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Questions linger as Shitanda sacks NHC bosses

By By Luke Anami | Jul 25th 2012 | 4 min read

By Luke Anami

The circus at the National Housing Corporation continued yesterday when the suspension of managing director James Ruitha was announced three weeks after the event.

Things became murkier after it emerged that Ruitha’s contract was to end this month, but he opted not to reapply.

Housing minister Soita Shitanda said he suspended Ruitha after receiving reports of the Efficiency Monitoring Unit and other “Government agencies”, including the Inspectorate of State Corporations regarding the alleged illegal allocation of houses built by the parastatal.

Also suspended is the chairman Bosire Ogero. Ruitha’s position has already been advertised. Under the State Corporations Act he is required to re-apply six months before the expiry of his contract.

“The MD’s suspension is essentially because of the manner in which he handled the sale of houses,” said Shitanda at a press conference.

The minister said in some cases staff members were allocated as many as 20 units yet other applicants got nothing.

 “The chairman was suspended for six months in March and his fate awaits the full investigation reports by the Ethics and Anti Corruption Commission team,” said Shitanda.

The minister explained that both the chairman and the MD allegedly allocated themselves between four and five houses respectively in contravention of a housing policy that requires allocation of not more than one unit each.

Compliance with policy

The NHC board, which can only be disbanded through a gazette notice, has since been suspended from conducting any activities.

Three other managers including estate officer Lillian Muinde, company secretary Elizabeth Mbugua and finance manager Manasseh Wandabwa were relieved of their duties over the allocations.

Mbugua allegedly allocated herself 21 units; Wandabwa nine and other NHC staff more than five units.

“Upon receipt of views by EMU and Inspectorate of State Corporations, we have embarked on measures to address the apparent weaknesses particularly with respect to compliance with policy, procedures and ethical practice,” Shitanda said.

He continued: “In this respect I have already relieved from duty the chairman of the board, the managing director and officers found culpable.”

The minister said the committee charged with the responsibility of allocating houses is under the managing director.

Shitanda said the ministry was implementing measures to close loopholes allegedly used by staff to acquire NHC houses and ordered the board and management “to implement these policies in the allocation of houses, on merit to ensure equity and fairness.

But the minister defended his wife and government officials allocated houses saying they followed the law in applying for the units.

“Even (Francis) Kimemia (Head of Civil Service) applied like anybody else, but did not qualify as per the requirements of NHC. He was not allocated a house,” he said.

Build units

Shitanda explained that in the case of NHC houses in Kileleshwa, only those who could pay at least 20 per cent of the selling price, ranging from Sh8 million to Sh13 million, were allocated units.

“To qualify for a house, the applicant must apply by purchasing an application form at Sh2,000 and thereafter pay a 20 per cent deposit before one is allocated a unit,” noted the minister.

Some of the State officials accused of benefiting from the sale of NHC houses include his deputy Margaret Wanjiru, but Shitanda said she got only one house “on merit”.

The Minister blamed the lack of support from the Government for the high prices of NHC houses saying the corporation had to borrow from financiers to build the units yet it needed to recover its costs.

An attempt by the NHC to raise money through a bond listing at the Nairobi Securities Exchange collapsed two years ago after Central Bank refused to guarantee the same.

Shitanda said NHC has spent Sh9 billion on housing since 2002 with only Sh1.6 billion coming from Treasury. It borrowed another Sh1.6 billion from commercial banks at market rates, Sh2.4 billion from contractors and raised the rest through advanced sales and other “internal sources”.

House Allocation

Said Shitanda: “There are some instances where advertised houses are not all taken up immediately and the Corporation is obliged to take appropriate measures to dispose of the same to recover the cost.”

The Corporation also allows applicants who miss out on a particular scheme to carry forward their money to future schemes, meaning top government officials who missed out on earlier schemes were given priority.

The NHC audit report titled Distortions in House Allocation: Report of House Allocation Process at the National Housing Corporation revealed that in every scheme between 10 and 20 per cent of the houses were reserved for NHC staff.

Another 10 per cent were reserved as “special cases” to be allocated to senior officials, allegedly by the managing director.

“Majority of the houses was developed with funds borrowed from the bank. In fact those with cash can have them as the loans must be repaid soonest,” Shitanda explained.

He said houses in Kisii, Migori, Kakamega were not fully taken up.

Completion of project

Recently built NHC houses are located in Kileleshwa, Nairobi West, Langata Phase Four and Five and Madaraka B, D, and E among others.

“The construction costs of these projects are therefore paid to the financiers on completion of the project,” he explained.

“We shall implement the recommendations of the EMU report in totality, be it reprimanding officials to or charging them in a court of law for abuse of office,” the minister added.


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