Senators: Probe Kemsa boss for Sh7.6b scandal
Wednesday, March 31st, 2021
- The CEO is accused of taking advantage of the disconnect and lack of an effective oversight mechanism to undertake the procurement of Covid-19 items without an existing budget.
- The team also wants ODPP and DCI to probe 16 companies that were awarded tenders by Kemsa to determine if there was any collusion between the CEO, the board of management and the directors of the companies.
Hillary Mageka and Anthony Mwangi
A Senate committee has indicted suspended Kenya Medical Supplies Authority (Kemsa) Chief Executive Officer Jonah Manjari and the board of directors in the Sh7.63 billion scandal.
Kemsa’s board, which was chaired by former Murang’a senator Kembi Gitura, was also blamed for failing to exercise effective supervision over the operations of the management in the procurement of Covid-19 items.
Manjari is accused of taking advantage of the disconnect and lack of an effective oversight mechanism to undertake the procurement of Covid-19 items without an existing budget and beyond the Kemsa budget leading to loss of public funds.
Details are contained in a report by the Senate Health Committee on the inquiry into the allegations of irregularities in the procurement of pharmaceutical equipment and products by Kemsa. The report was tabled in the House yesterday.
The committee chaired by Trans Nzoia Senator Michael Mbito has recommended that the Directorate of Criminal Investigations and the Office of the Director of Public Prosecutions investigate the Kemsa CEO and board of directors for the loss of Sh7.63 billion.
Mbito’s team also wants ODPP and DCI to probe 16 companies that were awarded tenders by Kemsa to determine if there was any collusion between the CEO, the board of management and the directors of the companies.
“At the time of the declaration of first case of Covid-19 in Kenya in March, 2020, the Kemsa budget did not make provision for the procurement of items in response to Covid-19,” the report tabled in the Senate by Kisumu Senator Fred Outa reads in part.
“The procurement plans that were in place at the time only provided for the procurement of pharmaceuticals and non-pharmaceutical products that Kemsa procured in its day-to-day business,” it adds.
While section 43(1) of the Public Finance Management Act (PFMA) empowers an accounting officer to re-allocate funds and the parameters within which such re-allocation may be made, the committee observed that no information was submitted by Kemsa of any steps taken by the CEO to seek the necessary approvals for the re-allocation of the Kemsa capital budget for the procurement of Covid-19 related items.
The Committee noted that instead, the CEO issued commitment letters for the procurement of Covid-19 items without a corresponding review or re-allocation of its capital budget, and without the approval by the Board of Kemsa contrary to section 53(8) of the PPADA.
“The use of the Kemsa capital budget and funds meant for the UHC programme for the procurement of medical supplies in response to Covid-19 was not only irregular, but also put the implementation of the UHC programme in jeopardy as items meant to be procured under the programme would either not be procured on time or at all, given that the funds had been diverted for a different purpose,” the committee notes.
At the National Assembly, Kemsa Finance Director Waiganjo Macharia said that Manjari overlooked his office and signed for all the payments to suppliers in the Kemsa scam.
“The CEO and the Commercial Director Edward Mureithi signed up for a majority of the payments. My office which is entitled to do the payments was sidelined all along,” Waiganjo told the Public Investments Committee.
He added that he refused to sign for payments which were not supported by necessary documentation.
Waiganjo said he advised the CEO against over-committing since the authority had already overstretched its budget but was ignored.
Asked by committee chairman Abdulswamad Nassir why he authorised payments even after he had advised against, Waiganjo said he had no option since he could not control the CEO’s actions.
Given that the management of Kemsa received communication from the Ag. Director General for Health on February 9, 2020 informing them of the Covid-19 pandemic and requiring the agency to undertake the necessary preparations, the committee observed that the agency ought to have taken the necessary steps towards planning for the pandemic in good time including carrying out a market survey to determine the commodities to be procured, the source and pricing in a manner that would ensure value for money.
“Whereas the initial procurements undertaken in March, 2020, were undertaken on an emergency basis, the fact that the Covid-19 pandemic continued for months after meant that Kemsa still had the time and opportunity to undertake a rapid market survey to guide it in the conduct of subsequent Covid-19 related procurements,” the report further says.
“Given that Kemsa did not carry out a market survey, it ought to have, in the least, used the lowest price submitted by the companies as a guide and the basis for determining the price at which to procure the Covid-19 related items or the basis for negotiating with the suppliers of the respective items prior to issuing commitment letters,” it adds.