Why sugar craze is no longer news at the Kenyan Coast

As the sugar craze hit the country this week, it was no news for the port city of Mombasa, which has been beset with myriad seizures, legal battles and destruction of the essential commodity.

In the last one year, the Kenya Revenue Authority (KRA) has destroyed huge consignments of contraband sugar and blocked many more from entering the Kenyan market over tax disputes.

Security officials have been accused of colluding with importers to ship in sugar through small ports on the Indian Ocean, and without paying duty.

KEBS stamp

On June 8, police seized two trucks laden with 86 tonnes of contraband sugar at Kijipwa road-block in Kilifi County. The commodity was en route to Garissa from Mombasa.

The first two trucks were each carrying 560 50-kilogramme bags of sugar. The third had 600. KRA and the Kenya Bureau of Standards (Kebs) established that the sugar was from Brazil and was supplied by three different companies.

It was processed in June last year and had an expiry date of 2020.

The commodity was packed in bags manufactured by Adpack Ltd in Athi River. However, the bags did not have the Kebs mark of quality. According to documents seen by the Saturday Standard, the sugar belonged to Mackenzie EA Ltd. The consignment was received on August 13, last year and the first two trucks were released from the Mombasa warehouse on June 6 and June 7 respectively.

Suspicion among officials

Although the third truck was impounded on June 7, documents found on it showed it was released from the warehouse the next day, June 8, raising suspicion among officials.

A dispute arose between KRA and the police on whether to charge the people found on the trucks or the owners of the cargo. Angry men believed to be agents of the owners arrived at the police station and engaged in a heated argument with KRA and Kebs, claiming the cargo had legally been cleared.

It is not clear whether anyone was charged. There are unconfirmed reports that some of the sugar has turned up in local shops, although the trucks are still being held at the station. It is also not clear whether Kebs took samples of the sugar for testing, but in the evening, the agents left with Kebs and KRA officials to an unknown place.

Movement of illegal sugar, often from Somalia, is an open secret to police, KRA and other Government officials in Kilifi. Undocumented ships arrive from Somalia and dock at remote ports on the Indian Ocean.

The sugar is then unloaded, packaged and loaded onto trucks for onward transmission to Mombasa and other parts of the country, often under armed police protection.

There have been other seizures. On May 12, State agencies dumped 400 tonnes of sugar worth Sh28 million at sea on grounds that it was introduced into the market when duty had not been paid.

The sugar had been lying at the port since it was seized last year by KRA, which said some of the cargo had been wrongly labelled at importation to evade duty.

The initial destruction witnessed by Industrialisation and Tourism Cabinet Secretaries Adan Mohamed and Najib Balala involved pouring the sugar onto a pier at the Port of Mombasa before the Kenya Ports Authority (KPA) Fire Brigade splashed water to dissolve it.

The sugar, imported by Ms Flowlmer Distribution Company of Nairobi, was in bags labeled Kakira Sugar Company, according to KRA Commissioner for Customs and Border Control Julius Musyoki.

Kakira is a Ugandan-based sugar miller.

A cargo manifest seen by Saturday Standard showed the consignment was shipped into Kenya from Dubai aboard a vessel christened Nikoline Maersk. The import was disguised as ‘Dividing heads, part of grinding machine’ and ‘Truck boring mesh’ instead of imported sugar, a restricted commodity.

Big story

On February 4, last year, KRA destroyed 130 containers of contraband sugar valued at Sh56 million at the Port of Mombasa. The sugar had been imported from Brazil.

Around the same time, KRA intercepted 40 containers of contraband goods, including sugar and rice, at Compact Freight Systems in Miritini, Mombasa.

But the biggest story on sugar this year involves the legal tussle between KRA and Darasa Investment Company, which is now in the Supreme Court.

Darasa is seeking to overturn a Court of Appeal ruling that allowed KRA to impound 40,000 tonnes of sugar aboard a huge ship and deduct Sh2.5 billion in duty. For close to a year, KRA has been demanding Sh2.5 billion in taxes it claims the firm is trying to evade after importing 800,000 bags of sugar from South America without paying duty.

On December 27 last year, KRA lost its attempt to stop the offloading after the High Court in Mombasa ruled that the importer could offload the goods. KRA won its appeal, prompting the importer to move to the Supreme Court.

In overturning the judgement of the High Court, appellate judges Alnashir Visram, Martha Koome and Wanjiru Kariuki faulted the February 22 orders of Justice Eric Ogolla thus: 

“The judge had failed to address the issue of inconsistency when the consignment (sugar) was shipped into the country. We find that the judge’s orders are unlawful and the opinion has no merit and is hereby dismissed”.

Justice Ogola had ruled on February 22, that the sugar aboard MV Iron Lady ship from Brazil be offloaded and stored at JB Maina private warehouse.

In his ruling, Justice Ogola said KRA had acted in a discriminatory manner by allowing 13 other companies to clear their sugar and impounding Darasa’s. The judge said KRA did not give any reasons for demanding Sh2 billion.

Punish all

He said the same punishment should have been applicable to the other companies if Darasa had contravened the by-laws of tax-free importation.

Darasa, through its lawyers Fred Ngatia, Ian Tobino and Dennis Mosota told the appellate court that their client imported 40,000 tonnes of brown sugar from Brazil before August 31 last year. This was during the tax exemption period between May and August 2017.

Ngatia said the consignment was never off-loaded as there was no space at any of the berths.  

newsdesk@standardmedia.co.ke