MPs want Kemsa billionaires prosecuted over PPE scandal

Thursday, September 23rd, 2021 00:00 | By
PIC chairman Abdulswamad Nassir with vice Ahmed Abdisalan and member Mohamed Garane during the committee’s meeting with Kemsa officials early this year. Photo/PD/Samuel Kariuki

MPs want Kemsa billionaires prosecuted over PPE scandal The National Assembly’s Public Investments Committee (PIC) also wants all the 112 companies that supplied the PPEs to be surcharged the more than Sh3.9 billion they were paid for supply of the controversial goods.

The committee, which submitted its report to the National Assembly yesterday, also directed Kenya Revenue Authority director  general to investigate whether the suppliers that worked with Kemsa had declared and paid taxes.

The committee, in a report on the utilisation of Covid-19 funds by Kemsa, recommends that the Ethics and Anti Corruption Commission (EACC) investigates the parastatal’s board members on their role during the procurement of the PPEs with a view to preferring charges against them.

“The board members should be investigated either severally or individually for abdicating their responsibilities,” reads the report tabled before Parliament by committee chairman Abdulswamad Nassir.

In particular, the committee has singled out former Kemsa board chairman Kembi Gitura and a member, Joel Onsare, on the award of commitment letters to Wallabies Ventures Limited and Villa Surgical Supplies and Equipment Ltd, with a view to preferring charges against them for violating the Public Officers and Ethics Act.

The EACC should also investigate and prefer charges against suspended chief executive Jonah Manjari for signing commitment letters, an instrument not recognised in law, ignoring advice of board that resolved to suspend further procurement of PPEs because of budget constraints.

Manjari should also answer charges for procuring PPEs without a procurement plan, market survey and budgets.

The committee accuses Kemsa of failing to conduct a market survey, to establish going rates for goods they intended to procure and sell.

The committee notes that the authority did not conduct any market survey as a basis of price negotiations.

The former chief executive officer should also be investigated for failing to regularly and formally update the board on the preparedness of  Kemsa management to procure PPEs.

Further, Manjari failed to initiate procurement through requisitions and did not conduct due diligence on supplies prior to issuing commitment letters considering that some suppliers were not pre qualified by the authority.

The committee also wants the suspended Director of Procurement, Charles Juma, investigated for failing to advise the CEO on the need to put in place procedures of conducting retrospective direct procurement prior to procuring PPEs.

“Juma should also face charges for failing to initiate procurements requisitions contrary to the law and allowing receipt of goods that had not passed through Quality Assurance,” the report states.

Others recommended for investigation are the Director of Finance and Strategy, Waiganjo Karanja, on whether he abdicated his responsibility as the head of treasury.

The authority head of the Legal department, Ferdinand Wanyonyi, should also be investigated on whether he discharged his duty as a legal adviser to the CEO during the procurement of the impugned equipment.

The committee accuses Kemsa suppliers of selling PPEs at exorbitant prices leading to heavy losses to the public. 

These included use of retrospective direct procurement method without putting in place systems and procedures to guide the use of this particular procurement method, initiation of procurement by suppliers and not the user department.

“The suppliers were arbitrarily identified, amount of goods to supply and delivery dates were not indicated and samples were not inspected after they were delivered by the suppliers,” the committee notes. 

Again, 22 out of the 112 companies that supplied goods were not pre-qualified to do business with the authority and the management could not explain how the firms ended up winning tenders.

 On negotiations for prices, the committee says it was inconceivable that all the companies ended up bidding a similar cost.

Some intent letters from suppliers and all commitment letters from the authority had no price indication.

According to the committee, Kemsa operated in impunity and in total disregard of the law by settling on predetermined prices of the PPEs.

For example, there were instances where the three ply masks were bought at Sh4, 500 and PPEs at Sh9,000 even as other suppliers like Gladlab Limited offered to sell the same masks at $30 or Sh3,000.

Further, there was variance in the procurement processes where some entities such as Harleys and Nairobi Enterprises Ltd rejected a commitment letter and insisted on the use of procurement processes outlined in the law.

“The consequences were that the two firms were left out of the processes and were not awarded the tenders,” observes the committee.

Influenced tender award

The MPs noted that the Kemsa management proceeded to issue commitment letters despite instructions by Health Principal Secretary Susan Mochache to procure goods within the available budget of Sh758.8 million.

As at April, 2020, the authority had issued commitment letters for the procurement of PPEs amounting to Sh3.98 billion.

“The ministry only approved the procurement of goods worth Sh758.6 million under the World Bank-funded project but the authority went on to over-commit items to a further Sh2.2 billion,” the committee observes.

After depleting their coffers, the authority through chairman Gitura, a former diplomat and politician, wrote to the PS seeking permission to re-allocate the Universal Healthcare funds to purchase PPEs.

“The management exceeded the approved budgets and irregularly utilised UHC funds to purchase the PPEs,” the committee concludes.

The request was turned down but the authority went ahead to use the UHC money to purchase the items.

The management of Kemsa, the committee says, failed to adhere to relevant public finance management laws in budgeting and incurring expenditure for procurement of PPEs.

The advent of Covid-19 saw money put into procurement of protective equipment, masks and sanitisers.

The role was delegated to Kemsa who in turn broke all rules to single source or influence tenders. 

The prices of the equipment were inflated, tenders issued to companies that have never supplied medical equipment and billions of shillings lost.

The guise Kems used was that it was undertaking emergency procurement. An explanation MPs did not buy.

Kemsa also did not carry out any form of due diligence with respect to the companies as required by law. 

 The board was subsequently disbanded and the senior management suspended awaiting the outcome of the probe.

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