KRA boss has seven days to explain Sh64b edible oil loss

A House team has given the Kenya Revenue Authority (KRA) Commissioner General Humphrey Wattanga seven days to appear before it to give more information on the alleged loss of Sh64 billion in misdeclared revenue by Louis Dreyfus Company (LDC), in the palm oil scandal.

The ultimatum was issued after the Commissioner failed to appear before the National Assembly’s Finance and National Planning Committee on Wednesday as scheduled.

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

According to documents tabled before a Parliament, the product was imported from countries such as Malaysia and Indonesia through the port of Mombasa, and was destined for the East Africa Community market.

LDC, which is the importer of the product, is however said to have misdeclared the consignments in a bid to avoid paying the requisite taxes.

The committee was, however, disappointed with Wattanga’s failure  to attend  and his request that he appears before the MPs in two months, that is on November 26, 2024.

“As an oversight arm of the government, this committee directs that the 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 Kimani Kuria –led committee also expressed concern with Wattanga’s request, claiming that it amounted to  contempt of Parliament and that it demonstrated the “lack of seriousness” by the taxman.

“As a country we do not need to borrow loans whereas we can raise billions through revenue. Our failure to meet the 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,” added Langa’at who doubles as Ainamoi MP.

Baringo North MP Joseph Makilap was also intent on getting to the bottom of the truth and criticised KRA for not availing the required information. “By saying that they can only appear on November 26, 2024 it means they are basically pushing the matter to next year. According to information before us, Oil was imported but it reached the port it was declared as crude, we are just seeking to know how this is possible,” stated Makilap.

Kitui Rural MP Mboni Mwalika said a meeting with the taxman in the soonest time possible was a necessity so as to establish the directors of the firm at the centre of the probe.

The documents tabled before the National Assembly Committee explain that one form of misdeclaration occurs by mixing the product as 60 per cent crude palm oil and 40 percent crude palm oil. It is then declared as crude palm oil.

In other instances, it emerged, the product was imported as a refined product, but declared as crude palm oil to circumvent the payment of the 35 per cent duty, which is equivalent to $500 per ton.

Consequently, in 2022, the government lost Sh16.5 billion in revenue from the 233,000 metric tonnes that were misdeclared as crude palm oil and Sh32.54 billion in 2023 from the 387,868 metric tonnes misdeclared.