Revealed: Sh180m vaccines decayed at JKIA as Afya House watched

In May 2015, the Siginon Group signed a contract for vaccine clearance services with the Health ministry.

This was after its bid trounced several other companies that had expressed interest in the tender.

Siginon was awarded the deal for clearing and forwarding services, as well as meeting the third-party cost, which means paying storage costs and disbursing vaccines on behalf of the government.

Under the contract, the company was to charge 25 per cent of the total consignment as agency fee.

The charges for transporting drugs from the airport to the warehouses designated by the ministry across the country would be based on the distance covered.

The warehouses, being government facilities, were not to charge any storage cost.

The contract further authorised Siginon to incur the cost of dealing with third parties, for which it would then invoice the ministry for a refund.

Stored for three years

The third party in the expired vaccines saga was the Jomo Kenyatta International Airport Swissport, which apparently stored the vaccines for three years without being paid.

For the first six months of the contract, everything was fine. The ministry was paying its debts on time until 2016, after which time no more payments were forthcoming for services Siginon had rendered.

Siginon Group Managing Director Meshack Kipturgo told the investigative team that despite disbursing vaccines on behalf of the ministry, the invoices remained unsettled and the refunds were not made, some of which were overdue by two years.

Through a number of emails seen by the Nation, Siginon kept requesting for payment. The emails, however, were ignored.

Meanwhile, the firm continued render the contracted services until a time it could not pay third-party fees.

Sh11m outstanding payment

On September 13, in an email to Dr Ephantus Maree, the former head of the National Vaccines and Immunisation Programme, Siginon complained that it had been following up on an outstanding payment of Sh11 million. 

“We have been following up with MoH on payment of outstanding Sh11.2 million due to Siginon Group but payment is not forthcoming. It is important to note that over 90 per cent of the outstanding amounts are actually third-party charges (taxes, terminal handling centre charges, CFS charges, shipping line) that we have paid on behalf of the ministry,” states the email written by the group’s accounts team leader, Mr Leonard Chumba.

It continues: “Our operating cash flows are strained due to the funds being tied up in the outstanding debts. The immediate taxes due on the current shipment is Sh1.9 million. We do not have liquid cash to settle the tax due and, therefore, the shipment will incur demurrage charges.”

The email requested the ministry to hasten payment of the outstanding debt.

The email was written at 6.52 in the morning and within an hour, Dr Maree had responded, stating that the content was well noted and would be addressed urgently.

“Thanks for your mail. The content therein is well noted and will be urgently addressed. I have copied this mail to Mr Chris Malala, our accountant, for necessary action. Will be in office tomorrow from outside the country for follow-up. Kindly for now continue to liaise with Dr Mutie and Chris,” Dr Maree wrote.

On October 11, 2016, in an email headlined ‘BCG Vaccine, Ministry of Health account status’, Siginon informed the ministry that had started clearing the consignment and that they hoped to receive the outstanding Sh16 million as promised.

“I am pleased to inform you that we have started the clearance process for the vaccines as agreed in the meeting and we are certain that we will receive payment for MoH outstanding debt of Sh16 million as promised. So far we have received the following POs in our IFMIS platform including PO No.3396 – Sh70,00, PO No. – Sh162,781, PO No. Sh1,902,179 and PO No.Sh7,232,873. We trust that by the end of the coming week the funds will have hit our accounts,” states the email.

No response

This email was, however, never responded to.

Mr Kipturgo wrote another email to Dr Maree on October 14, requesting the ministry to release some cash for Sh4 million duty payment.

“Kindly note that we have run out of funds to pay the attached entry for the measles and rubella vaccine amounting to Sh4 million. The demurrage charges are estimated to be Sh1 million, meaning the total cash required is Sh5 million”.

It continues: “To save on the demurrage cost, kindly personally intervene for us to be paid the below POs at least today so that we can use the funds to pay for the current shipment.”

The email was never responded to and the money was never released.

Four days later, Siginon wrote another email after having an unfruitful meeting with Dr Maree.

“I appreciate the meeting that we had yesterday. Kindly but urgently update on the payment progress, the Sh4 million duty is still pending and we risk having our KRA system being locked because of this outstanding entry. The demurrage charges approximate Sh1.5 million.”

Dr Maree responded four hours later, saying that they were working on the payment.

“Working on payment will update accordingly,” Dr Maree wrote.

Another email was written to him on October 26.

“Kindly update on the payment progress. To date, the demurrage charge has accumulated to Sh2.5 million and is accruing daily at Sh175,000. By the end of the week, it will hit Sh3.2million,” states the email written on October 25.

No action was taken.

