Revamp Sh64bn palm oil imports fraud probe

An investigation into a suspected Sh64 billion fraud involving the misdeclaration of palm oil imports began nearly two years ago, but has since stalled, highlighting the significant financial impact of public-sector corruption. The probe, headed by the National Assembly’s Finance and National Planning Committee, led by Molo MP Kuria Kimani, has been unable to secure testimony from crucial witnesses, such as former senior Kenya Revenue Authority officials and corporate executives, leading to the culprits remaining unnamed.

The committee also accused National Treasury Cabinet Secretary John Mbadi of obstructing the investigation. Intelligence initially revealed that the government was losing billions due to this fraudulent activity.

According to Parliamentary Budget Office documents, in 2022, the government lost Sh16.5 billion from the misdeclaration of 233,000 metric tonnes of imported palm oil. The losses increased to Sh32.54 billion in 2023 from 387,868 metric tonnes, and further to Sh13.83 billion in 2024 from 163,567 metric tonnes. The alleged scheme involved blending 60% crude palm oil with 40% refined palm oil and declaring it as crude palm oil to evade higher import duties.

Refined edible palm oil is subject to a 35% import duty, while semi-refined palm oil is taxed at a lower 10%.

The scheme is believed to be a large-scale tax evasion operation at Mombasa Port, which breaches guidelines set by the World Customs Organisation. The parliamentary inquiry focuses on substantial revenue leaks at the port, where refined or blended palm oil was allegedly mislabeled as cheaper crude oil to avoid high import duties.

The delay in parliamentary investigations not only hampers public sector oversight but also hinders the recovery of the billions lost, leaving taxpayers to bear the financial burden of the high-level public sector fraud. Continued cover-ups of such cases may further embolden corrupt operatives and hinder the recovery of stolen public funds.