Kemsa offices

The Kenya Medical Supplies Authority (Kemsa) offices in Nairobi.

| Lucy Wanjiru | Nation Media Group

How organisations bled graft cash amid Covid-19 crunch

The year 2020 will go into the annals of history as one riddled with high-profile financial scandals amid efforts to tame the Covid-19 pandemic.

On top of the list of graft-hit parastatals is the Kenya Medical Supplies Agency (Kemsa), through which the taxpayer lost billions after the national drugs supplier inflated the prices of Covid-19 personal protective equipment (PPE).

The scandal left Kemsa holding Sh3 billion worth of dead stock. And while, ironically, there is still need for more PPE across the country, the Kemsa stock is so inflated no one is willing to buy it.

Senior officials at Kemsa reportedly increased the prices of PPE by a whopping Sh7.8 billion as the coronavirus raged.

Deputy President

Investigations into the scandal at one point took a seemingly political angle, with Jubilee Party Vice-Chairperson David Murathe saying Deputy President William Ruto was linked to a company named Kilig Ltd, which was awarded a tender to supply 450,000 PPE to Kemsa.

“We have the evidence. We have the transfers. If you want to find out, go to KCB and find out who are the account holders of Kilig Ltd.

You will find out they are known partners of Deputy President William Ruto,”Mr Murathe said without providing any proof.

The DP did not take the claims kindly, terming those out to link him to the saga corruption consultants.

“The corruption ‘consultants’, brokers & conmen, some bankrupt in 2013, are now billionaires after looting while scapegoating William Samoei Ruto. Their overgrown IMPUNITY is shamelessly making them steal even from the sick in a pandemic. The END is nigh. NOWHERE TO HIDE. NO MORE SCAPEGOATING,” DP Ruto tweeted a day later.

Sh2.3 billion

According to Auditor-General Nancy Gathungu, the taxpayer would lose Sh2.3 billion were Kemsa to sell the stock in its stores at the current prices.

Ms Gathungu revealed this when she presented a special audit report on the utilisation of Covid-19 funds to the Senate Joint Committee on Health and ad hoc Committee on Covid-19 on September 30.

Ms Gathungu faulted Kemsa for failing to conduct a comprehensive needs assessment before committing public funds.

She added that 97 per cent of Covid-19-related stocks have been lying in the Kemsa warehouses for more than five months, suggesting inadequate market research and planning by the managers of the state agency.

“By irregularly procuring items valued at Sh7,632,068,588 under Universal Health Care (UHC) and capital budgets without requisite approvals, the accounting officer and the management of Kemsa violated Section 68 (1) of the Public Financial Management Act,” Ms Gathungu said.

No record

It emerged that companies that had been in existence for less than a year and with no record of dealing in medical supplies were awarded multimillion-shilling tenders.

According to the Auditor-General, such deals pointed to a suspicious nexus between top Kemsa officials and the owners of the firms.

Ms Gathungu called on the EACC and the Office of the Director of Public Prosecutions to investigate Kemsa officials for any collusion with the suppliers and take action against those would be found liable.

Labour and Social Protection Cabinet Secretary Simon Chelugui and the Health Principal Secretary said Kemsa had been authorised to release the stock in its stores, but the agency said it had not received any formal communication to that effect.

Agency barred

Two weeks ago, during a visit by the Senate Health Committee to the Kemsa stores in Embakasi, the agency said it had already distributed PPE worth Sh1.9 billion and was all set to supply PPE worth Sh3.9 billion to the counties.

However, the EACC barred the agency from distributing a huge chunk of the PPE, valued at Sh2.9 billion, pending investigations into procurement irregularities allegedly perpetrated four months ago.

The rest of the PPE are, however, yet to leave the warehouse pending formal authorisation from the Ministry of Health.

Three months ago, suspended Kemsa Chief Executive Officer Jonah Manjari said he bypassed Head of Procurement Charles Juma (now suspended) because he was scared of the “deep state”, which he claimed had threatened to make him “disappear” if specific companies were not awarded the lucrative tenders. 

