State points out gaps in au­dit re­port

Health CS says ev­ery­thing ten­dered and paid for was sup­plied, all con­tracts were awarded above board.

The Star (Kenya) - - Front Page - JOHN MUCHANGI @TheS­tarKenya

The govern­ment yes­ter­day de­fended it­self in the multi-bil­lion shilling HealthGate af­fair, re­jected the Health min­istry’s in­terim au­dit and said ev­ery­thing ten­dered and paid for has been de­liv­ered.

It said the Sh5.2 bil­lion fig­ure widely re­ported as sus­pect spend­ing was greatly ex­ag­ger­ated and em­pha­sised there was no in­ap­pro­pri­ate spend­ing or pro­cure­ment.

The af­fair, also known as Mafya House, has been a pub­lic re­la­tions night­mare for Pres­i­dent Uhuru Keny­atta and his re­elec­tion strate­gists.

How­ever, last night, Health CS Cleopa Mailu said, “The over­view of our re­ply to the au­dit queries is that there was gross ex­ag­ger­a­tion of the fig­ures in­volved; as well as ap­pli­ca­tion of in­ap­pro­pri­ate method­ol­ogy. There is no fig­ure of Sh5 bil­lion that cor­re­lates with the au­dit queries raised by the In­ter­nal Au­di­tor,” he said in a state­ment to news­rooms.

The CS ques­tioned the process and qual­ity of the au­dit and said the in­ter­nal au­di­tor had not iden­ti­fied any fraud or mis­ap­pro­pri­a­tion of funds. He said if the au­di­tor had shared the re­port with min­istry’s man­age­ment, as is stan­dard prac­tice, the min­istry would have been able to com­pre­hen­sively ad­dress the is­sues.

“We also note with con­cern that the In­terim Fi­nan­cial Au­dit Re­port was not put through the stan­dard in­ter­nal pro­cesses that any in­terim au­dit re­port must go through. The same was made pub­lic even be­fore the spe­cific au­dit queries had been dis­cussed and re­sponses and rec­on­cil­i­a­tions pro­vided,” Mailu said. The CS said his min­istry had combed through the doc­u­ment and con­cluded the noise the re­port has elicited was un­jus­ti­fied and not based on facts.

Mailu and PS Ni­cholas Muraguri were to ap­pear be­fore the Se­nate Health Com­mit­tee to­day to ex­plain the queries in the au­dit re­port, but in­for­ma­tion re­ceived last night in­di­cated that this would be post­poned.

The two were to ap­pear Wed­nes­day fol­low­ing re­ports of mas­sive ques­tion­able spend­ing amount­ing to Sh5.2 bil­lion. They did not show up, cit­ing short no­tice. They had asked to ap­pear to­day.

“We have con­fir­ma­tion they will come to­mor­row and we have asked them to come with an­swers and doc­u­ments show­ing where that money is or [that] it was prop­erly spent. Then they should as well show us,” Se­nate Health Com­mit­tee chair Wil­fred Machage yes­ter­day told the Star.

One of the con­tracts, for Sh1 bil­lion with Es­tama In­vest­ment Lim­ited to sup­ply por­ta­ble clin­ics was signed in July last year, although pay­ments were made this year. Mailu said in a press con­fer­ence on Sun­day that Es­tama had al­ready been paid Sh800 mil­lion, and there is a bal­ance of Sh200 mil­lion.

The au­di­tor had ques­tioned why elec­tronic tax reg­is­ter (ETR) re­ceipts were not at­tached by Es­tama. Mailu said this was not nec­es­sary.

“In ac­cor­dance with the ten­der re­quire­ments, tax com­pli­ance cer­tifi­cates and PIN num­bers were pro­vided by the sup­plier with the ten­der doc­u­ments. At­tach­ment of ETR re­ceipts for the pur­poses of award­ing a govern­ment ten­der is not a re­quire­ment,” he said.

Mailu ex­plained that four firms were con­tracted to sup­ply food sup­ple­ments re­quired to aug­ment oth­ers be­ing funded by the Global Fund.

