Outrage as audit shows Sh5.3 billion missing from Health ministry

Health Cabinet Secretary Cleopha Mailu (right) and his PS Nicholas Muraguri at a recent press briefing. [Photo: Beverlyne Musili/Standard]

Detectives Wednesday moved into Afya House, the Ministry of Health headquarters, to probe claims of the biggest theft in the Jubilee administration yet, of more than Sh5.3 billion by senior officials.

So complex was the alleged theft unraveled by an internal audit that also questions payments to the United Nations arm that deals with children and the world’s largest equipment maker, General Electric.

Kenyans were outraged by the newest scandal where one in every Sh5 meant to buy basic medicines and help save lives of dying patients, ended up in individuals’ bank accounts.

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No arrests had been made by the end of the day, even as it became clear from the internal audit report that former boss of the Ethics and Anti-Corruption Commission Phillip Kinisu was a beneficiary.

Among the avenues exploited by the thieving managers was diversion of monies from critical programmes such as the free maternity scheme to fictitious suppliers. Bernard Muchere, a certified fraud examiner who compiled the audit, fears that there could be even more money lost in the heist that also involved manipulation of the Government payments system, the Integrated Financial Management Information System (IFMIS).

“The small sample covered is an indicator that there could be a wider scheme wherein the ministry could have incurred huge losses to the detriment of service delivery to the public,” Muchere said in his report to Health Cabinet Secretary Cleopha Mailu.

The auditors raised fears that the theft and misappropriation of funds from the ministry may have caused an increase in the death of babies. “Increase in child mortality rate due to non-remittance of free maternity grants to the counties and referral hospitals.”

The scandal comes to light just days after President Uhuru Kenyatta expressed frustrations about the fight against graft in his government, where hardly any convictions have been made to date. Almost Sh900 million meant for funding free maternity was siphoned out of the ministry and paid to companies including Esaki Limited that were not among the listed suppliers.

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Esaki Limited received Sh151 million from the free maternity kitty, and is linked to Mr Kinisu who was forced out of the EACC following revelations that the firm received Sh35 million from the scandal-hit National Youth Service.

Another beneficiary from the kitty is a firm called Estama Investments, which received Sh200 million. The funds for the free maternity scheme were shared out among 31 entities for doubtful supplies, yet counties were collectively demanding over Sh1.48 billion from the health ministry to pay for the delivery of babies.

Since the funds were never released from the health ministry, and instead spent on non-essential usage, several counties were plagues with doctors’ strike which caused untold suffering to patients- with the poorer ones even dying while waiting for medical attention.

Free maternity service is a flagship project of President Kenyatta, as was the youth empowerment through the NYS where an estimated Sh1.8 billion is feared to have been stolen.

Wanton corruption

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Estama Investments also received another Sh800 million for the supply of 100 portable medical clinics, even though its existence as a supplier for the ministry was questioned in the audit. A total Sh1 billion was paid to Estama, with Mr Muchere citing that the firm “lacked the legal requirements to be considered for a government contract”.

It was specifically shocking for the auditors that Estama was paid Sh200 million on June 30, 2016, the same day that the purchase order was raised. “These funds were allocated to be transferred as GoK grants to various institutions and counties for free maternity,” Muchere said.

Accountants in the ministry refused to hand the auditors payment vouchers for another Sh400 million paid to Estama, in trying to frustrate the probe. While the clinics and medicines would typically rank higher on the list of needs, the ministry spent over Sh647 million to construct buildings that had not been considered in the original budget.

“Unless there were a disaster rendering people homeless, construction of building cannot qualify to be classified as unavoidable and unforeseen circumstances and hence the supplementary estimates under this account was contract.”

In order to foil the theft, the ministry top officials even made refunds worth Sh980 million to the National Treasury at the end of last June, which they had been unable to spend. But examination of the cash books revealed that there pending bills - arrears to suppliers, which should usually be the first to be settled.

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Health Cabinet Secretary Cleopha Mailu acknowledged that there indeed was the audit report, citing that some of the respondents had not given their side of the story. “We affirm that under no circumstances will the Ministry condone any acts of corruption and that the necessary action will be taken at all times to guarantee and preserve the value of taxpayers’ money,” Dr Mailu said.

The Kenya Union of Journalists called for the prosecution of Dr Nicholas Muraguri, the Principal Secretary at the Health Ministry, who threatened the reporter who first wrote the story on Tuesday.

Muraguri appeared to defend the looting from his ministry, which the KUJ says would amount to dancing on the graves of victims of the wanton corruption at his ministry.

Thousands of Kenyans die every second due to lack of drugs and medical equipment in our public hospitals, but a public officer who is entrusted with this very significant responsibility of saving lives can afford to defend the loss with threats to journalists,” KUJ Secretary General Erick Oduor said.

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Ministry of HealthIntegrated Financial Management Information SystemCleopha Mailu