LAW VIOLATED

Kenyans lost Sh2.3 billion in Kemsa scandal - Auditor General

Kemsa management indicted for violating various laws leading to loss of public money.

In Summary

ā€¢ The auditor noted some of the companies that were awarded the contract were established in January and February this year, pointing to possible collusion.

ā€¢ The report also reveals fraud in procurement and collusion between Kemsa bosses and the companies that were awarded multi-billion shilling contracts.

The Kemsa depot in Nairobi's Industrial Area.
The Kemsa depot in Nairobi's Industrial Area.
Image: FILE

A special audit by the Auditor General has shown that Kenyans lost Sh2.3 billion in the Covid-19 items procurement scandal at Kemsa.

In an explosive report presented to a Senate Committee on Wednesday, the Auditor General Nancy Gathangu indicted the management of Kemsa for violating various laws leading to loss of public money.

The report also reveals fraud in procurement and collusion between Kemsa bosses and the companies that were awarded multi-billion shilling contracts.

Nancy Gathungu after she was sworn in as Auditor General at the Supreme Court on July 17, 2020.
Nancy Gathungu after she was sworn in as Auditor General at the Supreme Court on July 17, 2020.
Image: CHARLENE MALWA
 
 
 

According to the auditor, Kemsa over procured items with Sh6.3 billion which are still lying idle in its warehouses.

If the items are sold at the current market prices, Kemsa will only recover Sh4 billion, leading a whopping loss of Sh2.3 billion.

The report shows that Kemsa illegally and irregularly diverted monies meant for UHC to purchase Covid-19 items without approval of the Ministry of Health.

"During the period under review, Kemsa irregularly utilised Universal Health Coverage and Capital Budget to procure Covid-19 related items worth Sh7,632,068,588 without evidence of approval of the budgets by relevant authorities," she said.

"The procurement process was not initiated based on need assessment and planning resulting in over procurement of Covid-19 related stock worth Sh6.3 billion that is still being held at Kemsa warehouses."

The auditor noted some of the companies that were awarded the contract were established in January and February this year, pointing to possible collusion.

"We established circumstances where Companies that had been in existence for less than one year, were awarded contracts to supply Covid-19 e.g Kilig Ltd and Shop ā€˜Nā€™ Buy Ltd were registered on January 22, 2020, and February 14 2020 yet they were awarded contracts," Gathangu said.