Taxpayers lost Sh4.5 billion in questionable maize imports executed by top government officials in collusion with well-connected maize millers, it has emerged.
Members of the National Assembly's Public Accounts Committee (PAC) were yesterday told how the government bought maize from some selected local millers at Sh3,600 per bag but passed it as imported grain from Mexico.
In March 2017, questions were raised when the import arrived in the country in a record three days after the government ordered the importation of maize to cushion Kenyans from an acute shortage of the staple food, which had led to a spike in maize flour prices.
Five local millers are said to have sold the produce to the government at Sh3,600 per 90-kilogramme bag and later bought it back at Sh2,300 per bag. The millers then sold maize flour to Kenyans at Sh90 per 2kg packet.
It further emerged that documents to support the expenditure in the deal had gone missing and could not be traced by the Ministry of Agriculture or National Cereals and Produce Board (NCPB).
Documents tabled before the Opiyo Wandayi-led committee revealed that some of the local companies in the arrangement were Export Trading, Hydrey P Ltd, Kitui Millers, Mombasa Maize Millers, and Pembe Flour Mills Ltd.
Hydrey P Ltd sold the grain to the government in five different consignments at a total cost of Sh3.1 billion.
Kitui Millers got Sh400 million from the deal, while Mombasa Maize Millers received Sh609 million and Pembe Flour Mills was paid Sh400 million. Export Trading got Sh3.5 million for three consignments.
Agriculture Principal Secretary Hamadi Boga and NCPB Operations Manager John Kanyaa yesterday told the watchdog committee that the five millers bought the same produce that they sold the government at a lower price, occasioning a loss running into billions of shillings.
The PS added that the purchase was sanctioned by the Cabinet and was supervised by an inter-ministerial committee.
He said the decision was informed by the government’s efforts to lower the price of maize flour to Sh90 after millers increased it to upwards of Sh130.
“If I was the one who was at the helm then, I would have done things differently. I would have allowed millers to import the maize and then given them tax remissions,” Mr Boga told the committee.
He further explained that the issue of maize importation had been nationalised in a decision that saw the government buy maize from any person who imported the produce.
“The circumstances around this subject are very controversial. This was the time we had unga issues and that is why this maize was basically nationalised, and those who had the maize were compelled to give it to the government,” Boga added.
Mr Kanyaa, in a previous submission before the committee, said NCPB was not involved in the deal at the stage of importation and was only brought in after the produce had “already reached” the Mombasa port.
MPs Wandayi (Ugunja), Tom Kajwang (Ruaraka), Ndindi Nyoro (Kiharu), Daniel Rono (Keiyo South) and James Gichuhi (Tetu) said the committee could be forced to order fresh investigations.
Mr Nyoro said it is outrageous that the government ended up spending more money on buying its own maize from millers who made millions of shillings in profit. He described the engagement the government had with the millers as blatant “theft of public money”.
The Office of the Auditor General noted that vouchers for only Sh7 billion in imports were available for audit.