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Senior executives at Kemsa on EACC radar in graft probe

Thursday July 16 2020
kemsa

Kemsa CEO Jonah Manjari is among those who have been questioned by the EACC over the financial scandal that is unfolding at the agency. PHOTO | FILE | NATION MEDIA GROUP

By PAUL WAFULA
By ANGELA OKETCH

Top executives at the Kenya Medical Supplies Authority (Kemsa) have recorded statements with the anti-corruption watchdog over the financial scandal that is unfolding at the agency.

This is after it emerged that officials dished out tenders to mysterious entities under the cover of the Covid-19 pandemic, putting the lives of ordinary Kenyans at risk.

Theft of donor money meant for drugs has reached record-breaking proportions at the Ministry of Health, as Cabinet Secretary Mutahi Kagwe has publicly admitted.

Kemsa chief executive Jonah Manjari is among those who have been questioned by the Ethics and Anti-Corruption Commission. Two senior directors, including those in charge of procurement and finance, have also been grilled. Several managers are also lined up to record statements this week.

“The exercise started last week and is still ongoing. Each one has been given their time,” EACC spokesman Yassin Amaro told the Nation via phone on Tuesday.

EMERGENCY MEETING

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That same Tuesday, top managers at the agency were holed up in an emergency meeting convened by the Health principal secretary.

The Nation investigations desk is in possession of an internal memo that has given a rare peek into the procurement mess at the agency, blunders that have put at risk over Sh100 billion of donor funds and billions of shillings in taxpayers’ money.

In the memo, Procurement Director Charles Juma raises a storm over Covid-19 purchasing that was messed up by Dr Manjari.

Mr Juma notes that he had scrutinised and analysed various commitment letters issued to suppliers of Covid-19 items and their delivery timelines and in his verdict lays the blame squarely on Dr Manjari’s doorstep.

Mr Juma argues that all purchases must be undertaken within an approved budget in line with the Public Procurement and Asset Disposal Act (PPADA).

He accuses Dr Manjari of issuing commitment letters amounting to Sh7.6 billion against an approved budget of Sh4.6 billion.

He says that this decision alone saw Kemsa exceed its approved budget by Sh3 billion. However, this is not the worst of it.

SHORT-TERM NEEDS

Mr Juma notes that the law only allows for direct procurement as long as the purpose is not to avoid competition. Given the emergency of Covid-19, Mr Juma says the agency would only have bought enough kits to meet the short-term needs as it embarked on a proper process to ensure Kenyans get value for money.

The goods procured directly should also be ex-stock and should only be delivered within one month.

“The quantities involved must be reasonable so as not to avoid open competition,” the letter reads.

Mr Juma has singled out Kilig Ltd, a company registered this year but given a tender to supply Sh4 billion worth of protective kits.

In procurement laws, a company must have been in existence for at least three years and should show proof of ability to deliver on short notice to be able to qualify for such a lucrative deal.

“From Kilig Ltd’s commitment letter, the total quantity requested is 450,000 kits at an approximate unit price of Sh9,000, bringing the total amount to Sh4,050,000.00. This is a huge and substantial quantity that will last a long time and does not meet the threshold under direct procurement for emergency,” Mr Juma said.

COMPETITIVE PROCESS

Mr Juma said the three-month timeline granted to Kilig Ltd to supply the kits does not fit in the emergency category as it is adequate to procure the kits by way of a competitive process.

Our independent search at the company registry revealed that Kilig is owned by a Ms Ivy Minyow Onyango and was registered on January 22.

The firm’s registered office is in Lavington, Nairobi. EACC chief executive Twalib Mbarak wrote to Dr Manjari on June 18 as he narrowed down investigations to about seven companies. He wanted to be furnished with all the original documents relating to the tenders and payments to these companies.

The documents he wanted include tender advertisement notices, blank tender documents, all bids, tender opening minutes and the list of bidders.

Others are the tender evaluation minutes, due diligence report, professional opinion, tender award notifications or regrets, acceptance letter from the winning bidders, contract agreements, inspection and acceptance certificates and the payment vouchers.

APPOINTMENT LETTERS

Kemsa is also required to provide the appointment letters to the committees, the original conflict of interest register from its database from January 2018 to date plus all other relevant documents.

“This commission is conducting investigations into allegations of procurement irregularities at Kemsa in relation to tender KEMSA/CONST/OIT4/2019/20. To facilitate our investigations, kindly furnish us with the original documents relating to the above tender,” said part of the letter to the Kemsa boss.

The agency is also being investigated over Sh3.2 billion construction of a modern warehouse and office block and Sh1.1 billion for the supply and installation of a racking system.

Among those being on the EACC radar screen are Megascope Healthcare Ltd and Faram East Africa Ltd, which have received the bulk of the tenders for the supply of Covid-19 materials running close to half-a-billion shillings.

Whereas close to 15 companies in the framework procurement at Kemsa have received tenders ranging from Sh250,000 to about Sh20 million, Megascope Healthcare has received deals estimated at about Sh193,918,000 while Faram East Africa Ltd is handling supplies for Covid-19 estimated at Sh183,985,400.

HUGE TENDERS

Other firms that have received considerably huge tenders include Revital Pharmacy (10,962,000), Bio-Zeq Kenya Ltd (16,075,00) and Becton Dickinson International. Insiders say the agency jumped into a procurement frenzy after Covid-19 struck, issuing commitment letters in “a flawed random exercise”.

At least Sh4 billion came from donors, who have already released a scathing report documenting the mess at the agency.

Last week, the Nation exclusively reported how an audit by donors had unearthed procurement and financial irregularities at the state corporation, putting at risk over Sh100 billion in donor funds.

The special audit conducted from October 2019 by the Global Fund and USAID recommended an overhaul of the entire procurement system at Kemsa.

It also called for a new accountability system that has an end-to-end supply chain visibility platform installed to prevent losses and wastage.

In one of the most disturbing findings of the review, it emerged that, despite being given the monopoly to sell exclusively to government agencies, Kemsa has been overcharging counties by up to 77 per cent for some essential drugs

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