Sony acting managing director Bernard Otieno when he appeared before MPs July 19, 2018. PHOTO | JEFF ANGOTE
South Nyanza Sugar Company (Sony) made a paltry Sh82.7 million
profit on sales of sugar imports worth Sh3.3 billion after irregularly
passing its importation licence to a third party.
A
joint Parliamentary committee investigating the importation of sugar
during the 2017 duty waiver window Wednesday heard that Sony Sugar did
not import any bag of sugar but used its licence to facilitate a third
party-Holbud Limited- to import 50,500 metric tons of brown sugar.
All the sugar was repackaged and sold by the importer directly after it docked at the Mombasa port.
The
consignment brought in by London-based Holbud limited was by law
required to have been transported to Sony sugar which was the consignee.
Holbud,
run by Hasnain Roshanali Merali, brought in the consignment on behalf
of six other buyback firms using Sony Sugar’s license.
Legal
Notice 9801 that was issued by the Treasury prohibited Sony Sugar or
any other miller allowed to import sugar during the duty free window of
October to December 2017 to pass its import license to a third party.
Bernard
Otieno, the managing director, told MPs that Sony Sugar applied for a
licence to import 90,000 metric tonnes of sugar to bridge production
shortfall during the 2016/17 and 2017/18 financial year.
He
said the sugar directorate granted it license to import only 50,000
tons, which the company went ahead to procure from Holbud, a firm that
already had the consignment.
“The truth is that we were
looking to make a little profit. We never spent any money on imports,
port charges, warehousing, repackaging and distribution,” Mr Otieno
said.
Mr Otieno, who failed to table the import license
told the Agriculture and Trade committee that Sony is technically
insolvent and had no capacity to finance or fund the sugar importation.
“This
was a joint undertaking between Sony and Holbud. The board and
management realised that Sony had no money to import, pay VAT among
other charges in Mombasa.
“This was sugar that somebody consigned to us. We were not buying sugar as Sony,” he said.
MPs
put Mr Otieno to task on allegations that Sony was used as a conduit to
facilitate sugar barons to import sugar after the duty free window
closed.
“You put lives of Kenyans at risk based on
sugar you didn’t see whether it was brown, white or yellow. You were
used as conduit for tax evasion.” Said the Busia Women MP Florence
Mutua.
MP Simba Arati said Sony received a license to
import sugar on September 17, 2017 when the window was closed on
September 13, 2013. He claimed the consignment left Brazil in November
2017 and arrived in Mombasa in December way after the window granted for
millers closed.
Mr Otieno said the issue of tax was
litigated in court where it was found that Holbud imported the
consignment within the duty free window.
The committee
co-chaired by Kanini Kega and Mohamed Haji has retreated to Mombasa to
compile its report that will be tabled on Tuesday.
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