Clean up pre-shipment services

 

kebs, pre-shipment inspection, Kenya Bureau of Standards, Industrialisation, Henry Kosgey, tax revenue, Public Procurement Administrative Authority

In an economy where a large proportion of what is collected in revenues comes from trade taxes, it is absolutely critical for us to have a well-functioning pre-shipment inspection (PSI) system. This is the tool that enables you to detect deceit in Customs declarations and to keep tabs on under-invoicing and capital flight.

PSI allows you to examine the quality of imports before the goods are shipped in. Indeed, a well-functioning PSI programme can enable you to significantly increase your tax revenues.

How does the system work? The accepted practice is that PSI services are contracted to private service providers. This quasi-privatisation model is accepted as it isn’t possible for a country to establish inspection services of its own in countries where its imports come from.

Enough of theory. Isn’t it just baffling that, almost four months since the last contracts expired, we are yet to formally engage new providers of this critical service? Corruption, political meddling and bungling by Kenya Bureau of Standards (Kebs) have combined to make it impossible for us to contract new players.

Contracts nullified

The two attempts that Kebs has so far made to procure the contracts ended up being nullified by the Public Procurement Administrative Authority. The authority, whose responsibility is checking corruption and irregularities in execution of procurement processes by public entities, accused Kebs of opacity and deliberately fudging the selection.

This did not come as a surprise because, in our corruption-ridden country, procurement of PSI services never concludes without allegations of corruption and improper dealings. Behind-the-scenes manoeuvring and lobbying by well-connected merchants intensify whenever PSI contracts are about to expire or when tenders for new contracts are about to be floated.

Indeed, meddling by corrupt elites is why Kebs is permanently steeped in a deep corporate governance crisis characterised by a high turnover of chief executives, arbitrary and frequent removal or replacement of the board of directors, arbitrary transfers of staff perceived to be blocking the interests of well-connected merchants and undeserved promotions of staffers deemed to be in good books of the politically influential.

It has almost become the practice that every new Trade and Industrialisation minister, in which Kebs falls, will insist on appointing his preferred CEO.

We all remember the controversy that erupted when former Industrialisation minister Henry Kosgey attempted to force a new CEO onto the corporation. The appointment of the current incumbent did not come without noises and controversies.

Blatant concoction

Three years ago, then-CEO Charles Ongwae was booted out of office over allegations that Kebs had allowed a Moroccan company to bring into the country a consignment of fertiliser that was laced with mercury under his watch. Months later, tests in independent laboratories abroad revealed that the story was a blatant concoction and the allegations untrue.

Consequently, the government allowed the fertiliser to be released into the market. Inexplicably, Mr Ongwae is still battling court cases of having allowed “fertiliser laced with mercury” into the country.  Talk of the theatre of the absurd!

In 2018, we all witnessed the tragi-comedy when a new regime at the Trade and Industrialisation ministry arbitrarily changed the rules of the game by accommodating new service providers despite the existing contracts not having expired.

The point is, we urgently need to remove Kebs from the suffocating grip of greedy elites. This is a critical national asset.

Demand more transparency

Secondly, 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 Directorate of Criminal Investigations revealed that some of the contracted entities have neither the capacity nor facilities in the countries where they are supposed to be inspecting goods for Kenyan importers.

Why do we engage briefcases companies to give us such a critical service? There are major security implications in all this, especially when it comes to inspection of motor vehicles. Globally, trade in used cars is suspected to be a conduit for money laundering.

In the United States, used car dealerships have been investigated for laundering money for terrorist financing networks in Lebanon. Shouldn’t we be sending technical teams to Europe, China and Japan to physically inspect the facilities these companies claim to have in those destinations and determine whether they have capacity to handle the anticipated volumes of imports?

And, in view of lingering suspicions about money laundering and terrorism financing schemes surrounding used motor vehicle business, shouldn’t we be subjecting these companies to political and security risk checks before we hire them?

I rest my case.    BY DAILY NATION