Two members of the troubled Nairobi Hospital’s board of management have resigned, citing personal reasons.
Recently-appointed board member Lady Justice Joyce Aluoch, and surgeon Dr Eric Kahugu resigned days before the hospital’s stormy annual general meeting last Monday.
They were replaced by businessman Joseph Wathoa Kigwe, the only person who expressed interest to join the board.
Monday’s closed-door AGM came in the backdrop of an audit report by Ernst & Young (EY), which revealed massive procurement irregularities and conflict of interest.
Firms associated with board members bid and ‘won’ multi-million contracts at the hospital, the report showed.
The draft audit report, seen by Star, covers transactions going back to 2013.
It questions the procurement of 16 stock items amounting to Sh130 million, made without the CEO’s approval.
“The manual indicates that a purchase requisition for stock items above Sh1 million should be approved by the procurement and stores manager, chief accountant, finance controller and finance director and the CEO,” the auditors noted.
The audit also notes six of the 11 big projects initiated between March 2013 and October 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 this value to Sh4.8 billion,” says the confidential report.
The projects in question include the Anderson centre whose contract value was Sh530 million but ballooned to Sh884.9 million.
The Central Supplies Operationalisation contract value was Sh195 million but the hospital ended up paying Sh650 million.
The new main kitchen was bid at Sh869.5 million but its cost rose to Sh1.2 billion.
Other projects with huge overruns are the CCU-HDU refurbishment, North Wing expansions and renovation, P1/P2 Fit Outs, Power Centre Upgrades and road and civil works.
On Monday, several shareholders of the Kenya Hospital Association – which owns the Nairobi Hospital - said no proper justification was given for such massive project variations of more than 50 per cent.
Shareholders also questioned the wisdom to squeeze so many structures at the hospital.
“The buildings are so close together. This might not pass a World Health Organisation audit,” said Dr Robin Mogere, a consultant surgeon who spoke at the AGM.
The draft audit also noted the hospital made advance payments to certain sub-contractors before they did any work.
In 2016, the hospital paid Sheffield Systems Ltd – a kitchen and laundry equipment supplier– an advance payment of Sh233.2 million while US$174, 245 advance was paid to Décor De Jour, an interior design company.
“The procurement policy indicated that prepayments for standard goods and services such prohibited,” the auditors say.
According to the policy, exceptions to the rule would be made only when in situations where no other source of goods or services was available and no other arrangement could be made.
The auditors also say patients were discharged with bills amounting to Sh28 million with no evidence of discharge agreement, or security.
In the audit period, the hospital also paid overtime claims totalling to Sh71.4 million without supporting documents.
(Edited by O. Owino)
