Saturday, January 10, 2009

Revealed: Sh150 million maize scandal

A bumper harvest of maize spread to dry at Emali, Makueni District. The allocation of the 80,000 bags to the so-called small-scale millers who supply about 60 per cent of the Kenyan market began on December 22.Photo/FILE 

By DAVID OKWEMBAH and NOAH CHEPLEON

More than 80,000 bags of maize valued at Sh150 million have been allocated to briefcase millers and a defunct company in Nakuru at a time when the country is facing a serious shortage of maize, the Sunday Nation has established.

Industry sources say that some of the maize, which was meant to cushion Kenyans against rising maize flour prices and a looming famine, may be on its way to Southern Sudan where it is being sold for US$80 (Sh6,000) for a 90 kg bag.

The allocation operation is running parallel to government efforts to avert a looming famine facing some 10 million Kenyans.

Last Friday President Kibaki chaired a Cabinet committee on food security which approved the importation of maize to head off a famine.

A list of 10-day maize allocations to 46 millers that was signed on December 22, 2008 by the trustees of the Strategic Grain Reserve (SGR) includes Milling Corporation, a Nakuru business that closed down last August.

Permanent secretaries

The trustees of SGR are the permanent secretaries for the ministries of Special Programmes, Agriculture, Office of the Prime Minister and Treasury.

The allocation of the 80,000 bags to the so-called small-scale millers who supply about 60 per cent of the Kenyan market began on December 22.

Indications that a significant amount of maize involved in this allocation process may have been diverted appeared in the week following the January 4 Sunday Nation report that more than 100,000 bags of maize to be processed by government-contracted big millers and meant to feed poor Kenyans could not be accounted for.

The National Cereals and Produce Board (NCPB) said it had released 144,000 bags of maize to the contracted millers, but they said they could only account for 40,000 bags.

Briefcase millers with no known premises are said to have inflated their per hour milling capacity so the SGR trustees would allocate them large quantities of maize at the expense of the bona fide millers.

NCPB spokesman Kipserem Maritim was unable to explain how the names of the briefcase millers found their way onto the list signed by four permanent secretaries. Mr Maritim could not confirm whether all the maize allocated had been collected or by whom. “The list is being audited to confirm who collected the maize,” he told the Sunday Nation.

Mr Maritim also confirmed that millers had confirmed to the Board that Milling Corporation closed down last year.

Asked whether the Board applied any standards to the millers they deal with, Mr Maritim said: “We are investigating how these companies found their way on our list.”

Kenya Anti-Corruption Commission (KACC) spokesman Nicholas Simani said their investigation of an earlier maize-related scandal at the Board in which crooked businessmen posing as millers were allocated hundreds of thousands of bags of maize only to offload them to millers at astronomical prices would be concluded on Wednesday and the file forwarded to the Attorney General with recommendations.

In one instance, a miller inflated his capacity to mill 100 bags of maize per hour although his firm was a small establishment that could hardly mill 10 bags of maize in the same period.
Nakuru-based Beada Millers is listed as having the capacity to mill 96 bags per hour.

However, when the Sunday Nation sought to know the hourly capacity of the mill, it turned out that it was 10 bags.

According to NCPB documents, Beada Millers applied for 23,040 bags of maize for 10 days; Beada was allocated 7,221 bags, or about 31 per cent of the firm’s stated capacity. The firm was asked to pay for 7,320 bags.

Another Nakuru miller, Valley Posho Mill, claimed a 100-bag per hour capacity at a mill in the Kenya Industrial Estates premises.But efforts to inspect the mill were thwarted by employees who said they needed authorisation from the proprietor, a Mr Kamau.

The mill, whose declared 10-day capacity was 23,000 bags of maize, was allocated 7,221 bags.

When contacted by telephone, Mr Kamau declined to state the capacity of his mill or say whether he had collected his allocation. He accused the Sunday Nation of acting at the behest of “Asian millers”.

Temusi Millers, which claims to be located in Ongata Rongai, listed its milling capacity at 100 bags per hour. But industry sources said a mill with such capacity should be known as one of the country’s big millers.

The proprietor refused to disclose the location or the capacity of the mill over the telephone and did not show up for an arranged meeting.

Telephone call

In a subsequent telephone call, a woman who identified herself as S. Magelo, a company director, said NCPB officials had asked them to inflate their milling capacity. “We were asked to put our capacity at 100 bags per hour although it is not that much,” she said. She, too, refused to state the mill’s real capacity or its location.

Temusi Millers were allocated 7,521 bags of maize for 10 days, based on its claim to be able to mill 10,000 bags a day.

NCPB also allocated the defunct Milling Corporation 12,185 bags of maize in the last week of 2008 based on its stated capacity to mill 162 bags per hour, or 38,880 in 10 days. The miller has not produced its Ugali brand of maize flour since last August.

NCPB Managing Director Prof Gideon Misoi is reported to have distanced himself from the 80,000-bag allocation list even as some of his managers said a group of people at the Board’s headquarters was responsible for the situation.

According to informed sources, the “millers” who had been allocated the large quantities are businessmen who either wanted to sell the maize to Southern Sudan or to act as middlemen for real millers.

Among the genuine millers who collected part of their allocations include Uchumi Grain Millers who had been given an allocation of 2,106 bags. Last Friday they were still awaiting their final batch.

Meanwhile, the minister for Agriculture has banned the export of maize or maize products. Mr William Ruto said he was invoking section 30 of the National Cereals and Produce Board Act to stop the export of the country’s staple food.

The ban comes in the wake of the alleged allocation of large stocks of maize to middlemen who are believed to be sending it to Southern Sudan at more than three times the price it fetches locally.

While NCPB sells the maize to the middlemen and briefcase millers for Sh1,750 for a 90 kg bag, the same maize is sold across the border for US$80 (Sh6,000).

While the NCPB had 5.3 million bags of maize in November 2007, including 3 million bags for the Strategic Grain Reserve, only 1.4 million bags could be found last month. Among the middlemen who were allocated the NCPB maize is a nominated MP.

And former Kabete MP Paul Muite has demanded an explanation from the government regarding the ‘‘disappearance’’ of maize from its stores at NCPB. He was also sceptical that the government could import enough maize to deal with the looming famine in the country.

“If the government is unable to account for 100,000 bags of maize, how can we entrust them with the millions that they intend to import?” Mr Muite asked.

He said is it was difficult to understand how the government could allow maize to keep ‘‘disappearing’’ in hundreds of thousands of bags at a time when millions are faced with starvation.

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