Ruto orders probe into Sh6B edible oils scandal

President William Ruto has ordered investigations into the finances of three senior-ranking government officials implicated in the loss of hundreds of millions of shillings through inflation of prices of imported edible oil.

Well-placed sources said the Head of State had through his own initiative negotiated a contract with the cooking oil manufacturers on the understanding that this would bring down the cost of the 125,000 metric tonnes of edible oil which was part of a strategy to tame the high cost of basic commodities.

It was later reported to the President that the three officers inflated the price by an average of $7 per litre, thus negating the original intention of Kenya importing the cooking oil. That meant after being converted, 125,000,000 litres were imported at an added cost of Sh875 million. The consignment was initially estimated at a total cost of Sh9 billion.

An impeccable source told People Daily that President Ruto had directed the Head of Public Service, Felix Koskei, to write to the Ethics and Anti-Corruption Commission (EACC) to open investigations with the view of prosecuting those involved.

Under investigations, the source said, are a Cabinet Secretary, a senior State House aide and a chief executive of a State corporation. Also on the radar of the anti-graft investigators are top managers at the Kenya National Trading Corporation (KNTC), which was the importing agency.

Huge budget

A source at EACC said the agency received Koskei’s letter on Thursday last week.

“Yes we have an interest at KNTC and already investigations have commenced,” said the source who asked for anonymity due to the sensitivity of the matter.

“Things will start moving starting Monday. We had, however, opened a file on KNTC even before the letter came in,” the source said.

Efforts to contact KNTC Managing Director Pamela Mutua at the weekend were not successful and she was yet to respond by the time of going to press.

Mutua took over the helm of the corporation in 2021. However, it was not until last year that the corporation was allocated a huge budget to import cooking oil and other food products, a process that commenced in March this year. And in August, KNTC started distributing cooking oil vending machines in poor neighbourhoods.

Now, however, questions have been raised over the handling of the importation of edible oils worth Sh9 billion. The matter was raised in the Senate after Marsabit Senator Mohamed Chute sought a statement from Moses Kuria, the former CS for the Ministry of Trade, Investments and Industry (MITI), on how the cooking oil was imported. When he appeared before the Senate Business Committee, Kuria told senators that the idea to import the edible oil was mooted to protect Kenyans from cartels.

 According to him, the intervention to have KNTC import the consignment was arrived at in order to arrest the ballooning costs of edible oils. “I instructed KNTC to import edible oil with a target that one kilo of edible oil would retail at Sh250... the price of oil has gone down today to Sh218 per litre,” Kuria said.

KNTC got the go-ahead to import the consignment through a Cabinet Memo in October last year.

“To address the cost of living, Cabinet approved a framework to position the Kenya National Trading Corporation as the anchor of State initiatives to create a price stabiliser for essential household food items,” the Cabinet memo stated in part. “KNTC will leverage on its infrastructure and capacity to help stabilise price swings of essential items that are abnormal and against the public interest.”

 Taxation aspect

However, a document filed in the Senate indicated that KNTC single-sourced the companies contracted to import 125,000 metric tonnes of the edible oil and set higher prices as opposed to what had been agreed on initially.

KNTC awarded Multi Commerce FCZ a Sh8.12 billion tender to supply vegetable oil and Shehena Company Limited to supply jerricans of edible oil at Sh1.33 billion. Kenya Revenue Authority (KRA) used the Kenya Gazette notice number 250 to facilitate the subsequent imports. The National Treasury later issued a circular indicating the quantities of edible oils to be imported.

The consignment included 125,000 metric tonnes and jerricans, which meant that 6,875,000 20-litre jerricans were imported.

However, three Single Administrative Documents currently with the investigators each have different entries and this discrepancy is expected to inform the investigations expected to commence today. The first document shows the importation of 26,600 20-litre jerricans translating to 20 shipping containers.

Unpaid taxes

In the second, the importation of 51,870 20-litre jerricans translates to 39 shipping containers and in the third document, the importation of 6,650 20-litre jerricans translates to five shipping containers, bringing the total to 64 shipping containers of imported cooking oil.

Investigators will also be seeking to establish the taxation aspect of the consignment which the source said had raised audit queries. In one document filed before the Senate by Senator Chute, Customs entry documents made a disclosure of unpaid taxes that KNTC allegedly owes.

According to a memo by KRA, KNTC was offered remissions and exemptions to facilitate exemption of 100 per cent import duty. However, all other taxes, fees and levies remained payable as per the applicable laws.

The unpaid taxes, the source said, include Customs Duty at 35 per cent, Import Declaration fees at 3.5 per cent, Railway Development Levy at 2.0 per cent, and the Agricultural Food Authority Levy. In total, the source said, KRA lost close to Sh10 billion in revenue. The taxman is however yet to comment on the matter even after it was raised in the Senate.