How Rai Group’s stranglehold on imported sugar led to the collapse of local millers

Mr Jaswant Rai

Rai group’s main goal was to cripple giant miller Mumias Sugar Company through aggressive, ruthless and deadly sugarcane poaching programmes from the millers’ contracted cane farmers to feed its needs at the West Kenya Sugar factory now renamed Kabras Millers

PART ONE

By The Weekly Vision Investigative Team

Rai Group the multi-billion shillings business empire is allegedly heavily involved in the importation of cheap contaminated sugar into the country, The Weekly Vision online has learnt.  

The group is making billions of shillings in profits annually from the illicit trade protected by top-level government officials and compromised politicians. The routes used are three, through Somalia’s Kismayu Port, Tanzania and Uganda borders. Emerging facts indicate that the business moguls acquired the West Kenya Sugar factory from the original owners the Biku Patel family, the firm is now used as a vehicle to smuggle or import cheap sugar in the country making billions of shillings disguised as locally produced sugar from that firm.

The other critical goal was to cripple the grounded giant miller Mumias Sugar Company through aggressive, ruthless and deadly sugarcane poaching programmes from the millers’ contracted cane farmers to feed its needs at the West Kenya Sugar factory renamed Kabras Millers that has since seen Mumias Sugar Collapse. Mumias collapse was to pave way for the Rai Group to take over, the group also targeted Nzoia and Butali contracted cane farmers to execute the cane poaching scheme.

Mumias Sugar Milling plant has since collapsed

These revelations were exposed by a government agency which was delivered to the national government late last year but no action has so far been taken, hence leaking it out to the media. Kabras Millers does not have any contracted farmers to supply it with the raw material for processing into sugar hence the poaching spree at no cost in investments for cane production thus reaping where they have not sown.

The report by a government agency however established that the bottom line is to use the milling facilities to also re-package the cheap imports of smuggled sugar into containers of their own brand names as locally produced sugar to flood into the local market under the very noses of the Kenya Revenue Authority (KRA) and other government agencies.

The other millers whose cane poaching operations were targeted for crippling in the multi-billion shillings schemes are state-owned milling entities like Nzoia, Muhoroni, Chemilil, Sony, Miwani including the privately own Butali Sugar Company. West Kenya/Kabras, Butali and Mumias Sugar are all located in Kakamega County, while Nzoia is in neighbouring Bungoma and the rest in the former Nyanza province.

Their report reads in part: “Perhaps the most critical factor in these deadly corporate industrial wars are emerging facts that the Rai Group led by Jaswant and Tajveer Rai is to take over the multi-billion shillings sugar industry in the country as a monopoly business entity owned by the Rai family.”

The whole system is compromised and working against local sugarcane farmers as seen here, Jaswant Rai was received like a hero by our MP’s in June 2018 when he went to parliament for ‘grilling’ over the importation of contraband sugar, with all the smiles and happy faces on the MPs scrambling to shake his hands

“That is after crippling and taking over state-owned millers including privately owned competing entities like Butali, Kibos and the recent entrant Busia Sugar Industries (BSI) in Busia county whose construction completion and operations were nearly ground to a total halt and oblivion – orchestrated and executed through endless but deadly legal battles fronted and financed by Rai Group Operatives forcing a presidential intervention,” it goes on.

They document that the biggest prime target for the Rai Group grabbing at a pittance was the grounded giant Mumias Sugar – the only miller in the East African region with the ultra-modern diffuser technology production factory compared to the rest that is still dependent on the old milling technology subject to high costs and wastage. MSC acquisition could also be crowned by the only modern multi-million shillings ethanol production facility.

“With the control of the product sales and imports/smuggled tonnes of the commodity in the region, the giant Rai Group would control and dictate consumer prices of the commodity as they rake in billions of shillings daily because of its high daily consumption rates and repatriate the billions of shillings generated in profits to their foreign accounts”

The diffuser machinery cost Mumias Sugar Company in the late 1990s more than Kshs. 5 billion to purchase and install to start production operations producing more than half of the sugar produced in the country compared to all other millers.

The report says that the emerging facts are that the Group has since expanded voraciously its tentacles in the sugar industry not only in Kenya but also Uganda with mills like Sukari Millers in Migori County, Olepito Sugar factory in Busia County, Kinyara Sugar Company in Uganda to scouting opportunities in Tanzania and expanding throughout the East African region.

They state: “With the control of the product sales and imports/smuggled tonnes of the commodity in the region, the giant Rai Group would control and dictate consumer prices of the commodity as they rake in billions of shillings daily because of its high daily consumption rates and repatriate the billions of shillings generated in profits to their foreign accounts.”

This automatically means leaving the local economies and consumers enslaved and impoverished forever because of the high dependency syndrome on sugar by local consumers – some of whom can’t live without sugar.

The Weekly Vision online investigations established that the biggest testimony of the monopoly take over example is that of the dead lead paper producer in the region – the giant Pan-Paper Mills in Bungoma County’s Webuye town. It was reportedly grounded by underhand operations of its sole competitor for the raw material against the Rai Ply based in nearby Eldoret town.

It ground to a halt and in a heavily indebted state that the new Rai Group owners were able to buy it at a throwaway price of Khs. 900 million when its market worth was more than Khs. 5.7 billion at the time.

A takeover ceremony that was witnessed by President Uhuru Kenyatta, his deputy William Ruto, a large host of county and national governments leaders including those from the region with a sham it had begun processing operations.

That the reality is the fact that the giant Pan-Paper remains dead transformed into a conduit for re-packaging deadly smuggled sugar allegedly laced with mercury and lead for Kenyans to consume under the brand name – Kabras Sugar. It is distributed all over the country on a daily and hourly basis to consumers, destroy their health in the process.

The case of thousands of tonnes smuggled impounded by police at the Pan-Paper warehouses in 2018/19 went ice cold after the Rai Group flexed its muscles as the smuggling continues executed by equally influential Rai operatives transforming Kabras Millers the leading producer of the sweetener in the country.  

Apart from targeting the contested receiver managed Mumias Sugar and other Rai monopoly deadly operations, where is that financial greed leading the Rai group under whose expense? The group has not developed and executed any sugarcane development programme with farmers in the region as required by law – the most critical questions are that where will they get the raw material supplies when their triggered cane poaching phenomenon ends with no poachable raw sugarcane?

Stakeholders in the sugar industry say that the emerging factors are that the Rai Group is manipulating the country’s economy for profit through corruption and financial control of some top government officials and their historic influence in the Kenyan economy and national politics appears to prove that. 

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