Wattanga given 7-day ultimatum to appear before MPs team » Capital News

NAIROBI, Kenya, Oct 3 – Kenya Revenue Authority (KRA) Commissioner-General Humphrey Wattanga has been given seven days to appear before the National Assembly’s Finance and National Planning Committee to explain the loss of loss of Sh64 billion in mis-declared revenue by Louis Dreyfus Company (LDC) in the edible oil scandal.

The committee chaired by Molo MP Kimani Kuria issued the ultimatum saying Wattanga’s failure to appear before the committee will risk punitive sanctions.

He had been scheduled to appear before the team but he failed despite issuing a commitment last week.

Wattanga had initially told the committee that he was only available to appear before it two months from now on November 26, 2024.

The house team stated that the action by the KRA Commissioner General signified his ineffectiveness in a critical office, strategic for revenue collection.

The committee Vice Chairperson, Ainamoi MP Benjamin Lang’at described this as a serious dereliction of duty.

“As on oversight arm of the government, this committee directs that the KRA management to appear before this committee on Tuesday next week without fail or face the necessary sanctions,”he said.

“It is a criminal matter that the country could be losing trillions in taxes through misdeclaration of goods,” Lang’at added.

The Ainamoi MP said it was unfortunate was struggling with raising revenues yet the country was losing revenue and those with the mandate fail to appear to answer to concerns.

“We don’t need to borrow when we can raise billions through taxes. Failing to meet the revenue targets is the reason why the country is borrowing so much. Misdeclaration of cargo is serious and we must know whether KRA is involved,” the lawmaker said.

Baringo South MP Benjamin Makilap accused the Commissioner General of taking the parliamentary committee for granted.

“I cannot believe that KRA can have the guts to tell us to postpone the meeting and even dictate to us when to appear. For them to suggest that they appear on November 26, 2024 is basically to push this matter to next year,” said Makilap.

“If you import refined oil and when it reaches the port of Mombasa it is crude, then you must tell us at what point did it go back to its original state,” he added.

Kitui Rural MP Bonnie Mwalika accused KRA of hiding the real culprits in the tax evasion saga.

“We want to know who are the directors of the two companies, their shareholding and the beneficial owners. Saying they will appear here after two months when the same things are happening is a no,” said Mwalika.

LDC- Kenya limited has offices in Mombasa and is one of the country’s leading vegetable oils merchandisers with a growing footprint across East Africa.

It’s a major importer of palm oil products for millers and refineries in East Africa and operates one of the largest oil seed storage facilities in the region.

Documents before parliament show that 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 tons that have been misdeclared.

In 2024 the government has already lost Sh13.83 billion in revenue from the 163,567 metric tonnes imported so far.

Wattanga appeared before the committee on September 24, 2024 to explain whether Louis Dreyfus Company (LDC) Asia PTA limited and Louis Dreyfus Company Kenya (LDC) limited evaded paying taxes through misdeclaration of palm oil cargo shipped into the country and to provide the required documents.

However, the committee could not proceed after he came with bulky documents on the material day.

Because the committee had not internalized the documents, it adjourned to afford it time to go through the documents.

The palm oil cargo imported from Malaysia and Indonesia, the world’s two leading exporters of palm oil products that accounts for 85 percent of the production, is in six types- RBD Palm Olein, RBD Palm Stearin, Crude Palm Kernel Oil, Crude Palm Olein, Crude Palm Oil and Palm Fatty Acid Distillate.

Documents before the committee show that the product imported by LDC companies whose intended use is in Kenya and the other East African countries using the port of Mombasa for imports, is mis-declared in two ways.

First, the product comes as a blending of 60 percent crude palm oil with refined palm oil of 40 percent, which is then declared as crude palm oil.

Alternatively, the product is largely imported in refined form but declared as crude palm oil at the port of Mombasa so as to evade the 35 percent import duty or USD500 charged per tonne.

The product also attracts Import Declaration Fee (IDF) at the rate of 2.5 percent, Railway Development Levy of 1.5 percent and Value Added Tax (VAT) 16 percent.

In Kenya, 35 percent duty is charged on imported refined palm oil with semi refined palm oil attracting 10 percent duty.

Palm oil stearin is a by-product of palm oil refining and is used in soaps manufacture and cooking fats. RBD Palm Olein is refined palm oil, Crude palm kernel oil is a by-product that is used in soap manufacturing.

Crude Palm Olein is palm oil that has been semi processed, which means that it has only been fractioned to separate the liquid portion from the solid portion of oil and attracts import duty at the rate of 10 percent.

Crude palm oil is unprocessed oil which requires full processing.

Palm fatty acid distillate is a by-product of palm oil refining and is used to make brown soaps.

This means that were the product to be imported in crude form, the country would benefit as the by-products from the refined oil would help the soap manufacturing among others.

The committee had requested that KRA provide details on the total cargo volume of palm oil imported by LDC Asia PTA through the port of Mombasa from February 23, 2023 and June 26, 2024.

The committee wanted the details to include the volumes of RBD Palm Stearin, Crude Palm Kernel Oil, Crude Palm Olein, Crude Palm Oil, and Crude Palm Fatty Acid Distillate.

The Committee also wanted Mr Wattanga to provide details regarding the total taxes and fees paid by LDC Asia PTA in the importation of the palm oil cargo from February 23, 2023 and June 26, 2024.

Copies of all import declaration documents which are not limited to port health reports, Kenya Bureau of Standards (KeBS) reports, bills of ladings and cargo manifests for all the 120 cargo of palm oil imported by the company from February 23, 2023 and June 26, 2024 are also required.

Also required by the committee is a list of consignees of all the palm oil cargo volumes imported by the company during the period.

The committee also sought details of cargo volume of RBD Palm Stearin, Crude Palm Kernel Oil, Crude Palm Olein, Crude Palm Oil, and Crude Palm Fatty Acid Distillate imported by LDC- Kenya limited, Acee Limited, Mazeras Oil Limited and Vipingo Industries Limited through the port of Mombasa from February 23, 2023 and June 26, 2024.

Further, Wattanga was required to provide details of the taxes and fees paid by LDC- Kenya limited, Acee limited, Mazeras Oil limited and Vipingo Industries limited in the importation of the palm oil products between February 23, 2023 and June 26, 2024.

The copies of all import declaration documents for palm oil cargo by LDC- Kenya limited, Acee limited, Mazeras Oil limited and Vipingo Industries limited through the port of Mombasa from February 23, 2023 and June 26, 2024 were also required.

The copies, the committee stated, should not be limited to port health reports, KeBS, SGS reports, bills of lading and cargo manifests.

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