Parliament team unveils Sh1.4bn rip-off at NHIF

Thursday October 17 2019

National Hospital Insurance Fund acting Chief Executive Officer Nicodemus Odongo gives the National Assembly Public Investments Committee insight into the leasing of an integrated revenue management system on October 15, 2019. The services were single-sourced. PHOTO | FILE | NATION MEDIA GROUP


The national health insurer is at the centre of another scam after questionable hiring through single-sourcing of an integrated revenue management system at a cost of Sh1.4 billion.

Just a day after it emerged that Sh35 million of members’ contributions could not be traced, MPs on Thursday heard that top officials at the National Hospital Insurance Fund (NHIF) spent Sh1.4 billion of taxpayers’ money to lease the system from Web Tribe Ltd in 2014.

The contract was signed during Simon ole Kirgotty’s tenure.

An audit report that the National Assembly’s Public Investments Committee is examining found that had NHIF opted to buy the system, it could have cost only Sh495 million.

However, officials of the insurance fund, some of whom were arrested last November and are now out of office, opted to lease the equipment for which they were paying Web Tribe company an average of Sh24 million per month.



NHIF acting Chief Executive Officer Nicodemus Odongo on Thursday confirmed to the committee chaired by Mvita MP Abdulswamad Nassir that the fund continued to pay Sh24 million per month from 2014 to 2018 when the Directorate of Criminal Investigations (DCI) arrested top NHIF officials on corruption-related issues.

After the arrests, which included CEO Geoffrey Mwangi, the DCI stopped any further payment to Webtribe. However, NHIF is still using the system.

Documents presented before the committee further indicate that NHIF also ignored a circular by Head of Public Service Joseph Kinyua directing all ministries, government departments and state agencies (MDAS) not to buy any system without involving the ICT Authority.

In the letter dated February 2018, Mr Kinyua said that the ICT Authority would be required to sign service level agreements with MDAs to ascertain the quality of equipment bought.

“You are required to ensure compliance with this directive and bring it to the attention of officers working under you for seamless implementation,” Mr Kinyua’s letter reads in part.


Mr Nassir termed the deal a well-choreographed move by NHIF top officials to rip off taxpayers.

He queried how NHIF got into the deal without any feasibility study and without a scope of work and tender floated to the public.

“This is one of the biggest scandals this country has ever witnessed… the money incurred in the purchase of this system was enough to buy cancer equipment for a hospital,” Mr Nassir said.

Outgoing Auditor-General Edward Ouko pointed out in his report for financial year 2013/2014 that the procurement of the integrated system was single-sourced as no evidence of competitive bidding for audit verification had been made available.

“Although the direct procurement method was used, no evidence was availed to the effect that the underlying circumstances met conditions set for direct procurement as laid down in Section 91. Management was therefore in breach of the Public Procurement and Assets Disposal Act,2015,” reads the audit report.


The NHIF management failed to give any valid reason as to why they opted for single sourcing when the services offered by Web Tribe were not unique and could be offered by any other company.

“This move was against the Constitution and the person liable should be surcharged and taxpayers’ money recovered,” Kiminini MP Chris Wamalwa said.

Other MPs - Ahmed Abdisalan, Mary wa Maua, and Hassan Omar - called for the auditor’s office to conduct a special audit of the purchase of the integrated system.

“The information given by NHIF in relation to this matter is misleading. I hope investigative agencies will do their work well. This is a bad precedent being set by NHIF,” Mr Omar said.

The committee directed NHIF to furnish it with the initial contract with Web Tribe, the breakdown of monthly payments since 2014, and any other documents in relation to the contract next week.