“The sup­ple­ments were de­liv­ered and re­ceived by Kemsa (Kenya Med­i­cal Sup­plies Au­thor­ity) for dis­tri­bu­tion to health fa­cil­i­ties for ease of ac­cess by the HIV-Aids pa­tients and other vul­ner­a­ble pop­u­la­tions,” he said.

He added that pay­ments to the sup­pli­ers were made on pro­duc­tion of signed de­liv­ery notes by Kemsa on be­half of the min­istry.

The govern­ment said a sur­vey on nu­tri­tion sta­tus un­der­taken by the min­istry in­di­cated high cases of mal­nu­tri­tion in arid and semi-arid ar­eas and other risky coun­ties. As a re­sult, it was agreed that the min­istry ur­gently pro­cure nu­tri­tional com­modi­ties to cater for at risk pop­u­la­tions in dry ar­eas and vul­ner­a­ble pop­u­la­tions liv­ing with HIV.

On the free ma­ter­nity fund, Mailu said Sh586 mil­lion, not Sh889 mil­lion, had been bud­geted. The dif­fer­ence of Sh302 mil­lion was made up of Sh118 mil­lion from the Global Fund, Sh66 mil­lion was for Kenya Med­i­cal Train­ing Col­lege and Sh 117 mil­lion was for the Health Sec­tor Sup­port Project. It said th­ese were wrongly lumped to­gether as they are sup­posed to be ac­counted for un­der sep­a­rate ac­counts.

“The pay­ments of Sh586 mil­lion were made af­ter set­tling all free ma­ter­nity pro­gramme re­im­burse­ment claims amount­ing to Sh3.8 mil­lion from the coun­ties for the 2015-16 fi­nan­cial year,” Mailu said.

Nom­i­nated Se­na­tor and health com­mit­tee mem­ber Zip­po­rah Kit­tony con­firmed the panel was pre­par­ing to

in­vite more “per­sons of in­ter­est”.

“First we want to hear from Dr Cleopa Mailu and (Dr Ni­cholas) Muraguri. We in­vited them last week but they asked for more time,” she said.

The scan­dal has em­anated from a leaked in­terim au­dit re­port for 20152016 by the min­istry’s head of In­ter­nal Au­dit Bernard Muchere.

He raised queries on ex­pen­di­ture run­ning into bil­lions, which the min­istry was ex­pected to ex­plain be­fore the re­port could be made pub­lic.

“The on­go­ing au­dit re­view on endof-year pro­cure­ments and pay­ments has re­vealed per­ti­nent is­sues which raise red flags on [a] pos­si­ble fraud scheme that re­quire your at­ten­tion,” Muchere wrote to Dr Mailu on Au­gust 29 this year.

He also said un­sup­ported pend­ing bills amount­ing to Sh2.5 bil­lion from the 2014-2015 fi­nan­cial year could be ques­tion­able.

“The pend­ing bills should form the first charge in the sub­se­quent fi­nan­cial year in line with Trea­sury circu- lars. Hence, the min­istry should not have 2014-2015 bills,” he said.

The af­fair has also been linked to Pres­i­dent Uhuru Keny­atta’s rel­a­tives af­ter it emerged his sis­ter Nyok­abi Keny­atta Muthama and cousin Kath­leen Ki­hanya are di­rec­tors of a com­pany that pock­eted Sh41 mil­lion in ques­tion­able pay­outs.

Their firm, Sun­dales In­ter­na­tional Ltd, is listed on the Pub­lic Pro­cure­ment Over­sight Au­thor­ity’s 2014 roll of “Dis­ad­van­taged Groups” that should re­ceive pref­er­en­tial treat­ment when they bid for ten­ders.

On Satur­day, the Star ex­clu­sively re­ported that Sun­dales, reg­is­tered on Septem­ber 12, 2013 — five months af­ter Uhuru’s elec­tion — has been awarded govern­ment con­tracts run­ning into hun­dreds of mil­lions of shillings.

Be­tween Septem­ber 2014 and Fe­bru­ary this year, for in­stance, Sun­dales won at least five sep­a­rate ten­ders from the Kenya Med­i­cal Sup­plies Au­thor­ity — worth Sh270 mil­lion.

/ MONICAH MWANGI

Health PS Ni­cholas Muraguri dur­ing a press con­fer­ence at Afya House on Oc­to­ber 28

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