More rot came trotting out of the Kemsa closet when Ms Pamela Kaburu, Mr Juma’s secretary, told MPs that Mr Manjari ordered her, in the presence of Nairobi Senator Johnson Sakaja, to backdate a commitment letter for a three-month-old firm that was awarded a Sh900 million tender.

“He ordered me to backdate the letter for Shop N Buy from May 8 to April 30 and deliver it to his office,” Ms Kaburu told the National Assembly Public Investments Committee that is chaired by Mvita MP Abdulswamad Nassir.

She added that many commitment letters were issued in Manjari’s office without the knowledge or approval of the procurement manager, as required by the law. To date, no one has been prosecuted over the scandal.

Ports authority

The Kenya Ports of Authority (KPA) has also been a hotbed of corruption-related cases.

It was in 2020 that last year’s Sh40 billion Kipevu Oil Terminal tender scandal returned to haunt the well-heeled parastatal, with senior officials being questioned by the Directorate of Criminal Investigations for allegedly inflating the cost of building the terminal by Sh28 billion.

EACC Lower Coast region Director Japheth Baithalu said the contract, which was awarded to China Communication Construction Company, was supposed to be worth Sh12 billion.

The then KPA Managing Director Daniel Manduku told detectives that the tender was above board.

As the outrage on the Sh40 billion Kipevu oil terminal scandal peaked, President Uhuru Kenyatta warned of high-profile arrests and prosecution.

Officials differed

Dr Manduku was again in the limelight after Director of Public Prosecutions Noordin Haji differed with Director of Criminal Investigations George Kinoti.

Mr Haji insisted there was enough evidence to prosecute Dr Manduku, but the DCI boss had a different view.

In August, the Mr Haji ordered the arrest of Mr Manduku. The former KPA boss presented himself to the DCI offices a few hours later.

He was accused of impropriety in the award of a 244.8 million tender and was promptly detained at the DCI headquarters on Kiambu Road.

This came five months after his resignation on March 27, when he said he was voluntarily leaving his office after a thorough introspection.

His exit came shortly before the KPA board grilled him on allegedly questionable awarding of tenders.

Another official

As Dr Manduku faced the detectives, another KPA official, Mr Juma Fadhili Chigulu, was seized from his office at the port of Mombasa.

He, too, was to face graft-related charges.

In April, the KPA board’s Risk and Audit Committee recommended disciplinary action against senior managers in the finance, procurement and engineering departments.

Several officials were sacked and others moved in a major reshuffle at the parastatal in August. Some officials were ordered to refund money lost in tender malpractices.

The acting head of the procurement department, Adza Dzengo, was also shown the door in changes that affected more than 15 top employees.

A demotion

Head of Container Terminal Edward Opiyo was demoted to principal officer in the same department and sent to Lamu, while head of liaison markets Anthony Nyamancha, who was based in Kampala, was sacked.

Acting general manager for Infrastructure development Alfred Masha was also sent on early retirement.

In another case, two directors of a microfinance company were charged with conspiracy to unlawfully acquire Sh215 million from KPA.

Nyali Capital Ltd directors Alfred Hinga and Peter Ndichu were released by Mombasa Chief Magistrate Edna Nyaloti on Sh5 million bond and a surety of a similar amount, or an alternative of Sh2 million cash bail.

This was after the two denied receiving the amount dishonestly from KPA.

Many accusations

Three weeks earlier, KPA finance general manager Patrick Wambugu, accountant Isaac Obunga and Jacinta Wanjiku (Mr Wambugu’s wife) had been charged with conspiracy to commit the economic crime of unlawful acquisition of public property on different dates between October 2014 and March 2017.

Mr Wambugu was further accused of failing to disclose that he had an interest in Nyali Capital Ltd, after allegedly helping the firm to get listed as a vendor in the KPA supplier relationship management system.

Mr Wambugu was accused of using his position to improperly confer Sh215 million to Nyali Capital while Mr Obunga, the accountant and reconciliation officer, used his office to improperly confer a benefit to the firm through the KPA system.

The defence lawyer, Mr Jared Magolo, told the court that the accusations had been raised to block his clients from rising to senior ranks at the parastatal.

Senior Assistant Director of Public Prosecutions Alloys Kemo rubbished Mr Magolo’s claims, saying the case was properly fixed.