• This is the first time a report is placing the Board at the centre of the disorder at Kemsa,
• The committee said the CEO took advantage of the systems disconnects and lack of an effective mechanism to undertake procurement of Covid-19 items.
Image: EZEKIEL AMING'A
A Senate report has accused the Board of Kemsa of failing to oversee the operations of the management in the procurement of Covid-19 items.
The report blamed suspended CEO Jonah Manjari for having single-handedly run the show at the Kenya Medical Supplies Authority leading to the Sh7.63 billion scandal.
The report by the Senate Health Committee called for investigation of senior Kemsa officials for their role in the lost funds.
“The committee recommends the ODPP and DCI investigate the CEO, Kemsa and the board of management of Kemsa for contravening the law,” the report reads.
It was tabled on the floor on Tuesday.
In addition to Manjari, officers recommended for investigation include: Charles E. Juma, director, procurement; Eliud Mureithi, director, commercial services; Fredrick Wanyonyi, corporation secretary/director, legal service; Edward Njoroge, director, operations; and Waiganjo Karanja, director, finance and strategy.
Also targeted is any other officer of Kemsa who was involved in the procurement processes and who is, upon investigation, found culpable.
The committee report examined allegations regarding irregularities in the procurement of pharmaceutical equipment and products by Kemsa
The committee wants the ODPP and the DCI to investigate supplying companies to determine if there was collusion among the CEO, Kemsa, the board of management and the directors in violating the PPAD and PFM Acts.
“It was clear the role of the board of Kemsa is to have oversight over the Authority. It is required to provide strategic and policy leadership to the Authority and further provide budgetary oversight over the Authority,” the report reads.
The report said Manjari took advantage of the weak oversight by the board to "mutilate procurement laws, leading to loss of Sh2 billion" taxpayers money.
“The committee observed the CEO, Kemsa, took advantage of the disconnect and lack of an effective mechanism to undertake procurement of Covid-19-related items without an existing budget and beyond the Kemsa capital budget,” the report reads.
This is the first time a report is placing the Board chaired by former Murang’a Senator Kembi Gitura at the centre of the disorder at Kemsa that sparked public outrage.
The report says Manjari distorted procurement laws to land the Authority in the financial morass.
The report tabled by Kisumu Senator Fred Outa says Manjari disregarded the Ministry of Health, bypassed the board and ignored his juniors’ advice in the procurement.
It also suggests the CEO could have colluded with private companies to award them tenders. Some companies had been registered only three months earlier and due diligence was not done, to the detriment of the taxpayer.
Already, the EACC has investigated the procurement. The anti-graft agency has already submitted its file to DPP Noordin Haji and is said to recommend Manjari’s prosecution alongside other top officers in Kemsa.
The report said Manjari bypassed the board and directly wrote to Health PS Susan Mochache to utilise part of the Sh13.04 billion disbursed to the Authority for UHC to finance Covid-19 procurement.
Even though the PS declined the request, Manjari still went ahead to spend the UHC funds on Covid-19 items.
The report said Gitura wrote to the PS, informing her the CEO had already spent the cash.
“The committee observed that the Board of Kemsa and MoH were only engaged after the irregularities had taken place,” the lawmakers said in the report.
The committee cited lack of proper coordination between the Ministry of Health, the Board and Management of Kemsa in the procurement of Covid- 19-related items.
In addition, Manjari, who was the Authority's chief accounting officer, did not seek any approval for reallocation of UHC funds to procure Covid-19 items.
This failure violated sections 44 and 45 of the Public Procurement and Asset Disposal Act and Section 58 of the PFM Act.
Manjari has also been blamed for procuring the items without conducting a market survey, raising the possibility of procuring items at inflated prices.
“Kemsa only entered into negotiations with the supplier after the deliveries had been made and no information was presented by Kemsa to indicate that these negotiations were guided by a market survey,” the report reads.
Director of Briema Grains Stores Limited Abdighafar Ali, Shop ‘N’ Buy director James Cheluley and Bell Industries Limited director Titus Ibui admitted to the committee they wrote letters of intent to Kemsa indicating prices of the items to be procured.
They supplied items to Kemsa.
While observing that the procurement were bidder-driven rather than Kemsa-driven, the committee said in some instances, bidders submitted bids that were higher than the price set in the letters of intent.
“The committee, therefore, found out that failure by Kemsa to carry out a market survey exposed it to high prices,” the report reads.
The committee said Kemsa and CEO awarded tenders to non-prequalified firms. This was done without the Authority carrying out due diligence to determine the companies’ ability to supply the items.
Citing Kilig Limited, a company that supplied PPE to Kemsa, the committee said Kemsa contracted firms that were unable to deliver the items.
“Save for the case of MEDs, Kemsa did not exhibit any prior or existing knowledge of the capabilities of the suppliers to deliver Covid-19-related items and further no interrogation was undertaken by Kemsa to determine whether or not the suppliers met eligibility criteria," the report reads.
The committee identified at least 16 companies that were awarded tenders but were registered less than three years prior to the award. They include Shop ‘N’ Buy, which was awarded a Sh970 million tender for supply of KN95 face masks and PPE.
Also named were Kilig Limited, Regal Freighters Limited, Trade Soft Limited, Nel Limited, Aszure Commercial Services Limited, Trade Soft Limited, Nanopay Limited and Zebra Investment Limited.
Others are Tikasan Holdings Co Limited, Bennetts Ventures Limited, Hamethyst Limited, Ohiyo Company Limited and Briema Grains Stores Limited.
The committee wants the ODPP and DCI to investigate the companies to determine if there was collusion among the CEO, Kemsa, the board of management and the directors in the contravention of PPAD Act and PFM Act.
In addition, the committee observed Kemsa only prepared and approved procurement plans months after the Authority had already spent Sh5 billion in the haphazard procurements without a budget.
“The failure by Kemsa to review the procurement plans and tie them to an approved budget meant that Kemsa had no basis against which to determine the items to procure or the cost or to monitor and assess the effectiveness and economic efficiency with which its undertook the procurement processes,” the report reads.
The Authority, the report says, did not conduct needs assessment leading to overdrive procurements. The items are still stuck in Kemsa stores.
The report blames Manjari for disregarding advice by the director of procurement to stop issuing commitment letters, in the retrospective, as they had exceeded Kemsa's budget.
It shows Kemsa carried out direct procurement without putting in place framework and guidelines to guide the process.
The report said while the Manjari appointed a tender evaluation committee, it was a mere formality as they worked retrospectively.
(Edited by V. Graham)