Corruption: Global Fund demands refund of stolen Sh40m 

The National AIDS and STI Control Programme (Nascop) engaged in fraudulent and collusive practices during the selection of hotels for programme activities funded by the Global Fund, a new report has revealed.

The fund is now demanding that Kenya refund at least Sh40 million it donated to aid Kenyans with HIV but which was misappropriated by the Ministry of Health.

The donor, headquartered in Geneva, has already written to the MoH and National Treasury to demand that the funds be returned by the end of May.

MoH has already reimbursed Sh5.4 million ($42,164) of the Sh7.6 million ($59,112) that was stolen through fictitious printing services, leaving a balance of Sh2.2 million ($16,948). 

The money was lost between January 2018 and June 2021, when Nascop managed a Sh3.2 billion ($25.58 million) grant. From this budget, Nascop recorded a total of Sh180 million ($1.4 million) in hotel expenses involving 238 hotels. During the same period, it also recorded a total of Sh180 million as payments made for printing services. 

These payments were made through electronic transfers that often included several payments grouped together.

False invoices

A report on the matter reveals that a former procurement officer at Nascop colluded with hotel owners to inflate prices and submit false invoices, resulting in the misappropriation of funds.

“Staff at Nascop engaged in fraudulent and collusive practices during the hotel selection process for programme activities. In a separate instance, staff at Nascop manipulated payment records to fraudulently pay third parties that did not deliver any goods or services,” Global Fund’s inspector-general said in an audit report seen by the Nation. The employee had edited at least 16 hotel quotations on his computer and Nascop concluded contracts with 12 for a total of Sh20.8 million.

“The former procurement officer explained his behaviour by stating that at times the program activity deadlines were tight and there was not enough time to carry out an entire procurement process,” the report noted.

The audit also noted at least two instances when the former procurement officer received multiple quotations from two different hotels, enabling him to simulate competitive procurement processes. In both cases, hotels that submitted lower-priced quotations were not selected.

The report further revealed that Sh5.4 million was paid to two companies that were falsely described in Nascop records as a single printing company. In addition, a wrongful double payment of Sh2.1 million was made to another printing company.

“Independent bank confirmation showed that the payments, which were purportedly made for printing services, were in fact made to two different entities without procuring any services,” the report showed. A background search on the two firms revealed that they were owned by the same person.

A former accountant of Nascop confirmed that his signature was on the electronic fund transfer that authorised the payments. The first page of the document had been fraudulently changed to include the two entities instead of the printing vendor.

In one instance highlighted in the report, an irregular payment of Sh3.5 million was made to a hotel owned by a former director of Medical Services without any supporting documentation.

The amount was later refunded to Global Fund and the accountant who processed the payment was sacked.

The Ministry of Health has already been confronted with the audit and admitted wrongdoing.

Global Fund is the second-biggest donor toward HIV services in Kenya after the US President’s Emergency Plan for AIDS Relief.