebs told the Sunday Nation that its role in the programme was to undertake conformity assessment on all imports under the duty-free programme, to ensure they met quality standards.
The Sunday Nation contacted the individuals linked to the companies mentioned and allowed them four weeks to respond to questions on the tenders. They had not responded by the time of going to press
Reporting by Peter Mburu, Richard Munguti and Brian Wasuna
