kebs, preshipment inspection, Kenya Bureau of Standards, Industrialization, Henry Kosgey, tax revenue, Public procurement administrative authority
In an economy where much of what is collected in revenue comes from trade taxes, it is absolutely essential for us to have a well-functioning preshipment inspection (PSI) system. It is the tool that allows you to detect deceptions in customs declarations and keep an eye out for under-invoicing and capital flight.
PSI allows you to examine the quality of imports before the goods are shipped. Indeed, a well-functioning PSI program can significantly increase your tax revenues.
How does the system work? The accepted practice is that PSI services are contracted out to private service providers. This quasi-privatization model is accepted because it is not possible for a country to establish its own inspection services in the countries from which its imports originate.
Enough theory. Isn’t it just puzzling that, almost four months after the last contracts expired, we still haven’t officially hired new providers of this essential service? Corruption, political interference and the Kenya Bureau of Standards (Kebs) mess have combined to prevent us from recruiting new actors.
The two attempts Kebs has made so far to secure the contracts have ended up being canceled by the Public Procurement Authority. The authority, whose responsibility is to check for corruption and irregularities in the execution of procurement processes by public entities, accused Kebs of opacity and of deliberately rigging the selection.
This came as no surprise because in our corrupt country, the purchase of PSI services never ends without allegations of corruption and improper transactions. The behind-the-scenes maneuvering and lobbying of well-connected traders intensifies whenever PSI contracts are about to expire or when tenders for new contracts are about to go out.
Indeed, the interference of corrupt elites is the reason why Kebs is continually plunged into a deep corporate governance crisis characterized by a high turnover of CEOs, arbitrary and frequent removal or replacement of the board of directors. administration, arbitrary staff transfers seen to block the interests of well-connected merchants, and undeserved promotions from staff members deemed to be on the books of influential politicians.
It has almost become a practice that every new Minister of Trade and Industrialization, to whom Kebs reports, will insist on appointing their preferred CEO.
We all remember the controversy that erupted when former Industrialization Minister Henry Kosgey attempted to force a new CEO on the company. The appointment of the current incumbent was not without noise and controversy.
Three years ago, then-CEO Charles Ongwae was dismissed from his post over allegations that Kebs authorized a Moroccan company to import a consignment of mercury-containing fertilizer into the country under his supervision. Months later, tests at independent labs overseas revealed the story to be a blatant concoction and the claims to be false.
Therefore, the government authorized the marketing of the fertilizer. Inexplicably, Ongwae is still battling court cases for authorizing “fertilizers containing mercury” in the country. Talk about the theater of the absurd!
In 2018, we all witnessed the tragicomedy when a new regime at the Ministry of Trade and Industrialization arbitrarily changed the rules of the game by welcoming new service providers when existing contracts had not expired. .
The point is, we urgently need to remove Kebs from the stifling grip of the greedy elites. It is an essential national asset.
Demand more transparency
Second, we are at a point where the government must demand more transparency in the selection of PSI service providers. Recent audits and investigations by the Auditor General and the Criminal Investigations Directorate have revealed that some of the contracted entities lack the capacity and facilities in the countries where they are supposed to inspect goods for Kenyan importers.
Why do we hire briefcase companies to provide us with such a critical service? All of this has major safety implications, especially when it comes to the inspection of motor vehicles. Globally, the used car trade is suspected of being a vehicle for money laundering.
In the United States, used car dealers have been investigated for money laundering for terrorist financing networks in Lebanon. Shouldn’t we send technical teams to Europe, China and Japan to physically inspect the facilities that these companies claim to have in those destinations and determine if they have the capacity to handle the anticipated import volumes?
And, given the lingering suspicions about the money laundering and terrorist financing schemes surrounding the used motor vehicle trade, shouldn’t we subject these companies to political and security risk checks before proceeding? hire them?
I rest my case.