Suppliers demand Sh58bn from Health ministry

MPs demanded list of debts for which the ministry has been sued from 1995, from past regimes

In Summary

• The ministry says it has no money to settle the huge debts because they amount to the ministry's total annual budget

• Health committee vice chair requests a new committee to investigate the debt 

Health PS Susan Mochache
IMPROVED TERMS Health PS Susan Mochache
Image: FILE

Suppliers are demanding Sh58 billion from the Ministry of Health over breached contracts. 

The debts arise from the former Presidents Daniel Moi and Mwai Kibaki's eras.

The ministry yesterday said it has no money to settle the huge debts because they amount to the ministry's total annual budget.

Principal Secretary Susan Mochache said they have written to Treasury to allocate money to settle some debts.

"In some cases, we will enter into negotiations to lower the amount to levels that we can shoulder," Mochache told the National Assembly Committee on Health yesterday. 

The list of debts was requested by MPs, who are keen that the ministry sheds liabilities as it rolls out Universal Health Coverage.

The Sh58 billion represents the total amount demanded by suppliers who sued the ministry, some as early as 1995.

Some were awarded damages while other cases are ongoing.

The oldest case was filed by United Medical Supplies in 1995 after supplying medical items between 1992 to 1993.

Former Solicitor General Njee Muturi in 2016 proposed an out-of-court settlement because the case had taken 20 years and the ministry was losing.

"At the same time it would pose a challenge to the defendant especially in securing witnesses," Mochache said yesterday. 

United is now demanding Sh15.1 billion, mostly in interest accrued.

Another supplier, Eurotech International, sued in 1999 claiming to be owed Sh76 million over a 1995 contract.

It had supplied larvicides and other insecticides to kill mosquitoes.

The supplier won the case in December 2000. 

Last Wednesday, the supplier wrote to the ministry saying he would accept Sh2.25 billion  in an out-of-court settlement.

John Chomba is demanding Sh11.2 million after supplying 12,000 bedsheets worth Sh8,280 in 1998.

He was awarded special and general damages amounting to Sh11.2 million in 2002.

Equip Agencies is demanding Sh15.2 billion after supplying malaria control equipment, drugs and protective clothing worth Sh1.2 billion in 1995.

"On March 27, the ministry received a letter dated March 26 from the claimant that he is further willing to accommodate the government to settle the matter out of court at a total payment of Sh15.25 billion," Mochache said.

Others are more recent cases. 

For instance, Faram East Africa sued in June 2013 for breach of contract in the maintenance of blood banks and medical refrigerators. 

It was awarded Sh17.3 million in July 2015 but in July 2017 the Attorney General forwarded the ministry a calculation of a decretal amount of Sh111.8 million.

The ministry requested Treasury to allocate the money in August 2017, but this was not done. The claimant is now demanding Sh190.8 million, which includes interest and damages. 

Vulcan Limited sued in 2000 for wrongful termination of contracts and non-payment for medical reagents and needles already supplied.

In 2016, the Solicitor General advised the ministry to pay Vulcan the amount owed plus interest, now totalling Sh1.7 billion. Treasury is yet to release the funds. 

Other are pending cases, including a suit filed by Uasin Gishu Memorial Hospital demanding Sh1.7 billion from the Moi Teaching and Referral Hospital. 

Faram East Africa is demanding Sh14 million from the ministry over a 2018 breach of contract.

Turn-O-Metal has also sued for Sh101 million for a breached 2005 contract for borehole drilling.

Gyam investment is demanding Sh393 million in a go-down services case while Rockey African Limited is demanding Sh316.8 million for the supply of medical goods in 2012 whose contract was breached.

Health committee vice chair Swarup Mishra called for a new committee to investigate the bills. 

"We need to engage an anti-fraud consultant because when people demand debts they can add all manner of interests and non-existent penalties," he said.