Graft-ridden Kemsa seeks Sh5bn to stay afloat, donors start probe

Kemsa CEO Jonah Manjari
Photo credit: File | Nation Media Group

What you need to know:

  • A Kemsa board meeting held on Wednesday revealed that the agency’s operations could grind to a halt unless the government offers to bail it out.
  • It has also emerged that Kemsa was only allowed to spend Sh758 million during the first phase of financing to fight Covid-19.

The Kenya Medical Supplies Authority (Kemsa) has been left holding on to medical supplies worth Sh6 billion that it cannot move because they were bought at inflated prices in the guise of fighting Covid-19.

The agency now claims that it is broke and is asking the government for a Sh5 billion bailout, even as it emerged that it cannot account for Sh17 billion allocated to it for the last financial year.

Two major foreign donors at the Ministry of Health have threatened to withdraw funding due to rampant graft.

A Kemsa board meeting held on Wednesday revealed that the agency’s operations could grind to a halt unless the government offers to bail it out.

Sources who spoke to the Nation said that agency intends to ask the government to allow it sell off some items procured to fight the coronavirus in order to stay afloat.

Lose Sh1,926,841,075

An ongoing audit has already found out that the agency has at least 10 items worth Sh6,397,034,383 that could have been bought for Sh3,407,512,070.

The agency now wants to sell them at a lower value of Sh4,097,523,208 as it awaits for a cash bail out. If the government agrees to Kemsa’s request, taxpayers stand to lose Sh1,926,841,075.

The Nation is aware that this absurd request is likely to reach Health Cabinet Secretary Mutahi Kagwe this morning (Friday).

But even as Mr Kagwe ponders on whether to re-capitalise an agency already rife with graft, the United States Agency for International Development (USAID) and the Global Fund have raised the red flag over how Kemsa has been spending their money.

The two agencies have informed audit firm PriceWaterHouseCoopers to follow up on a number of audit queries raised by their own investigations on Kemsa.

USAID is run by the United States government while Global Fund is a multi-stakeholder organisation.

“We have noted several areas of concern in the management of procurements at Kemsa as well as in the implementation of Global Fund Grants which we wish to bring to your attention,” Senior Fund Portfolio Manager John Ochero wrote to Health Principal Secretary Susan Mochache on June 23.

“Our local fund agent Price Water House Coopers will follow up,” continued Mr Ochero.

Fight Covid-19

It has also emerged that Kemsa was only allowed to spend Sh758 million during the first phase of financing to fight Covid-19.

The agency’s management was however so overzealous that it overshot its expenditure to Sh4.6 billion then to Sh9 billion.

What is even more dumbfounding is that all this money was given by the World Bank to assist Kenya fight Covid-19.

Health Principal Secretary Susan Mochache wrote to suspended Kemsa chief executive Jonah Manjari on April 15: “This is to approve the procurement of goods worth Sh758,690,583 as outlined in the attached annex. Disregard all other requests made in relation to Covid-19.”

How the expenditure grew from an initially approved Sh758 million to over Sh9 billion is one of the questions auditors and detectives from the Ethics and Anti-Corruption Commission are trying to find answers to.

The Nation has discovered that Kemsa Managers at some point tried to bypass the Health ministry and get Sh5 billion directly from Treasury.

Sources have told the Nation that this plan failed after bureaucrats at Treasury noticed and told the ministry to put its house in order.

On Thursday, Deputy President William Ruto waded into the mess at the Health Ministry, seemingly chastising a government where he is the second in command.

“At least for once it won't be possible to be blamed for what someone said "started in Wuhan as a virus, landed in Italy as a pandemic and now in Kenya as a multi-billion shilling corruption enterprise,” tweeted the DP.

The scandal has already claimed its first causalities.

Last Friday the Kemsa board sent home its chief executive, Dr Jonah Manjari.

Also suspended alongside the CEO are directors Eliud Muriithi (Commercial) and Charles Juma (Procurement).

vachuka@ke.nationmedia.com