Alcohol manufacturers and importers in Kenya have finally spoken over the recent tax evasion scandal in the country which has seen one of the leading factories shut.
The Alcohol Beverages Association of Kenya (ABAK), an umbrella body that brings together Kenya’s leading manufacturers and distributors of alcoholic beverages, now says it want to proactively engage government agencies in streamlining the industry, where fake liquor is said to account for 40 percent of the market.
This is after the recent tax evasion scam touching leading alcohol manufacturer and importer- Africa Spirit Limited, which led to the shutting of its Thika-based factory.
A government operation conducted on the night of January 31, 2019 led to the confiscation of an estimated 21 million counterfeit excise stamps and 312,000 litres of illicit products valued at Ksh1.2 billion (US$11.9 million).
Authorities are pursuing Kenyan multi-billionaire Humphrey Kariuki who owns the company which is also accused of smuggling ethanol from Tanzania, in one of the biggest alcohol industry scandal in recent times.
Following the developments, ABAK has now invited government institutions for visits in respective premises to facilitate investigations.
“ABAK is aware of ongoing investigations on one of our members, Africa Spirits, following a raid on the company’s premises in Thika. As we await the outcome of the investigations, ABAK would like to state in the most certain terms that we do not condone any unethical behaviour among our members,” Chairman Gordon Mutugi said.
According to the association, its policy is based on conducting businesses in an honest and ethical manner.
“Our value statement governs all members affiliated to us, business dealings and the conduct of all persons or organisations who are appointed to act on our behalf,” Mutugi said in a statement.
The association has cited its efforts in ensuring compliance saying it has been at the forefront of the campaigns to streamline tax collection among its members and eradicate illegal liquor trade, for some years now.
With time, its mandate has expanded to promotion of safe and responsible production, licensing, sale and consumption of alcohol.
When the Government announced a crackdown on illegal alcohol in 2015, ABAK was at the forefront of the campaign, supporting law-enforcement agencies in driving out unscrupulous traders who, besides endangering people’s lives, have been denying the Exchequer, and therefore Kenyans, billions of shillings in taxes.
ABAK has also in the past partnered with government agencies, including regulatory and law enforcement bodies like the Ministry of Interior, Kenya Bureau of Standards (KEBS), Kenya Revenue Authority (KRA) and The National Authority for the Campaign Against Alcohol and Drug Abuse, to combat illicit alcohol trade.
Early last year, the association issued a three-point agenda on fighting illicit alcohol and counterfeit alcohol in the market and conveyed the need to empower law enforcement officers and supply chain stakeholders on the identification and interdiction of illicit products and subsequent prosecution of offenders.
“ It is also the reason why ABAK has been at the forefront in supporting the rollout of Electronic Goods Management System (EGMS) as one of the fool proof ways of identifying and curbing illicit and counterfeit alcohol.
It has spearheaded stakeholder efforts in 11 counties including Kiambu, Murang’a, Nakuru, Narok, Kajiado, Kisii, Trans Nzoia, Kisumu, Kakamega, Taita Taveta and Mombasa – in an ongoing country wide initiative to bring sanity in the industry.
Last year, all members of ABAK signed a code of conduct to promote ethical sale and consumption of alcohol.
The association is also part and parcel of KRA’s broader campaign, driving a nationwide sensitisation effort referred to as Soma Label, a mobile-phone recognition technology that helps consumers tell genuine brands from fake as well as responsible drinking campaigns in Kenya.
The association has called for collective responsibility and accountability from all stakeholders including Government Agencies in the fight against illicit alcohol trade.
In connection to the tax evasion scandal, ABAK has called for further investigations beyond the membership to identify all involved players in the allegations, which it says is undermining the industry’s efforts.
The umbrella body says it is guided by a code of conduct outlining the way it should carry its activities and will continue to play its industry-leading role, championing the agenda for progressive alcohol law enforcement, advocating for a level-playing ground that eliminates illicit alcohol manufacturers in Kenya.
“Whereas these are allegations, the association views them seriously and will, where needed, co-operate with the authorities in their investigations,” the lobby group said.
ABAK members include Africa Spirits, FRM Packers Ltd, Heineken, Kenya Breweries Ltd, Kenya Wine Agencies, London Distillers, Monwalk Investment, UDV, Vine Pack Limited, WOW Beverages, Mount Kenya Breweries and Zheng Hong Limited.
The association has been keen on supporting the alcohol industry by providing training, information and technical expertise to government agencies, consumers, value chain players and the society at large.
Africa Spirits scam
According to KRA commissioner of intelligence and strategic operations Githii Mburu, the company has been evading monthly tax remittances of Sh3 billion (US$ 29 million).
The firm is also linked to smuggling of ethanol, the main ingredient in alcohol making, where the government loses about Ksh4 million (US$ 39,879) for every 20,000 litres smuggled into the market.
Located in Kenya’s industrial town of Thika, about 50-kilometres from the capital Nairobi, Africa Spirits has been manufacturing portable spirits including Glen Rock, Legend Black, Blue Moon, Legend Brandy, Gypsy King and Furaha.
Through its subsidiary Wines of the World Beverages (WOW Beverages), the firm has also been importing and distributing global brands of wines and premium whisky from the US and Europe.
Some of the international spirits in its portfolio include Famous Grouse, Bacardi and Martini among many others. Wines include Malbec from Argentina, Waterford from South Africa, Gato Negro from Chile and Tommasi from Italy.
A Production Manager at the factory was arraigned in court and detained for seven days to facilitate further investigation.
“This operation is part of the Government ongoing campaign against illicit trade aimed at ensuring compliance with tax and consumer protection laws,” KRA officials said.