• The panel chaired by Kajiado Senator Lenku Seki is investigating the controversial deal that could have cost the country billions of shillings.
• Anangwe told the committee that only three companies supplied the commodity.
Image: FILE
The controversy surrounding the Sh16 billion edible oil deal has deepened after it emerged only three companies supplied the commodity.
The development came after it emerged the Kenya National Trading Corporation, which contracted the firms to supply the commodity used a ‘special’ procurement method spearheaded by a committee.
The revelations came to the fore during a meeting of the Senate Trade, Industrialisation and Tourism with KNTC strategy general manager Lucy Anangwe.
The panel, chaired by Kajiado Senator Lenku Seki, is investigating the controversial deal that could have cost the country billions of shillings.
During the meeting held in Parliament, Anangwe told the committee that only three companies supplied the commodity.
“KNTC presented the list of suppliers who were given the contract and supplied as per the LC (letter of credit) agreement. For the other suppliers from KNTC, their contracts were cancelled,” she said.
They are M/s Charma Holdings, M/s Multi Commerce FZC and M/s Shehena Commodity.
According to a special audit report released early this month, Multi Commerce is a foreign company that was incorporated in Kenya four months after signing the KNTC deal.
Anangwe was responding to a question by Uasin Gishu Senator Jackson Mandago, who sought to know why KNTC supplied a list of only three companies to the committee.
“The committee requested for the list of suppliers but you only gave us three. You partially gave us the list. Why didn’t KNTC give us a comprehensive list?” Mandago posed.
According to the auditor’s report tabled in Parliament on August 6, out of Sh16 billion, Sh9.3 billion was allegedly paid to firms contracted by KNTC to help the government lower the price of cooking oil.
Anangwe told the committee that the team established under the project implementation unit was in charge of the procurement of the firms for the supply of the commodity.
She submitted that the method used was not a ‘normal’ one.
“It is the project implementation unit, which was formed that found it proper to use a specially permitted procedure to procure the items,” Anangwe said.
At the time of the procurement Anangwe was the finance boss at the state agency. She said she was not part of the committee that conducted the procurement.
Busia Senator Okiya Omtatah had questioned why KNTC picked the firms to supply the commodity of such magnitude.
“What was the criteria for pre-qualification? Was due diligence carried out? At what point were these firms audited?” he posed.
“How lawful was it to do what you did and how effective was it? Was due diligence was carried out on this companies?”
At this point, Anangwe sought the committee’s indulgence to provide a comprehensive response to the issues at a later date.
“From where I’m seated right now, it needs a detailed explanation. I would request the chair to allow KNTC to look into it and make a full submission to the committee,” she said.
M/s Charma Holdings director Ruth Kinyanjui, who appeared before the panel soon after, was put to task to explain whether her firm was among those that hiked the prices of the commodity.
“There are cartels who hijacked the process and increased the prices by $9. Some companies were made to return the money to the government but others have not. Was your company one of them?” Marsabit Senator Mohamed Chute posed.
Kinyanjui denied being paid excess or asked to refund any amount to the state.
“Our company is not a cartel and we have not been asked to refund any money,” Kinyanjui, a sole director of the company, said.
However, she found herself in trouble after it emerged that her company shares the same office block with another company, Purma Holdings.
The committee directed that KNTC top management and the companies appear before it in a fortnight for further questioning.
According to the audit report, the firms delivered 2.5 million jerrycans of 20 litres each out of the 2.8 million the state merchant ordered.
However, it emerged that unscrupulous dealers sneaked a consignment of edible oils into the pack to enjoy tax exemption.
“It is therefore possible that Sh306 million may have been exempted for cooking oil, which was not part of the programme,” Auditor General Nancy Gathungu says in her report.
Interestingly, KNTC has no record of container numbers or quantities of jerrycans delivered by the mysterious supplier.
The audit has flagged the deal, saying the products arrived late and did not make the much-needed impact on prices.
When KNTC was handed the mandate in November 2022, cooking oil traded at Sh344 a litre and went down to Sh328 in December.
But the first consignment by the contracted firms landed in May 2023, when the price had dropped to Sh319 per litre.
KNTC made peak sales later in September and November 2023, when the prices were Sh316 and Sh326 per litre.
“The analysis implies the cooking oil programme might not have had the required impact on the prices of cooking oil,” Gathungu said.
The corporation has now been forced to sell the products at throwaway prices and some of the imported oil, the report indicates, could be missing.