Nairobi News


Anti-graft team exposes ethanol tax evasion scam in Embakasi

Customs and anti-corruption officials have unearthed a multi-million-shilling syndicate involving the illegal packaging and sale of untaxed ethanol meant for export.

The syndicate involves police officers who receive huge bribes to ensure the culprits are not arrested, the officials said.

After two weeks of an undercover operation, Kenya Revenue Authority (KRA) and Ethics and Anti-Corruption Commission officials on Tuesday raided a godown at Embakasi, Nairobi, and impounded truckloads of ethanol.

Fifteen suspects were arrested.

“We had intelligence that ethanol intended for export was being diverted into the local market to make illicit liquor. This means the culprits never paid taxes. This is because ethanol for export is exempted from taxes,” said the anti-graft agency’s deputy chief executive officer, Mr Michael Mubea.


In the undercover operation, officers said they followed three trucks that left Spectre International Ltd in Kisumu carrying drums of ethanol, which was declared as a product for export to a company in Mwanza, Tanzania.

The trucks ended up at the godown in Embakasi, where more ethanol was found in drums.

According to the officials, cartons containing 250ml of branded spirits – Best Gin, Blue Ice and Flying Horse – were also found at the godown.

The brands are popular with youth, who buy them for Sh100 per bottle.

Officials said they also found fake Kenya Revenue Authority stickers.

During the journey from Kisumu, the officials also noted the trucks were being escorted by a saloon car that made several stops along the way.

Police in cars with civilian registration number plates stopped by the “escort” car and collected what is believed to have been bribes.


Anti-graft officials are now looking for the cars used by the police officers after they were caught on camera at Westlands, Nairobi.

According to the police, some of the occupants of the vehicles were in police uniform, while others wore civilian clothes. The “escort” car was also impounded.

“This consignment alone is worth Sh7 million in evaded tax revenue,” said Mr Mubea.

KRA Deputy Commissioner James Mburu said some unscrupulous businessmen were taking advantage of government initiatives to commit crimes.

“We do not tax ethanol for export to ensure local companies are competitive in the regional market. We don’t levy VAT or Excise Duty,” he said.

Mr Mburu added: “The exporting company will be investigated and will face sanctions. It is the responsibility of the company to ensure products for export exit the country and produce documents to prove this every month.”

The impounded goods were taken to a Customs yard and the godown sealed until investigations are completed.