KRA boss given seven-day ultimatum over Sh64 billion edible oil revenue loss

A House committee has given Kenya Revenue Authority (KRA) Commissioner General Humphrey Wattanga seven days to provide information on an alleged Sh64 billion revenue loss linked to misdeclared imports by Louis Dreyfus Company (LDC).

The ultimatum follows Wattanga's failure to attend a scheduled session with the National Assembly’s Finance and National Planning Committee on Wednesday.

The committee is investigating how the government lost billions in revenue over the past three years through the importation of edible palm oil disguised as crude palm oil.

Documents presented to Parliament reveal that the product was imported from Malaysia and Indonesia via the port of Mombasa for the East Africa Community market.

The committee alleges LDC misdeclared the consignments to evade taxes.

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Wattanga's absence and request to appear before the committee in two months disappointed committee members.

 He suggested a meeting on November 26, 2024.

“As an oversight arm of the government, this committee directs that KRA management appears before this committee on Tuesday next week without fail or face the necessary sanctions,” said Committee Vice Chair Benjamin Lang’at.

“If the country is losing billions in taxes then that is a criminal matter,” he added.

The committee, led by Kimani Kuria, expressed concern over Wattanga's request, describing it as contempt of Parliament and indicative of a lack of seriousness by the tax authority.

“As a country, we do not need to borrow loans whereas we can raise billions through revenue. Our failure to meet revenue targets is why we are borrowing so much. The misdeclaration of cargo is a serious issue and we need to find out if KRA was involved,” said Lang’at, who is also Ainamoi MP.

Baringo North MP Joseph Makilap sought clarity on the situation and criticized KRA for not providing the necessary information.

“By saying that they can only appear on November 26, 2024, it means they are pushing the matter to next year. According to information before us, oil was imported but it reached the port declared as crude. We are just seeking to know how this is possible,” stated Makilap.

Kitui Rural MP Mboni Mwalika emphasised the need for a meeting with KRA as soon as possible to establish the directors of the firm at the centre of the investigation.

Documents submitted to the committee detail one method of misdeclaration involving mixing the product as 60 per cent crude palm oil and 40 per cent refined palm oil, falsely declaring it as crude palm oil.

 In some cases, products imported as refined were declared as crude to avoid a 35 per cent duty, roughly $500 per ton.

 As a result, the government lost Sh16.5 billion in revenue in 2022 from 233,000 metric tonnes misdeclared as crude palm oil, Sh32.54 billion in 2023 from 387,868 metric tonnes misdeclared and Sh13.83 billion in 2024 from 163,567 metric tonnes imported to date.

“They (importers) load both cargoes into the same ship tanks using a 40 per cent refined oil blend and 60 per cent crude oil blend. This is against the World Customs Organization guidelines as any adulterated cargo cannot be deemed crude palm oil,” the document stated.

“The product at the destination country requires less processing or none at all, thus their customers save on processing costs,” it added.