The then little known parastatal, the Kenya National Trading Corporation (KNTC) Limited, an institution that has now spiraled to become a theatre and epicenter of multi-billion graft probe by the Ethics and Anti-Corruption Commission (Eacc) has morphed from a once docile entity to a giant state corporation controlling billions of shillings.
In One of a Two Parts investigative series, The Informer Media Group shines a spotlight on the goings on at the Managing Director Pamela Mutua’s led 58-years old company that got cabinet backing to access Sh24billion credit line in form of commercial bank loans for importation of state-sponsored duty free imports of cheap foods to be distributed through 120,000 shops ostensibly to lower the cost of living.
The over Sh21billion worth of tenders so far expended forms the basis of the alleged embezzlement of public funds probe through irregular award of contracts for supply and delivery of food commodities during the financial years 2022/2023 and 2023/2024 at KNTC.
The investigation is focusing on both locally and foreign incorporated companies.
In our nine months-long investigative dive inside KNTC, we can now authoritatively reveal that the multi-billion tenders were dished out to a few select companies without competitive bidding process as per the Public Procurement and Asset Disposal Act of 2015.
When contacted by The Informer Media Group on March 17, 2023, Mutua promised to issue a comprehensive response but nothing has been forthcoming.
And when reached out to the MD yesterday for a right of reply for the second time, she did not respond to our queries.
“…will be in touch and arrange response to the right of reply. We appreciate you getting in touch. Blessings. Pamela Mutua.” Mutua said through a short text message on March 17, 2023.
The anti-graft agency in a letter signed by Director Investigation Paschal Mweu, Mutua was ordered to provide among others, the approved budgets and procurement plans for the financial year 2022/2023 and 2023/2024.
“To facilitate the investigation, kindly provide us with all the original documents listed below in relation to procurement of the food commodities.” The letter from Eacc reads in part.
Among the items imported include the Sh5billion subsidised fertiliser, edible oils, rice and beans among others.
The state owned institution has now attracted the attention of opportunistic tenderpreneurs seeking privileged lucrative tenders and sleuths from Eacc, Directorate of Criminal Investigations (DCI) and Financial Reporting Center (FRC) in equal measure, with the latter trio institutions seeking to unravel, detect and pre-empt a whiff of suspected financial scandal and fraud that has dogged KNTC.
Domiciled under the Ministry of Industry, Trade and Investment, KNTC is mandated to act as a procurement agent for the government and participate in the promotion of wholesale and retail trade in order to strengthen the supply chain of essential products within the country.
According to the official website of KNTC, the parastatal is also mandated with the responsibility of supporting the Micro, Small & Medium Enterprises (MSME) sector through supply of raw materials, provision of consultancy services and identification of markets for their products.
In April this year, the National Assembly Public Accounts Committee (PAC) ordered a forensic audit into the expenditure of Sh15billion that was spent on the procurement of subsidised fertiliser.
PAC gave Auditor-General Nancy Gathungu 30 days to comb through the expenditure and table a report after the committee said it has received information about possible fraud, kickbacks, money laundering and corruption in the procurement of the crucial planting material.
In March this year, the House approved an allocation of Sh15 billion in the Supplementary Budget for 2022/23 to the Ministry of Agriculture for the purchase of subsidised fertiliser.
“As PAC, we have resolved unanimously to sanction a forensic audit into the procurement and distribution of fertiliser subsidy after emerging cases of possible corruption, embezzlement and fraudulent activities in the procurement of the fertilizer.” Nominated MP John Mbadi and chairperson of PAC said.
“Within 30 days, the Auditor-General should table its findings before we commence a public inquiry into a possible fertiliser scandal. We will thereafter conduct an open inquiry starting with the Ministry of Lands that received the money. If the funds were channeled to other agencies such as NCPB and the KNTC, all officers involved will be invited to shed light on this procurement.” The committee ruled.
The subsidised fertiliser was being sold at a maximum price of Sh3,500 per 50-kilogramme bag, with the government looking to lower the high cost of production that was incurred by farmers last year when the planting material fetched Sh6,000 per 50-kilogramme bag.
The government settled on the KNTC to procure and sell fertiliser to farmers, a role that was previously played by NCPB, which would then bill the Treasury for services rendered.
Under the scheme, KNTC was to pay the NCPB Sh50 for the distribution of a single bag, well below the Sh150 that the grain handler normally earns for the same quantity when supplying for other agencies, including the government.
KNTC mainly supplied Nitrogen Potassium Calcium (NPK) fertiliser under the subsidy programme, forcing farmers who prefer Diammonium Phosphate (DAP) to buy it from agro vets.
The Ministry of Agriculture said it had cut on the distribution of DAP as it seeks to cut acidity levels on soils attributed to continuous use of this type of input.
A survey done by the Central Bank ahead of its monetary policy committee meeting late last month had found that only 29 per cent of farmers had purchased subsidised fertiliser as the planting season began in mid-March, citing a lag between the date of receipt of notification and redemption of the voucher.
Some of those who had not registered for the plan also cited poor quality of the fertiliser, limited stocks, delayed delivery and lack of money.
The Kenya Agriculture and Livestock Research Organisation (Kalro) subsequently urged the government to include DAP fertiliser in the subsidy to increase the absorption rate by farmers and enhance productivity on farms.
A whistleblowing document filed in the National Assembly shows that the KNTC contracted Multi Commerce FZC for Sh8.12billion to supply vegetable oil and Indian white rice while Standard Petroleum won a Sh5.5billion deal to supply rice, red kidney pinto beans, cooking fat and fertiliser.
On the other hand, Lamar Commodity Trading was awarded Sh2.7billion tender to supply NPK fertiliser while Charma Holdings Limited was awarded a Sh2billion tender to supply edible vegetable oil.
Others are Makram Imports and Export Limited with a Sh1.88 billion tender for the supply of Indian raw white rice, Shehena Company Limited to supply jerry cans of edible oil at Sh1.33billion and Nutrivine Sh187.5 million to supply rice.
While appearing on the floor of the House, former Trade, Industry and Investments Cabinet Secretary Moses Kuria absolved KNTC from any wrongdoing.
Kuria is now serving as the CS for Public Service, Performance and Delivery Management. He was succeeded by Rebecca Miano in the Trade docket.
