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Files of firms in Sh5.3b scandal go missing from AG office

COUNTIES
By Moses Michira | October 28th 2016
The Sh5.3 billion scandal at Afya House has taken a new twist after it emerged that registration details of companies involved in the transactions have gone missing from the State Law Office.PHOTO; COURTESY

The Sh5.3 billion scandal at Afya House has taken a new twist after it emerged that registration details of companies involved in the transactions have gone missing from the State Law Office.

Staff at the Companies Registry were yesterday unable to trace the files for Estama Investments, registered as an EPZ company, and Life Care Medics.

The two companies were beneficiaries of cash meant for patients, expectant mothers and new-born babies.

Records of a third supplier, Medafrica, were non-existent, raising questions about its identity.

Without the files, it becomes impossible to unmask the people behind what may turn out to be the biggest scandal in the Jubilee administration.

"Thousands of patients and doctors have suffered from this theft as unearthed by the auditor. This is totally unacceptable and we must know who the thieves are," said Ouma Oluga, the secretary general of the Kenya Medical Practitioners and Dentists Union.

It was not immediately possible to get an input from the Attorney General, who is the head of the State Law Office, relating to the missing files.

An official who attended to the request by The Standard was only able to get the registration numbers of the companies but said additional information such as directorship were only contained in the physical file.

In another failed attempt to get details of sampled companies, an officer from the Registry said the missing files may have been displaced before offering to locate them herself.

Reforms undertaken at the Companies Registry, a department at the office of the AG, which include digitisation of records were anticipated to tackle the "lost files" menace and enhance transparency.

Missing company files have in the past frustrated investigations into major corruption scandals even slowing the progress of court proceedings.

Estama Investments Ltd was the biggest beneficiary of the payments after receiving Sh1 billion. The Standard was only able to establish that it was registered in June 19, 2008.

The most shocking finding about Estama was that it was paid Sh200 million from the free maternity kitty on June 30, 2016, the same day the procurement decision was made.

Life Care Medics Ltd, whose file was also reported missing at the Registry, was paid Sh201 million for the supply of food rations alongside Cooperative Bank of Kenya that got Sh265 million.

DOUBLE PROCUREMENT

The same commodities were, however, procured through the Kenya Medical Supplies Authority (Kemsa), raising fears over the actual delivery of foods or rations.

And as commercial bank, the auditors reported that it was an obvious case of fraud as the lender was unlikely to be a supplier of foodstuff.

Dr Ouma said the diversion of funds had crippled crucial operations in most hospitals where expectant mothers were turned away.

The doctors' lobby said the reported misappropriation was shocking, and the fact that there were rampant medicine stock outages and delayed disbursements to counties were a sure sign of theft.

Some doctors are still owed up to 15 months’ worth of unpaid allowances, according to the KMPDU boss. He said grand theft at the ministry headquarters was directly responsible for the brain drain that had seen Kenya lose about 2,200 practitioners in two years.

The audit report found glaring pointers to the manipulation of the Government payments system (IFMIS), which reflected a cash balance of Sh43.3 billion and a bank overdraft of Sh22.3 billion.

It is, however, difficult to visualise how the Health ministry would be holding over Sh43 billion in cash, as it is enough to fill several rooms.

At the estimated global average weight of one gramme per bank note, the supposed cash would be about 43 tonnes or multiple truckloads.

Bernard Muchere, the auditor who compiled the report, termed the balances as unrealistic financial position.

He questioned the reliability of the IFMIS in ensuring efficiency and reliability as had been envisaged when the Government moved all procurement and planning to the system.

"This raises a red flag as to the authenticity of the adjustments and hence the reliability of the bank balances, ultimately rendering the financial position at the ministry untenable," Mr Muchere said in his report.

Theft at the Health ministry is a replication of the prior scandal at the National Youth Service, where senior officials even claimed their passwords were stolen, a claim investigating agencies termed as untenable.

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