Inside KRA’s tough fight with cartels, tax evaders
Kenya continues to lose billions of shillings through various tax evasion schemes despite government’s intensified crackdown on counterfeit and sub-standard products, especially alcoholic beverages.
Industry insiders and tax officials say though there are some positive results of the government action in response to public health crisis caused by illicit alcohol use among low income groups, Kenyans are still badly exposed to fake drinks as cartels continue to call the shots.
A director of one of the leading spirits manufacturers told People Daily that a solution must be found to stem the vice as it exposes consumers to consumption of illicit liquor.
“Our opinion is that the government should have a team drawn from the manufacturers, distributors, KRA, police and anti-counterfeit authority to fight this vice,” he said, reflecting the view in the manufacturing industry that the team charged with checking proliferation of the spirits in the market is not doing enough.
A senior KRA official, however, said the repeat cases of unscrupulous traders smuggling, for instance, ethanol into the country from Tanzania, points to criminal cartels working overtime to escape dragnets of Police and Kenya Revenue Authority (KRA) customs officials.
“These repeat cases point to concerted efforts by the criminal cartels to beat government revenue collection efforts and cause harm by off-loading illicit spirits and liquor to gullible consumers,” added the official, who requested anonymity.
He expressed frustration about failure to prosecute some of the smugglers even after being arrested, saying in most cases the suspects are released but nothing is said about impounded products which cartels still find a way – through collusion – to sneak into the system.
The official talked of a lorry bearing a foreign number plate currently at a police station in Loitoktok, Kajiado County with contraband ethanol, KRA stickers, sugar and dairy products.
He said the truck did not arrive in the country through the official route and was impounded awaiting Director of Criminal Investigations reports and Kenya Bureau of Standards (Kebs) certification and eventual arraignment.
However, three days after it was impounded, the KRA official said, there were concerted efforts by businessmen from Nairobi, Thika and Nakuru to have the goods released, but authorities refused.
“The cartels dropped several names hoping for intervention but the police officers did not bulge,” he added.
A senior DCI officer said over 13,500 litres with a street value of Sh18 million of suspected ethanol was seized and one suspect, arrested at Loitoktok after detectives conducted a search on two lorries found packed near a local bank.
“The 54 drums of the ethanol were concealed with watermelons and wheat husks,” the officer told People Daily.
The senior officer said rice husks are used to mask the smell of leaked ethanol while on transit.
Had the consignment found its way into Kenya unnoticed, according to KRA officials, the government stood to lose more than Sh2.83 million in excise duty and close to Sh1.32 million in customs taxes.
Ethanol, also called alcohol, ethyl alcohol and grain alcohol, is a clear, colourless liquid and the principle ingredient in alcoholic beverages such as beer, wine or brandy. And since it can readily dissolve in water and other organic compounds, ethanol also is an ingredient in a range of products, from personal care and beauty products to paints and varnishes to fuel.
Over the last few months, various raids have been made in Kisumu, Nakuru, Nairobi and Thika as KRA together with the multi-agency team on illicit trade and counterfeits fight to get rid of illicit products from the local market and to ensure revenue loopholes are sealed.
“This is a scheme and pattern that we have now learnt. At this time of the year, we have cases of unscrupulous businessmen and traders flooding the market with cheap alcohol from neighbouring countries which arrive as legitimate produce for sale,” the KRA official in Loitoktok said.
The officer said there is a specific pattern that is well co-ordinated at many levels in many agencies that the importers of the spirits know when the products land and who clears them at the ports of entry.
Early this year, two police units clashed at a roadblock on the Nairobi-Namanga highway over suspected contraband ethanol. Two detectives from Directorate of Criminal Investigations in Parklands were disarmed in the drama before they were rescued by their seniors who sent them reinforcement.
They were disarmed at the Kitengela roadblock by a team of police officers as they escorted a lorry laden with suspected illicit ethanol from Tanzania.