Ex-Health ministers on the spot in Sh63b MES project

Wednesday, September 9th, 2020 00:00 | By
Isiolo Senator Fatuma Dullo
Isiolo Senator Fatuma Dullo. Photo/PD/File

Hillary Mageka @hillarymageka

Three former Health Cabinet Secretaries  (CSs) and their Principal Secretaries (PSs) are on the spot for allegedly bungling the Sh63 billion Managed Equipment Service (MES) scheme.

This is after the Senate Ad Hoc Committee investigating the controversial deal concluded that the entire procurement process of the MES project, was a criminal enterprise shrouded in secrecy.

The committee chaired by Isiolo Senator Fatuma Dulo has recommended to the Ethics and Anti-Corruption Commission (EACC) and the Directorate of Criminal Investigations (DCI), to investigate the process of procurement and award of contracts under the MES project, with a view to taking action against those found culpable.

“The ad hoc committee finds that various and several public officers and public institutions acted or omitted to act in the inception and execution of the MES project, that caused the government to spend unjustifiable public resources on the project,” reads the report tabled in the Senate on Tuesday.

Among those likely to answer questions from EACC and DCI are CSs James Macharia (Transport and Infrastructure), Sicily Kariuki (Water and Sanitation) and former CS  Cleopa Mailu, currently Kenya’s Permanent Representative to the UN, Geneva.

Commercial interests

Others are PSs Nicholas Muraguri (Lands), Fred Segor (Wildlife), Julius Korir (Youth) and former PS Khadijah Kassachon. 

The public officers have been fingered in the report for their various acts of omission and commission.

According to the report, county governments were not involved in the conceptualisation, negotiation and award of contracts under the MES project and yet they are paying for the equipment and services under the project.

According to the report, the Ministry of Health, then under Macharia exceeded its mandate by undertaking roles and functions belonging to county governments.

The committee observed that whereas implementation of the MES project may have been well intended, it provided an opportunity for some officers to defraud the public. 

According to the report, the project was crafted to benefit a few commercial interests.

The report singles out Macharia and Segor for overseeing the conversion of the MES project from a Public Private Partnership (PPP) to a public procurement process under unclear circumstances.

According to the report, the committee did not receive any evidence of a written policy to justify the shift from a PPP model to a MES project under public procurement process.

Under the original PPP model, the 47 counties would have paid a total of Sh1.5 billion a year which translates to Sh31 million per year per county, as opposed to the Sh200 million per county per year in the 2018/2019 Financial Year under the MES public procurement process.

The procurement process, restricted the supply of equipment, most of which is basic and readily available in the market, and user training, instead of training of personnel in specialised care.

It was during Macharia’s tenure that the Health ministry first proposed to obtain specialised medical equipment for county health facilities through a PPP initiative under a ‘Build Lease and Transfer’ (BLT) model

 “This conversion was not in the public interest because under a PPP, the total cost of the project including infrastructure support was Sh43 billion, over a period of 10 years,” the committee notes.

After the conversion, the report states that each county paid Sh95 million in the Financial Year 2014/15 to 2017/2018; Sh200 million in 2018/2019 and Sh132 million in 2019/2020 and 2020/21.

This is despite the fact that Ministry of Health had received approval from the Public Private Partnership Committee to implement the project as a PPP in October 2014.

In its report, the Senate committee notes that the ministry unilaterally changed the mode of implementing the project from a PPP to a public procurement through a letter dated June 22, 2015, to the National Treasury.

“There was no evidence or any policy paper that was presented before the committee to explain the sudden shift from a PPP to a public procurement process,” the committee held.

The committee observes that the report of the Technical Sub-committee dated January 22, 2014, states that when the project was initially conceptualised, it was intended to equip health facilities with modern and specialised diagnostic equipment, infrastructure development to facilitate installment of equipment in hospitals and train personnel in specialised care, at a cost of Sh43.5 billion spread over 10 years.

When he appeared before senators in February this year, Macharia defended the leasing option, saying when conceptualising the MES project, the ministry had ruled out procurement by outright purchase based on lack of capital and trained personnel.

Likewise, he stated that while the ministry had considered financing and leasing options, owing to lack of capacity at county hospitals, the leasing options were ruled out in favour of transferring risk to private entities through a MES model.

“Leasing of equipment is dependent on volume of work which varies across different hospitals. As such, leasing for hospitals with low work volumes would have been expensive,” he said.

Under a leasing arrangement, the CS argued, only basic repairs would be provided as there would be no replacement of obsolete equipment while fitting out works would also not be included.

Prof Segor, who was the Health CS between 2013-2015, is fingered in the report for awarding contracts to two companies to supply equipment underIntensive Care Unit and radiology equipment, at a combined contract value of $275,771,678.00 (to Sh27.8 billion).

On their part, Mailu and Kassachon have been fingered for varying the project from Sh65 million to a whopping Sh200 million  per county per year.

The committee also faults Kariuki for irregularly terminating a contract between the Health ministry and a company that was to provide an Information Communication Technology (ICT) solution.

The team wants the anti-graft body to investigate circumstances underwhich the Healthcare Information Technology (HCIT) contract, which was awarded to Seven Seas Technologies Group, was subsequently terminated by the ministry.

Critical component

 “The committee takes cognisance of the multiple violations of the above mentioned acts of law by the officials in the Ministry of Health and in particular CS Kariuki and Morang’a Morekwa,” reads the report.

The company was supposed to roll out an ICT system to inter-link all hospitals that benefitted from the MES major components of the project.

The report also faults Kariuki for making false representations on the HCIT which was a critical component of the MES project.

As envisaged, the use of HCIT would have facilitated the ministry to measure the level of productivity of the project by supporting the monitoring of equipment and personnel.

Further, it would have allowed for the optimisation of MES equipment by supporting diagnostics, particularly in radiology, whereby images would be referred to a central server, where the requisite expertise was available.

The committee now wants all persons found liable for breach of the law in the investigations prosecuted.

“In the event that the termination of the HCIT contract results in a loss of public money due to a breach on the part of the government, the National Treasury shoul;d urgently undertakes civil proceedings against public officers found liable for the loss of money emerging from the termination,” reads the report.

Muraguri is on the spot for executing the MES contract for radiology equipment with General Electric East Africa Ltd on March 31, 2016, on behalf of the ministry.

The report notes that despite not qualifying, the firm was awarded the tender to supply the radiologyequipment, through a letter dated November 21, 2014.

The award letter was signed by Muraguri, then Director of Medical Services, on behalf of then PS Julius Korir.

The contract was subsequently executed on March 31, 2016. Signatories to the contract included Muraguri as Health PS then and Felix Okwenda, for General Electric East Africa Ltd.

“The culpable officers bearing the greatest responsibility be barred from holding public office,” the report states.

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