KPA faces payouts worth billions in suits over loss of cargo containers - Daily Nation

KPA faces payouts worth billions in suits over loss of cargo containers

Sunday December 16 2018

Containers at the Mombasa port.

Containers at the Mombasa port. Kenya Ports Authority is on the spot over the disappearance of containers in unclear circumstances. FILE PHOTO | NMG 

By EDWIN OKOTH
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The Kenya Ports Authority (KPA) is on the spot over mysterious loss of containers at the Port of Mombasa in what points to a well calculated internal fraud that has hit importers hard.

The importers who rely on KPA to handle their cargo from the shipping line before they clear and collect them have been shocked at times to find the cargo, which are sometimes stored in the bulky 40-foot containers, missing under unclear circumstances.

With some container losses remaining unresolved for over 10 years ago, KPA has been battling court cases with some set to demand billions in compensation in lengthy and costly legal battles.

The State agency, which admits to having suffered cyber-attacks in the fraud that has seen some containers disappear, could not however disclose the latest figures on how many containers have been lost.

Mr Abdullatif Ibrahim spoke to Sunday Nation over his experience of losing three 20-feet containers containing fabrics from China between August 2005 and November 2008.

The businessman had received all clearances including the release orders and KPA invoices and had trucks ready to pick his cargo when he received a lifetime blow to his business.

“When we went for customs verification, the containers could not be found. We looked all over the port but the containers had disappeared without trace,” Mr Ibrahim said, recalling the start of his wild goose chase that is still on to date.

The importer wrote several letters to KPA to follow up on the container loss. He got two responses; one of the responses accepted that indeed the containers disappeared and another in November 2008 simply saying the request was rejected.

The claims, which according to documents he filed has hit Sh36 million, were “awkwardly exaggerated” according to KPA and no other offer was given in return.

The businessman then had more salt rubbed on his wound when KRA slapped him with a Sh1.9 million duty demand for the cargo he was yet to see. For KRA, the goods were taxable having arrived in the country and for failure to pay the duty, the business was suspended.

The drama around his container losses saw some eight people, including KPA officials, arrested and charged with the theft of containers.

KPA, which interdicted its staff involved in the fraud, however turned a deaf ear on the businessman’s pleas whose final attempt to get Original Delivery Orders to try and lodge an alternative claim through the shipping line hit a snag.

“KPA wants us to commence a court action 13 years later on a straight forward case of containers disappearing from the port under their custody. The case may take another 10 years to be concluded when most of us will be dead. We also cannot afford to raise court fees to lodge the claim of Sh36 million,” Mr Ibrahim said in despair.

The agency did not comment on this case and declined to give an annual figure on how many containers are reported lost at the port of Mombasa, only restricting their reply to 2016 from when it says the losses had been ‘zero-rated.’

KPA head of corporate affairs Bernard Osero said there have been a number of theft attempts since 2016, but only three instances saw containers leave the port before they were recovered and the suspects arraigned in court.

“The loophole that led to the compromises are attributed to the emerging cybercrime. However, a number of measures have been put in place to counter and mitigate against the risks including a hardened ICT infrastructure especially in the core business processes systems that deal with cargo clearance,” Mr Osero wrote in reply to our queries.

In May 2016, some 124 containers found their way out of the port in an irregular release that caused a Sh106 million loss in tax revenues.

Two top KPA managers in April 2018 denied taking part in the loss of containers in a scam that involved the use of a password belonging to a retired staff.

Another importer — Tanzania -based Modern Holdings which lost 15 containers of assorted Masafi fruit juices and mineral water from the United Arab Emirates — is embroiled in a decade-old legal dispute in which the KPA may be slapped with Sh2.4 billion in compensation plus an accrued interest. The firm ignited a legal duel with KPA which ended up in the Supreme Court.

KPA has continued to be on the spot for similar loss of cargo, including the 2015 loss of 2,636 containers that were destined for Uganda.

The transit cargo comprising 1,052 twenty-foot containers and 792 forty-foot containers was at the centre of dispute between KPA and the KRA which spilt into Parliament in April 2018 as the taxman demanded that KPA covers the Sh2.6 billion lost taxes occasioned by the mysterious vanishing of the containers.

The Kenya Ship Agents Association chief executive Juma Tellah said the shipper also suffer massive loses when containers disappear.

“Container is actually the ship and their demands are very high overseas so we are either forced to lease to fill the void. It is however impossible for a container to leave the port without the knowledge of some people. There must be collusion for that to happen,” he said.

A number of importers are reportedly engaging KPA to trace their lost containers including those lost this year but they did not want to talk about their legal and paralegal processes for fear of jeopardising the initiatives.