Cat-and-mouse game as Kenyan teams seek out ICD tax evaders

Tuesday June 11 2019

A cargo ship.

The containers shipped into Mombasa port are so many, it makes sense to improve the pre-shipment inspections at the ports of origin. PHOTO | FILE | NATION MEDIA GROUP 

NJIRAINI MUCHIRA
By NJIRAINI MUCHIRA
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A multi-agency team tasked with verifying containers at the Inland Container Depot have now been forced to look for individual owners of the consolidated goods after failing to track down the consolidators.

This comes even as it emerges that Kenya Bureau of Standards appointed pre-inspection agencies in various parts of the world are earning $800 million annually for carrying out goods inspection at the country of origin yet Kenyan agencies conduct re-inspection.

The agencies earn $800 per container, an amount paid by the importers. In 2018, the number of containers that entered the country stood at 1.2 million.

President Uhuru Kenyatta has directed the Kenya Ports Authority, Kenya Revenue Authority and Kebs to honour pre-shipment inspections done by the standard’s body appointed agents.

This follows complains that re-inspection of goods when they arrive in Kenya is one of the causes of container pileup at the ICD, something that has had adverse effects on businesses.

Delays in releasing the goods has resulted in massive losses for traders who are forced to pay demurrage and other penalties averaging $682,369 per day.

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“Imported goods should not be subjected to additional inspection at the port of entry except for cases legitimately suspected not to conform to the set standards,” said the president.

He said the directive is intended to strike a balance between enhancing the ease of doing business in Kenya and protection of the public from harmful imports.

DIRECTIVE

However, implementation of the directive on ending double inspection of cargo is bound to be problematic considering the government is already at loggerheads with some of the agents who it accuses of letting in sub-standard goods to leave the country of origin having been issued with a certificate of conformity (CoC).

The disagreements emanate from the fact that the agents have been avoiding to carry out inspection of every item on a container, opting for random inspections.

In October last year, the government indefinitely suspended and fined two pre-inspection agencies for allowing sub-standard goods to enter the Kenyan market.

China Certification and Inspections Group Company (CCIC) and Société Générale de Surveillance SA (SGS) of Switzerland were suspended for failure to inspect goods before they were allowed into the country.

The other Kebs appointed agents are Cotecna Inspection SA, Bureau Veritas and Intertek International Ltd.

While the directive targets new cargo coming in, the process of releasing containers currently at the ICD is giving the multi-agency team sleepless nights due to missing consolidators.

Inability to track down the consolidators is a clear demonstration of just how chaotic and amorphous the process of importing consolidated cargo was, and which gave rise to a vibrant tax evasion racket and importation of counterfeit goods.

The multi-agency team is working with individual cargo owners to verify the goods before they can be released, a process that is expected to take months considering some of the containers have been lying at the ICD for more than a year.

The team is also having a hard time in the verification process because majority of the containers do not have the CoC that is issued to the consolidator when the cargo is inspected at the country of origin.

The certificate of conformity is a mandatory requirement to facilitate clearance of good by both the KRA and Kebs.

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