Sugar scam stirs slush fund fears

A public spat over when 200 000 tons of duty-free sugar should be imported from the Common Market for East and Southern African (Comesa) bloc to forestall a sugar shortage in Kenya has exposed potential economic sabotage by members of the ruling party.

The disagreement involves Minister of Finance Amos Kimunya, Agriculture Minister Kipruto arap Kirwa and Trade Minister Mukhisa Kituyi. The three were implicated when the Kenya Sugar Board accused government officials of attempting to create an avenue to raise slush funds for the re-election of President Mwai Kibaki in the polls set for December.

On February 9, the board’s chief executive, Andrew Otieno Oloo, wrote a letter to the Kenya Anti Corruption Commission and the National Security Intelligence Services accusing the ministers of attempting to execute fraudulent deals.
Otieno said the sugar crisis had been orchestrated to trigger a price increase for the commodity.

The profit that would have accrued from the sale of the overpriced sugar was to be split between the ruling clique and the importer. Opposition leaders — some of them Cabinet ministers, especially from the sugar cane growing belt — have expressed similar concerns.

Two weeks ago, presidential aspirants Raila Odinga, William Ruto, Musalia Mudavadi, Najib Balala and Kalonzo Musyoka — all from the opposition — also took the government to task over the delayed sugar imports and said the scheme was intended to create an artificial scarcity aimed at raising prices.

In the letter, Otieno invites the anti-graft watchdogs to investigate the ministers implicated in the sugar saga, as well as the private company involved. Otieno accuses MAT International, which has connections in high places, of dirty trade practices. The sugar board official also implicated businessman Mohammed Sajjad, owner of MAT International and a known political wheeler-dealer whose shady business dealings have the blessing of the government.

Sajjad is a former member of Parliament and renowned election campaign fundraiser from the dark days of former president Daniel arap Moi.

The imported Comesa sugar would have stabilised sugar prices, which have already increased by more than 100%, to $2 from less than $1 a kilogram in October last year. The issue boiled over last December when Kimunya declined to expedite the government gazette notice, making it impossible for the sugar board and the Kenya Revenue Authority to set a date for traders to start importing the sugar.

The scandal has further tarnished Kibaki’s image as he struggles to recover from a series of similar scandals that cost the taxpayer more than $100million between 2003, when he came to power, and 2004, when the details of the theft of public resources began to emerge.

The three ministers implicated in the swindle belong to the National Rainbow Coalition of Kenya, a faction of the ruling National Rainbow Coalition, on whose ticket Kibaki is expected to defend his seat. In January, the party announced that it planned to spend $74million to ensure Kibaki retains power. The source of the pledged campaign funds remains a major subject of speculation.

Kenya’s sugar needs are 800 000 tons per annum. It produces 600 000 tons and the remaining 200 000-ton deficit is bridged with imports from Comesa.

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