Billions lost as cargo theft hits Kenya Ports Authority
By Benard Sanga | November 29th 2015 (Old article but nothing has changed since then)
The Port of Mombasa risks losing its competitive edge following a wave of cargo theft that has hit the supply chain along the Mombasa-Malaba highway, importers and transporters have warned.
The Kenya Revenue Authority (KRA) describes the theft of the cargo as “a grave concern” but says it cannot quantify the loss.
KRA Southern Region manager George Muia said the taxman has launched investigations into the theft and diversion of transit goods into the local market, which is blamed for the failure to meet revenue targets.
He said that the ongoing probe conducted by the Revenue Protection Unit will be extended to Uganda and Rwanda.
“An investigation is going on. But to start with, we have imposed sanctions on two Electronic Cargo Tracking System (ECTS) seal providers that have had repeated cases of interference,” said Muia.
A status report compiled by transporters and customs agents reveals a spike in cargo pilferage or theft along the highway by a cartel able to interfere with cargo tracking systems undetected.
The report handed to the National Police Service Commission reveals that in the month of September and October, 65 cases of attempted or actual theft of goods from containers fitted with the mandatory ECTS were documented by the Kenya Transporters Association (KTA) and customs agents.
Transporters say they are suffering losses running into millions as a result.
The Standard on Sunday established that officers from the Ethics and Anti-Corruption Commission as well as the Directorate of Criminal Investigations are expected in Mombasa this week to probe the alleged theft of more than 2,000 containers loaded with assorted items destined for Uganda in the last nine months.
Supply chain stakeholders are puzzled at how the theft is taking place undetected despite the ECTS system being in place.
Seals puzzle
Trucks ferrying transit containers are required to fit a tracking system that monitors their movement in real time. Containers are also secured with ECTS seals and KRA, the transporter and ECTS service providers are alerted when there is an attempt to tamper with this system.
The ECTS is deactivated once the cargo arrives at the Malaba border and bonds cancelled.
Kenya licensed several private companies that supply the gadgets at a fee of up to $1,000 (about Sh102,000) and another $200 (Sh20,400) for the seal, with the fee levied on the transporter and cargo owner.
However, on September 8, one transporter’s records indicated that his truck was ferrying 632 cartons of dry iron boxes from Mombasa but only 294 cartons were found in the container when the cargo reached the owner.
“On arrival at the client premises in Nairobi, it was discovered that the container had a different seal number from the original. The case (151/34/2015) is going on at the Nairobi Law Courts but we have paid Sh2,088,619 as penalties,” states the transporter’s report.
On October 9, a consignment of 582 microwaves was missing from a container load. The theft was only discovered when the truck reached its destination.
And on October 18, robbers attacked a transit truck heading to Kagali at Chimoi along the Eldoret-Webuye road, an area the report cites as a hotspot for such activities. “They cut the seal and tracking gadget and stole five hand sprayers,” the report says.
Then on October 20, another transporters lost a 20ft container loaded with coffee on its way to the port of Mombasa. The truck is parked at Changamwe Police Station, where the incident was reported.
Less than a week later, on October 26, another truck enroute from Mombasa was attacked by robbers in Taru, Kwale County, along the Mombasa-Nairobi highway and a container loaded with rice stolen.
The matter was reported at MacKinnon Road Police Station the next day under OB Number 03/27/20/2015.
Mr Wellington Kiverenge, KTA’s chief executive officer, a lobby group representing truckers, said the cartel appears to have an elaborate collusion network.
The observation is shared by Shippers Council of East Africa CEO Gilbert Langat, who adds that the effectiveness of the cartel “could only mean that it involves drivers, corrupt customs officers, unscrupulous traders and some law enforcing authorities”.
“These guys are able to open seals and remove part of the cargo, empty part of the consignment and replace the seals and sometimes steal goods without tampering with the seals,” Kiverenge said.
And Langat pointed out that the sophistication of the cartel demands that the rapid response teams have sufficient resources, such as aircraft, to respond to emergencies promptly.
He said high-value goods such as coffee, sugar and electronics were the most targeted.
“Pilferage can only be done when the contents of a container are well known. And for this to happen, there must be some element of collusion by those handling it,” said Langat.
“In Uganda, the tracking devices are offered by URA for free and the system has worked smoothly. In Kenya, where private companies play a key role in the system, and being in competition among themselves, the providers can easily be motivated to make each other look bad.”
Other experts say that after the region embraced a Single Customs Territory, requiring the payment of the taxes at the point of entry, it erred in failing to employ uniform tariffs and taxes on isolated goods. Thus, they argue, unscrupulous traders import goods as destined for Uganda, pay duty to the Uganda government and exploit the weak monitoring system to divert the goods into the Kenyan market.
“In fact, this is denying the revenue authority a huge amount of revenue since various products such as sugar attracts significantly varying levels of taxation in Kenya and Uganda,” a custom agent in Mombasa who want to remain anonymous.
KRA also says the number of importers who ship in cargo as destined to Uganda but later pay Kenyan taxes and cargo diverted to Kenya has increased.
“Although it is not illegal for cargo destined for Uganda to be diverted into the local market once the shipper has paid the taxes, we are witnessing an increase in that trend,” said Muia.
He said KRA had reports of ten cases of cargo theft in transit but added that it was upon the law enforcing agencies to curb the vice.
National Police Service Commission Deputy Director for Communication Winifred Kitonga the transporters’ damning report will be handed to the Inspector General of police.
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