Two scams, same tricks: How masterminds of Afya House looting perfected NYS scheme

Masterminds of the Sh5.5 billion heist at the Health ministry just perfected the tricks employed at the National Youth Service to continue looting public resources.

Except for the change of names of key players and the victims of the misappropriation, the architects skimmed hundreds of millions of shillings through similar tricks, only on a grander scale.

An internal audit at the ministry shows that officials also overstated bills, causing the loss of Sh1.6 billion in public funds.

The auditor found that the Ministry of Health submitted to the National Treasury a list of pending bills amounting to Sh2.4 billion.

However, when the auditors went in, they only found a total bill of Sh856 million from payment vouchers and other documents.

OUTRIGHT THEFT

In the NYS scam, the Auditor General revealed at least eight different schemes - from paying for air, paying twice for the same invoice, over-payment and outright theft.

These mirror the tricks at Afya House in a pattern that has raised concerns that the schemes could be replicated in other Government departments.

In both schemes, there was manipulation of financial statements and the Integrated Financial Management Information Systems (Ifmis).

In the Health ministry scam, the auditor, Bernard Mucheru, found huge unexplained discrepancies between the manual financial records and the records in Ifmis.

"Since the two records are derived from the same transactional data and the same principles of accounts are applied in the treatment of the transactions, the balances should be the same apart from clerical errors," the report notes.

Mr Mucheru said this raised a red flag on possible manipulation of books of accounts, raising the question of reliability and authenticity regarding the financial statements.

Esaki Limited, the company owned by the family of former Ethics and Anti-corruption boss Philip Kinisu, was also named as a beneficiary in both schemes.

The firm featured in the NYS scandal after it emerged that Mr Kinisu was doing business with the service before he was asked to head the agency at the time it was investigating the losses at NYS.

Kinisu dismissed conflict of interest allegations on grounds that he supplied the borehole materials to NYS long before he was named the EACC chairman.

However, some of the payments were made when he was at the EACC.

The National Aids Control Programme also provided room for more theft. The audit shows that Sh515 million meant for food rations may have been lost. Out of this, Sh265.7 million was paid to Co-operative Bank of Kenya.

"Co-operative Bank of Kenya cannot be a supplier of food and rations and hence the real payees were not disclosed," the audit says.

In the NYS scam, Family Bank became one of the key players after millions were withdrawn from the lender over the counter and stashed into bags.

The remaining Sh249.9 million was paid to five firms.

Curative and Rehabilitative Health Services (construction of buildings) got Sh350 million.

Taxpayers also lost about Sh150 million after Afya House adopted a scheme to pay for services through what is known as 'advice mode of payment.'

There was also diversion of money from key projects to pay consultants, some of whom did not have any contracts with the ministry.

CONTRACT PRICE

In the NYS scam, Consulting House, which is owned by political analyst Mutahi Ngunyi, received Sh12.5 million more than the contract price, with the excess money being drawn from an invoice that had already been paid.

The Ministry of Health audit found that about Sh800 million meant for the construction of buildings was "utilised on ineligible activities like procurement of goods and services and payments to consultants who had no contractual agreement with the ministry".

Another Sh889 million from the free maternity programme was diverted and the money used to pay other bills.

There were also cases of undisclosed transfers of money as well as budgetary over-expenditure. For example, the curative and rehabilitative health services department had an excess expenditure of Sh411.2 million.

The audit also found that an undisclosed amount of public funds were also lost through the withdrawal and altering of completed procurements and substituting them with unauthorised expenditure.

The same also happened at NYS, where contracts were altered. For example, an altered supplies branch contract was used to facilitate fraudulent payments of Sh222 million to various suppliers without proof of the goods being delivered or services being rendered.