For the whole of November, there was no communication between the two entities. In December 2016, in an email marked high importance, the debt is indicated as having had accumulated to Sh21.1 million.

“Kindly find the statement of account for your ministry reading Sh21.1 million, which is all overdue. Attached is also PO number 3553 dated October 14 of Sh428,000 and PO number 3396 dated October 7 of Sh70,000, which have not been settled to date,” it states.

In the email, Mr Kipturgo stated that the group’s cash flows were severely strained because more than 90 per cent of the amount outstanding comprised disbursements (terminal handling charges and government taxes), which Siginon had paid on behalf of the ministry.

“This situation is so bad that we are not able to efficiently offer our clearing services to your Ministry for the current shipments. We have tetanus vaccine which landed on 29th November and we have a polio vaccine which landed 6th December,” it states.

Third party charges

Mr Kipturgo stated that the firm's charges per shipment of Sh17,670 was not a very big concern to them  in terms of the repayment period but their big headache was the third party charges in the millions which they had to clear. Taking long to refund the debts distorts operations cash flows.

“We would really appreciate it if we get paid by end of this week the two outstanding PO’s totalling Sh498,000 and the invoices which I had confirmed we under payment process totaling Sh14.2 million. When we get these payments then we will be able to move with clearance and delivery of the current shipments otherwise we are totally grounded,” It states.

This was never responded to. Siginon, however, went ahead and cleared 6.1 tonnes of pentavalent vaccines worth Sh180 million that were brought in February 2017 and immediately the group suspended clearance services.

“Despite making the disbursements on behalf of MoH, the invoices due remained unsettled and no refunds made for over two years. This greatly incapacitated our service offering to the MoH, as it stretched our financial capacity beyond the limit indicated in the contract. This further affected our ability to clear the shipment in question. The matter was brought to the attention of MoH officials, but no action was taken”.

The pentavalent vaccines, also known as a five-in-one vaccines were donated by the Serum Institute India and are part of the country’s immunisation programme.

The vaccine prevents five major diseases, including haemophilus influenza type B (the bacteria that causes meningitis, pneumonia and otitis media – ear infection), Diptheria, whooping cough, hepatitis B and tetanus.

Shelf life ended

The 6.1 tonnes of 2,280,000 doses of pentavalent vaccine were brought into the country in February 2017. They have since stayed at the Swissport warehouses and have gone bad.

The vaccines’ shelf life ended in April 2018, by which time the vaccine had lost viability, six months to the expiry date of October 2018.

This means that due to a breach of contract between Siginon and the Ministry of Health, the vaccines were held for three years and many women and children were put at risk of serious diseases.

The Jomo Kenyatta International Airport Swissport storage has since demanded that the expired vaccines be removed to free space.

According to the Ministry of Health, Siginon did not honour its part of the contracted mandate, stating that there were contract execution challenges.

The Health ministry told the Nation that the contract required the agent to clear the vaccines from the landing sheds, including payment of all third-party charges. Siginon, according to the ministry, was to deliver the vaccines to the Ministry of Health’s Central Vaccines Depots and then invoice the ministry for payment.

The payment process, according to a statement from the ministry, is that they receive the invoices, confirm receipt of service in writing then processes the payment through the procurement department.

However, the vaccines were not cleared for entry into the country as per the contract by the clearing agent because the shipping agency demanded to be paid before releasing the consignment.

“The clearing agent was not able to honour the contract and subsequently clear the vaccines from the Swissport handling shed, with subsequent loss of shelf life and expiry of the vaccines, before arrival,” says a statement from the Ministry of Health.

The ministry blamed Siginon for variations in and application of demurrage costs, which constrained contract execution.

Not to blame

“We are not to blame here. We did what was required of us. We have been paying for the storage until such a time that we could not continue paying. The ministry was not paying for the services rendered,” Mr Kipturgo.

Even as Swissport seeks approval from the ministry to destroy the vaccines, there is yet another war between Siginon and the ministry on who is going to foot the destruction cost and whether the company will let the vaccines be destroyed before the shipment fee is paid.

The ministry insists it is not its responsibility to destroy the goods since it was Siginon's responsibility to handle and clear the consignment.

Siginon, on the other hand, maintains it is not within its control to determine how, when or where the destruction should be conducted.

“As a customs clearing agent, we handle goods on behalf of our clients. It is, therefore, not within our control or our authority to determine how, when or where the destruction should be conducted. This is purely the domain of MoH, and the terminal shed. However, we are available to support the process as and when required to the full extent of our capacity.

For a consignment to be destroyed, the parties responsible have to foot the cost of destruction. Roughly, it costs Sh30 per kilogramme.