Report reveals how Kemsa management defied ministry advisory to award tenders
A report by the Auditor General has revealed how the Board and the management of Kenya Medical Supplies Authority (Kemsa) defied Ministry of Health advisory to award tenders to undeserving and unqualified companies to supply covid-19 related equipment.
A report tabled in the Senate yesterday by Nancy Gathungu details how the Kemsa board and the CEO Jonah Manjari overlooked procurement laws to award tenders worth billions of shillings even after having been warned by the Health Principal Secretary Susan Mochache to adhere to the law.
In one instance during the financial year 2019/2020, the Board of Kemsa approved a total capital budget of Sh4.6 billion to finance its capital operations.
There was however no evidence that upon the outbreak of the Covid-19 pandemic, the management and Board of Kemsa either re-allocated any of the capital budget amount of Sh4,655,709,000 or requested for a supplementary capital budget to cater for the emerging Covid-19 related procurements.
“Therefore, the KEMSA capital budget for financial year 2019/ 2020 did not have any allocation for Covid-19 related procurements,” writes the auditor.
Gathungu says that on June, 12, 2020, Manjari, requested the PS seeking approval to utilise UHC funds to pay for expenses incurred on emergency procurements for Covid-19 related procurements.
“This request was declined by the PS and there was no approval by the Ministry of Health for Kemsa to utilize UHC funds to pay for expenses incurred on emergency procurements for Covid-19 related procurements,” Gathungu says.
Contrary to the advisory by Mochache, Kemsa board chairman Kembi Gitura,(left)wrote to Health CS Mutahi Kagwe, indicating that Kemsa had utilised the UHC funds.
But when she appeared before the Health Committee, Mochache said she was shocked when she got information from the National Treasury informing her that Kemsa had written to the ministry seeking budgetary support of Sh5.14 billion to procure Covid-19 items.
She said Kemsa bypassed the procedures and directly wrote to the Treasury. According to Mochache, Kemsa had indicated that they had procured goods that had been delivered but not paid for.
“ I wrote to them and advised them that the funds that they were seeking were not approved. On August 6, Kemsa wrote us a long letter seeking some Sh2.9 billion,” she said.
She added; “In fact in their request, they had asked us to allow them to convert some Sh6.7 billion meant to cater for the UHC programme to pay for the PPEs that had been delivered”.
According to Kemsa financial records, some of the expenditures had been narrated as having been funded from the Kemsa capital budget.
“This is a clear indication of coming of UHC and Kemsa Capital funds both of which were irregularly used to fund Covid 19 related expenditures,” noted the auditor.
According to the auditor, Ministry of Health allocated an amount of Sh13 billion to finance UHC, out of this amount, only Sh8.5 billion was disbursed to Kemsa.
A further amount of Sh333.4 million was disbursed by Ministry of Health to Kemsa for payment of Tax on USAID procured equipments.
“My audit established that Kemsa had irregularly issued commitment letters amounting to Sh.7.7 billion to various suppliers, out of which supplies of Sh7.6 billion had been delivered to Kemsa with an amount of Sh.4,7 billion having been paid.
Gathungu finds that Kemsa irregularly procured items valued at Sh.7.6 billion under UHC and Capital Budgets without requisite approvals.
“The agency CEO is therefore culpable of having violated the Public Financial Management Act,” says the auditor.
When he appeared before the joint Senate Health and Ad Hoc Committee on COVID-19, Manjari said he received requests for companies to be awarded tenders from Kagwe, Mochache and an official heading a response unit only identified as Brigadier.
“There were requests from CS Kagwe, PS Mochache and a Brigadier. They, at one point, came to KEMSA and we were told we needed to respond or else they’ll take over the warehouse,” Manjari told the committee.
Manjari was tasked by the joint committee to explain an expenditure totaling Sh7.6 million without clearance from the KEMSA board.