Revealed: Kenya lost Sh6.6 billion in controversial edible oils deal

Kenyan taxpayers lost at least Sh6.6 billion in a controversial edible oils importation deal, a Senate committee revealed on Tuesday during a hearing.

The Senate's Trade Committee, which is investigating the Sh16.5 billion edible oils scandal, uncovered multiple irregularities in the process.

It emerged that the Kenya National Trading Corporation (KNTC) had sold part of an uncleared consignment, nearing its expiry, to a local company for re-export.

However, the batch remains in the country, raising further concerns.

KNTC General Manager for Finance, Purity Kimanthi, told the committee that the corporation incurred a loss of Sh6.6 billion due to currency exchange rate fluctuations, clearance fees, and warehousing costs.

She explained that by September 17, KNTC had sold 1.67 million jerricans of the oil, generating only Sh5.9 billion.

Kimanthi added that 10,651 jerricans were damaged during transport and unloading, and the corporation is in the process of filing insurance claims.

Additionally, KNTC has outstanding payables of Sh313.1 million for warehouse rent, storage, and agency fees.

She also admitted that part of the oil consignment was sold at Sh3,028 per jerrican instead of the intended Sh3,700, resulting in a further loss of Sh540 million.

"So you are admitting there is such a loss due to the factors you have mentioned. Who has benefited from this?" asked Kajiado Senator Seki Lenku, the chair of the committee.

Overpayments to suppliers

Marsabit Senator Mohamed Chute raised concerns that more than Sh6 billion had been lost through overpayments to suppliers, exchange rate fluctuations, and suppliers' failure to refund overpaid amounts.

He told the committee that the letter of credit was initially opened at $23 per jerrican, but KNTC ended up paying $30, leading to an overpayment of at least Sh2.5 billion.

"At the time of purchasing the cooking oil, the dollar was exchanged at Sh162, but by the time of selling the consignment, the rate had fallen to Sh133, losing at least Sh1 billion in the process. Who will bear this loss?" Senator Chute inquired.

Nominated Senator Esther Okenyuri also expressed her dissatisfaction.

"This is a slap in the face of hustlers who were waiting for these items to cushion them against the rising cost of living," he said.

The cooking oil importation was approved by the Cabinet in 2022 as part of a plan to address the high cost of living.

KNTC's General Manager for Strategy, Lucy Anangwe, who was the finance and accounts manager at the time, revealed that she was not part of the procurement team and only became aware of the irregularities during a probe by the Directorate of Criminal Investigations (DCI).

Peter Njoroge, KNTC's acting Managing Director, admitted to the price variations but blamed the issue on his predecessor, Pamela Mutua.

According to documents submitted to the committee, KNTC cited the price differences in a credit note communication between Mutua and the suppliers.

All suppliers agreed to issue credit notes equivalent to $7 (Sh903.9) per jerrican. However, Multi-Commerce is yet to honor a credit note amounting to $6.8 million (Sh878.1 million), and Charma Holdings still owes $3.7 million (Sh477.8 million).

Njoroge assured the committee that KNTC has been engaging the suppliers.

"Should the firms not pay, then we will seek support from higher offices to pressure them to refund. If that fails, we will explore legal action as a last resort," he said.

KNTC Board Chairperson Hussein Dabasso also acknowledged the mistake of procuring in dollars, noting, "The procurement in dollars was unfortunate and should not have happened because the procuring entities were local firms."