The National Hospital Insurance Fund is in trouble for ignoring MPs’ advice to have the EACC probe the controversial Sh 3.9 billion multi-storey car park.
The Auditor General had raised fears of possible loss of billions of taxpayers’ money due to the Fund's failure to implement recommendations of the Public Investments Committee, a watchdog committee.
Former Auditor General Edward Ouko, in his last report before leaving office, questioned why the national health insurer did not involve Ethics and Anti-Corruption Commission in probing the car park. EACC involvement was recommended by the PIC.
The auditor also questioned how a project initially valued at Sh900 million escalated to Sh 3.9 billion without proper justification.
In six years since 2002 when the project was started, the cost has risen by 337 per cent. MPs insisted this increase must be investigated and those involved charged.
The car park was initially projected to cost Sh909,709,305 but this was revised upward to Sh 1.1 billion, a 30 per cent increase above the original estimate.
NHIF management further revised the cost upwards to 3.9 billion, which Ouko said was not justified.
The auditor's report reads: “Records indicate the car park was completed in July 2008 at a total cost of Sh3,342,120,239; a further amount of Sh626,635,998 and Sh4,706,521 was incurred in 2009-10 and in 2010-11 respectively ... increasing its total expenditure to Sh3,973,462,758 as at June 2011, or resulting in an increase of approximately 337 per cent over and above the original contract sum of Sh909,709,305."
It continues: "Although the issue has been discussed by the Public Investment Committee, no action has been taken on its recommendations as per the 19 and 21 reports which recommended the Director of the EACC should institute and fast-track investigation of the project with a view to preferring charges against all those would be found culpable.”
The NHIF, which has been marred with irregularities and which saw changes at its top management, was also cited for doing nothing to recover Sh49.5 million deposited at Consolidated Bank, Nairobi, in 2001.
The entire deposit — which was part of the Fund’s short-term investments — was offset by the bank against a guarantee executed by the former Fund CEO on behalf of the Euro Bank Ltd.
“It is not clear and the management has not explained the circumstances under which the Fund’s deposit was used as a guarantee by the then Chief Executive Officer,” Ouko observed.
After scrutinising the matter, the parliamentary oversight team recommended the CEO be held accountable for any losses incurred in the irregular investment of the surplus funds in the consolidated bank and be surcharged for Sh40,065,205.45, being the value of the un-deposited cheque of September 23, 2002, from Euro Bank.
PIC also recommended that Consolidated Bank should pay the Sh49.5 million owed to the Fund.
According to Ouko’s 2017-18 report, no action has been taken to date by the Fund to recover the Sh49.5 million the Fund lost.
Another instance in which the NHIF was found to have ignored PIC recommendations, is the issue of Sh1.4 billion — in payments for drawings and designs for the proposed Resource Center.
Construction has not started since the land was acquired 15 years ago.
The PIC had recommended that the Fund expeditiously pursue the prosecution and conclusion of the case to its logical conclusion.
By the time of the audit, the Fund management had taken no action to resolve the matter, the auditor said.
The 2017-18 report was tabled before the House National Assembly’s Majority Leader Aden Duale on Thursday last week.
The Board expenses, especially on seminars and conferences amounting to Sh38,613,988, also came under scrutiny with revelations that the NHIF board has been spending millions of taxpayers’ money without proper justification.
For instance, the Auditor faulted the Fund for paying Sh4, 33,631 to Harvard Business School for the training of two board members, training that Ouko pointed could be done locally.
The training on ‘New Era of Governance Course’, according to the report, was not supported by any documentary evidence to show that it was approved by the board.
“The Board approval for this training was not availed for audit verification. In addition, it was not clear why the training was not done locally to minimise on the expenditure,” Ouko said.
The board was also found to have spent Sh993,220 paid as imprest to two officers as per diem to board members attending a devolution conference in Kakamega and the Mombasa ASK show.
“The seminars and conferences expenditure also include an unsupported balance of Sh3,923,119 described as transfer to provisions. Although management has explained that these are imprest issued for board expenses and wrongly described as transfer to provisions, no evidence was availed to support this claim," the auditor said.
The Fund further claims it has Sh55 million due to KNH but the figure contradicts hospital records that indicate the Fund owes it Sh712,187,022.
The report further reveals irregularities in the Sh 8.7 million paid to 65 officers employed during the period but no supporting recruitment documents, including advertisement of the vacancies, shortlisting, interviewing and recruitment reports were availed for audit verification.
