Damning revelations was made after Senate committee grilled Treasury officials over the NCPB maize scandal.
Ministry officialls admitted that illegal payments to maize farmers and traders could be traced back to the time duty free importation was okayed between May and October.
According to Nelson Gaichuhie, the government lost Ksh.16.7billion between May and October last year after business men took advantage of a tax waiver to flood the Kenyan market with maize, cartels then went ahead to buy from the National Cereals and Produce Board (NCPB) the same maize they had sold to the agency.
Treasury reveals that domestic supply of maize had fallen to an unprecedented level and so without the duty-free importation, consumer prices of maize flour would have hit the roof. This opened the door for briefcase contractors who offered supposed long term solutions to the maize shortage to cartels that cashed in on duty free imports all exploiting loopholes in the system.
First, the National Treasury, KRA and the Ministry of Agriculture did not put a limit on the quantity of maize that was to be shipped into the country during the period.
“As treasury we could not know the quantities that were required…it was now the ministry of agriculture,” said CAS Gaichuhie.
Secondly, the Gazette notice that gave a nod to the duty-free imports stipulated that any person was allowed to import sugar.
The outcome was the flooding of the Kenyan market with cheap maize from non – COMESA countries.
In October, at the time of the expiry of the initial gazette notice, an extension was sought and approved.
According to Treasury, the maize barons imported the commodity duty free as per the gazette notice in bulk and later sold the commodity to NCPB in the name of farmers at Ksh.3600 per bag.
Later, when the government subsided maize purchased from NCPB for millers to produce cheap flour, the very same traders bought it at the new subsidised price of Ksh.2000 per bag.
They made Ksh.1,600 profit per bag from the government.
One of the farmers paid was Celestine Chepchichir. She supplied NCPB with 150,386 bags of maize and sold at Ksh.383million.