SENT PACKING

Nairobi Hospital board sacked and replaced

Owners sent home six remaining members after four resigned

In Summary

• Trouble for the sacked board began last year after newly-hired CEO Gordon Odundo disagreed with tendering for the expansion project.

• Sacked after audit report by Ernst & Young (EY) over Sh5.7 billion hospital expansion project launched in 2016. 

The Nairobi Hospital
OUT WITH THE OLD: The Nairobi Hospital
Image: COURTESY

Owners of Nairobi Hospital have sacked the entire board of management after an exceptionally stormy annual general meeting on Wednesday.

Six members were sent packing on Wednesday following an audit of the Sh5.7 billion hospital expansion project launched in 2016. Four members had resigned in advance. 

The audit by Ernst & Young (EY), discussed at the meeting, reveals procurement irregularities and conflicts of interest at the project. 

 
 

Ex-chairman John Simba–elected in July 2016–resigned two weeks ago and was joined by former board members Charles Kariuki and Anuthia Kapila who resigned last week.

Dr Eric Kahugu had resigned in June as well as Justice Joyce Aluoch who quit shortly after she was appointed to the board.

The rest of the members Sam Ncheeri, Alan Gachukia, Coutts Otolo and Margaret Muigai were removed on Wednesday.

Nairobi businessman Joseph Kigwe, who joined the board in June and became chairman two weeks ago, was also removed. 

The new board of management elected on Wednesday comprises Dr Wilfred  Ndirangu, Dr Chris Bichage, Dr Stephen Ochiel, Victor Miseda, Charles Wambugu, Otieno Odongo, Robert Shaw and Charles Amira.

"The elected board thereafter held a meeting and elected Dr Wilfred Ndirangu as the chairman and Dr Chris Bichage as the vice chairman," company secretary Mercy Mbijiwe said in an email to shareholders.  

Nairobi Hospital–easily the most successful private hospital in East Africa–is owned by the non-profit Kenya Hospital Association, a private company limited by guarantee whose profits are ploughed back.

 
 

It has no share capital and anyone can become a shareholder by paying an entry fee of Sh10,000, plus an annual subscription fee.

Mbijiwe said the new directors will be in office until the next AGM and can offer themselves for re-election.

Trouble for the sacked board began last year after newly-hired CEO Gordon Odundo, whom they later sacked, disagreed with tendering for the expansion project. 

Odundo is a seasoned accountant who previously managed the Gertrudes and Mater hospitals. 

The audit report by EY, seen by Star, questions how firms associated with some board members bid and won multi-million contracts at the hospital.

The draft audit report covered transactions dating back to 2013. 

It questioned the procurement of 16 stock items amounting to Sh130 million that were 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 said. 

The audit also flagged six of the 11 big projects initiated between March 2013 and October 2016 which had cost overruns amounting to Sh1.7 billion. 

The projects include the Anderson Centre whose contract value was Sh530 million but was revised to Sh884.9 million. 

Shareholders of the KHA said no proper justification was given for such massive project variations of more than 50 per cent. 

Edited by R.Wamochie