The Star (Nairobi)

27 March 2014

Kenya: House Team Unearths Mumias Sugar Scam

THE Agriculture Committee now claims Mumias Sugar-the country's largest cane miller, has been causing a serious crisis of sugar on its own.

This is contained in findings by the committee after reports that Mumias Sugar has been importing massive tonnes of sugar from outside, despite having the local one at its disposal. There have been cries from stakeholders, including farmers and employees of the firm, over payments and lack of jobs.

The committee led by its vice chairman Japheth Kareke Mbiuki, who is also the chairman of the sub committee on Agriculture, and member of both committees Mumias East MP Benjamin Washiali, toured a go-down in Mombasa Shimanzi, which had hundreds of bags of imported sugar.

When the press arrived, the godown was locked, and the officials said they had visited the facility the previous day and found an estimated 10,000 bags of imported sugar, while the Mumias Sugar one was only less than 2,000 bags.

"We came here to conduct our investigations into the root cause of the current problem in the sugar industry since farmers are saying they are not being paid by millers and workers are also not being paid," said Mbiuki.

He added that the committee members were investigating all the lists of licensed and unlincensed importers of sugar, after noting that Mumias Sugar was also selling the imported sugar to other firms at the expense of the local sugar.

"We have sugar from Egypt, Sudan and even as far as India and that would mean that the government should look into this issue since we believe the Comesa countries are being given a raw deal over non-Comesa member states," said Mbiuki.

Last year, the Kenya Sugar Board gave Mumias Sugar license to import 10,000 MT of sugar between March and May, but the officials yesterday claimed Mumias imported more than the expected quota.

"There is no way we could still have a lot of sugar in the godown if Mumias stuck to its quota. Someone should be held responsible for the collapse of Mumias Sugar Company," added Mbiuki.

The officials noted that at the depots, the imported sugar is sold at Sh3,000 per bag, while the Mumias one goes for Sh3,600, making it less attractive to buyers.

Washiali added that Mumias Sugar gave the license to export, to a third party, and thus, this was a loophole to import more consignment than what was stipulated.

"We fail to understand that despite having 30,000 acres for farming, it has failed in its role and thus affected all issues within the line of production," said Washiali. He proposed that the KSB takes action on the matter, since it has seen the firm facing a major crisis that if not arrested, will have much more dire consequences.

"We are going to talk to the minister of agriculture on this issue. Farmers are demanding over Sh500M in arrears, employees havent been paid yet this is what is happening," he added.

Washiali also said the issue of Comesa countries and sugar should be looked into, since documents in their possession indicate that some sugar is deemed to have come from Egypt, yet it was only on transit and came from other countries like India. They also promised to contact the Kenya Revenue Authority to establish if certain importing companies had paid 100 per cent duty and if they were licensed.

In one of the correspondence, one of the companies buying sugar from Mumias, Rising Star commodities Limited, threatened to stop selling Kenana sugar (imported) saying it is impossible to sell due to 'multi-pronged state agency dragnet' that is currently on the look out for the sugar.

"This has resulted in the Kenana sugar sourced from yourselves being impossible to sell. Our customers are blatantly denying to buy Kenana sugar citing agitatation from police, aggravation from officials of KSB, constant stalking by officials from KRA, incessant pestering from county government health official, the Kenana sugar bags have no expiry dates as per county government and Kebs regulations," noted Amin Nathoo, the Chief Executive Officer.

In the letter dated March 19th this year, he said the stock has become unmanageable adding that similar incidents have occurred in the past, specifically relating to the sugar.

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