SCANDAL

NSSF on the spot over Sh5.6bn unremitted contributions

Work on Hazina Trade Centre commenced in June 2013 at a cost of Sh6.7 billion, but the 34-storey project was scaled down to 15 floors

In Summary
  • The management says that the unremitted monies could be from M-Pesa payments
  • There are missteps in the payment of Hazina Trade Centre's contractor and uncollected balances in respect of Milimani Executive Apartments
SUIT: NSSF Building at Capitol Hill, Nairobi.
SUIT: NSSF Building at Capitol Hill, Nairobi.

 

NSSF contributors might lose billions of shillings in the ambitious construction and capital projects undertaken by the welfare parastatal.

The National Social Security Fund has come under sharp scrutiny is also on the spot over unremitted member contributions amounting to Sh5.6 billion and its contributions balance of Sh14 billion.

The management explains that the unremitted monies could be from M-Pesa payments and miscellaneous income, but the auditor general questions why the transactions were not reflected in the branch reports.

The AG's report reveals missteps in the payment of (Nairobi) Hazina Trade Centre contractor and uncollected balances in respect of sold Milimani Executive Apartments – Nairobi.

Also flagged are possible losses in the unresolved ownership disputes at Mavoko land, a non-beneficial lease of Mombasa’s Hazina Plaza as well as a plot in Upper Hill which was ‘illegally transferred’ to the Judiciary.

Further, there are fears the NSSF may lose Sh20 million in workers’ pension funds invested in land whose title was revoked by the National Land Commission in favour of the Judiciary. The matter is in court.

In his August 7, 2019, report,  outgoing Auditor General Edward Ouko also warned of a possible loss of Sh48 million in a dysfunctional CCTV installation at Mombasa Social Security House.

The Fund risks losing Sh215 million which was advance payment to China Jiangxi International Kenya Ltd for the construction of 324 housing units at Nyayo Estate, Embakasi.

Despite the hefty amounts paid to the Chinese contractor, only 44 units in the Sh2.1 billion project had been constructed as of March 2018.

Ouko warned that apart from the risk of losing the downpayment, the Fund risked paying more money for the delayed works.  The job should have been concluded by November 2014.

The blocks are stuck due to failure by the city county to grant relevant approvals for the construction of the remaining 280 units.

“Although the delays were blamed on the City Hall approvals, there is no sign of effort made to ensure completion of the project, putting members at the risk of losing the money paid,” the report reads.

Work on Hazina Trade Centre commenced in June 2013 at a cost of Sh6.7 billion, but the 34-storey project was scaled down to 15 storeys.

During the audit, minimal activities were observed at the incomplete project which now puts at risk Sh4.1 billion committed to the revised work scope – whose timeline has lapsed by three months.

“As at June 30, 2018, the contractor had been paid Sh2.1 billion; considering the minimal work mobilisation at the site, it is not clear whether the construction works would be completed,” Ouko said.

NSSF has also been reprimanded for failing to collect Sh2.8 billion from buyers of executive apartments at its blocks in Milimani, Nairobi. The contractor – Nanchang Foreign Engineering Company (Kenya) Ltd, completed the project at a cost of Sh1.6 billion and handed over the houses in April.

The Fund expected to collect Sh3.6 billion but had received a paltry Sh753 million as at April. It must collect the remaining amount to achieve the intended benefits.

Ownership rows at Mavoko land have put to risk contributors' investment of Sh126 million, being an unsettled debt by AMS Properties Ltd following a November 2011 agreement.

The company paid only Sh12.6 million and was to settle the balance of Sh113.4 million in 90 days from the date of the execution of the agreement.

“This has not been settled to date. The management explained that the contract has been terminated following a dispute over the location of the seven plots.”

NSSF is embroiled in a dispute with other parties who have laid claim to the property without clarity on how long the row would take, and what legal action has been taken.

Contributors may have lost the Sh450 million spent to acquire the nine-storey Hazina Plaza in Mombasa in 1994.

The block was leased and operated as a four-star hotel, an investment that was projected to raise Sh60 million in rent annually.

But the hotel closed in 2001 following the then tenant’s failure to pay rent, after which the block was put on sale at Sh300 million.

No bidders met the requirements. In 2010, the building was leased to Techno Holdings at Sh27 million annually but only Sh66 million was realised six years later.

The tenant was evicted and the building vandalised by the former tenant. “In view of the foregoing, the Fund has not realised any value for money from the investment of Sh450 million in the building,” Ouko said.

Contributors may also not get value for Sh178 million unrecovered investment at Milimani Upmarket houses, in Kisumu.

In the CCTV case, the audit blames the Fund for failing to include a service maintenance clause in the Sh226 million contract assigned to EPCO Builders Ltd.

The installation functioned for the first two years before developing technical issues due to lack of maintenance and dispute on the amounts payable.