Kenyan taxpayers lost Sh800 million in a government plan to import cheap foods in bulk in a bid to bring down the cost of living in the country two years ago.
An official of the Kenya National Trading Corporation (KNTC), through which the importation was done, on Wednesday told the anti-corruption court that the state-owned agency paid one of the suppliers Sh3.9 billion while the value of the rice supplied was Sh3.1 billion.
KNTC Managing Director Lucy Anangwe said the supplier, Purma Holdings, had also sought intervention of the Office of the Head of Public Service to have its dues settled.
She said KNTC had a Sh15 billion backing from the National Treasury to support the import scheme in January 2023 to stabilise the price of household goods.
A sum of Sh12 billion was for importation of rice while the balance was for administrative costs and renovation of the warehouse.
She said though KNTC received a consignment of rice from Purma Holdings, a company associated with businesswoman Mary Wambui, there were issues on settlement of payments following allegations of high prices.
“KNTC received consignment of rice but the supplier was not fully paid. At the time Purma asked for payments, I was involved and the matter was handled by the office of the President through the office of head of public service. One issue that made KNTC unable to pay Purma is because the goods were bought slightly over the market price,” said Ms Anangwe.
She was testifying before Chief Magistrate Charles Ondieki in the trial of former KNTC Managing Director Pamela Nduku Mutua and Supply Chain manager Amos Juma Sikuku.
The pair is being prosecuted over alleged violation of procurement regulations in the importation of cheap foods.
The court heard that KNTC procured from Purma 43 metric tonnes of rice at $600 per metric tonne even though there were other options of getting the same at $460, $520 or $490.
According to the witness, KNTC allowed the procurement of rice through the specially permitted procurement procedure (SPPP) and the National Treasury had authorised it to open special projects bank accounts for the transactions.
In its deal with Purma, the witness said KNTC suffered a loss which she attributed to the high foreign exchange rate.
“From Barchart.com, a platform where traders of commodities interact at the international level seeking to know prices of commodities, at the time KNTC contracted the supplier (January 2023), the price of rice was $400. If you add estimated freight charges of $60 per metric tonne it comes to $460,” she said.
“The supplier was paid Sh1.9 billion between July and September 2023. The amount due at that time with the dollar having appreciated was Sh2 billion, meaning Purma was paid Sh3.9 billion, hence KNTC suffered a loss having purchased the commodities at Sh3.1 and paying the supplier Sh3.9,” said Ms Anangwe.
The procurement stemmed from a communication from the Cabinet to KNTC directing the agency to import essential commodities such as fertiliser, edible oil, sugar, rice and beans as a measure to stabilise the cost of living, the court heard.
Resulting from the Cabinet dispatch dated November 10, 2022, KNTC engaged four suppliers -Multi commerce FZC, Standard Petroleum LLC, Macram imports and exports and Purma Holdings- in January 2023 to supply rice.
Purma had no bank financing and it supplied the rice on a consignment basis, while the other three companies were funded by banks through Letter of Credit – a guarantee that a seller will receive a buyer’s payment on time.
At the same time, the State told the anti-corruption court that Ms Mutua and Mr Sikuku are not being prosecuted over the purchase of all the cheap foods imported but only for rice commodities. The hearing continues.
