• Kenya Hospital Association has called for an extraordinary general meeting to kick out board members
• Board and management wrangling over control of hospital projects.
Image: FILE
The Kenya Hospital Association has called for a meeting to kick out the Nairobi Hospital Board.
The demand by shareholders to have a new board take charge follows the feuding between the board and the management over the control of the hospital’s Sh8 billion projects.
“Our client [the Kenya Hospital Association] herewith requisition the company’s secretary to immediately make available to them, the proposal forms to enable registration of nominees for the members seeking election to ascend to the membership board of directors at the extraordinary general meeting to be convened by our clients,” Echessa and Bwire Advocates said in a letter released on Monday.
The association hired the law firm after the board members refused to convene a general meeting that would get them out of office.
The wrangles between the board and the management led to the suspension of hospital CEO Gordon Odundo under unclear circumstances. The board had already shortlisted two candidates for the post.
“Your leave expires on March 13 and the board, at its meeting on February 25m, approved your compulsory leave be extended to April 13,” board chairman John Simba said in a letter delivered to the CEO last Friday.
Just recently, two board members representing the Medical Advisory Committee were recalled after it emerged the board was ignoring their views. When the committee later recommended two fresh names, the board refused to admit them. The board, as currently constituted, exists without the voice of doctors who play a critical role in the hospital's management.
The Star established from internal communications that the tenders at the centre of the problem include projects worth more than Sh6 billion. Another Sh2 billion was allocated for annual redevelopment.
Sources privy to the goings-on told The Star in confidence that a number of board members are directly interested in the tenders as the fight to control the medical institution hits the public in its third month.
One member has direct interests in audit firm EY that has been hired twice to audit the hospital. One member had his child and another his relative hired to senior positions at the facility to influence daily activities. Another official has unaddressed issues at the Capital Markets Authority.
In 2016, the 67-year-old health facility collected Sh8.7 billion. This grew to Sh10.1 billion the following year. A similar figure is expected for last year's collection. In the last two years, the hospital, among other projects, automated its parking system, successfully relocated doctors to the Anderson Centre, inaugurated its 400-seat convention centre, and commissioned a state-of-the-art 16-bed critical care unit.
In 2016, the board commissioned EY to audit the facility at the end of the tenure of the former CEO Cleopa Mailu, who had been appointed the new Health CS. President Uhuru Kenyatta last year redeployed Mailu as an envoy to the UN, Geneva.
“The report, which cost the hospital Sh15 million, has never been made public or had its contents implemented, but a section of the board had already commissioned a new audit report with EY at Sh17 million,” a senior official in the Finance department said.
EY recommended a watertight corporate governance structure that strengthens oversight roles and ensures non-interference in the day-to-day management of the hospital.
“The Nairobi Hospital’s Board of Management informed us that following findings and recommendations of internal audit reports, they have concerns that management processes, and specifically with respect to procurement processes and Treasury Management, have not generally been undertaken in a way that provides value for money, and in a transparent, efficient and effective manner,” the report said.
The Nairobi Hospital Forensic Investigation Services report dated August 6 last year says that Mailu’s tenure faced procurement and financial management audit queries.
“We noted that six of 11 projects initiated between March 1, 2013, and October 31, 2016, had cost overruns amounting to Sh1.7 billion. The initial total contract value for these projects amounted to Sh3 billion, but subsequent variations increased the value to Sh4.8 billion,” it says.
The report established that a number of patients walked out of the hospital without paying, some other projects suppliers in a number of companies with common directors submitted their bids under the same tenders and the hospital was invoiced before the purchase orders were done. Most projects followed implementation plans but failed to honour procurement policies. The hospital failed to carry out due diligence on suppliers and the report recommended the board give the management a free hand to carry out its mandate.
“We did not receive documentation from the Procurement department to support the disposal of vehicles Mercedes Benz E300 and E350, which, according to the financial reports and receipt documents, were disposed of in 2014 and 2015 respectively,” the report adds.
Also established were the change orders during the period. They were not presented to the board for approval but were to be presented to the board in later meetings.