The National Health Insurance Fund (NHIF) has been accused of failing to provide crucial financial documents on time, regarding queries raised by the Auditor General’s annual and financial report for 2019/2020.
NHIF management failed to issue the documents to the Public Investments Committee (PIC), on Social Services, Administration and Agriculture conducting a probe into irregularities in the issuance of loans, and escalation of costs amounting to billions.
In the auditor’s report, NHIF escalated costs, amounting to billions of shillings spent on building a car park in Nairobi.
The auditor general also queried NHIF’s purchase of land in Karen and irregularly issued a loan to Moi Teaching and Referral Hospital (MTRH) in Eldoret.
Yesterday, the PIC on Social Services, Administration and Agriculture chaired by Emmanuel Wangwe was forced to send away the NHIF CEO Samson Kuhora after he failed to avail the documents on time.
The committee wrote a memo to respond to the auditor general’s raised queries on September 14, but shockingly, the response through a document was made on Wednesday at 9pm, a few hours before the committee's sitting.
The chairperson accused Dr Kihora and NHIF management, saying he lacks seriousness and respect for the committee and Kenyans at large.
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“Evidence was sent at night. The Auditor General has also not received the 2020/21 financial response…the Auditor General doesn’t have a guide for conversation with NHIF. Is this intentional,” posed Wangwe.
Biko Magara, Auditor General’s representative also told the committee that he had not received the 2020/2021 evidence and response from NHIF regarding the areas of probe.
“We received information from NHIF, at 9.15 pm,. We therefore haven't been able to work on it, The document shared was a soft copy,” said Magara.
Wangwe directed the NHIF management to re-appear before the committee together with the NHIF board on October 9.
The auditor general’s audit report questioned the construction of a multi-storey car park.
As previously reported, the National Hospital Insurance Fund entered into an agreement with a local construction firm for the construction and completion of a multi-storey car park at a contract sum of Sh909,709,305.
According to the information available, the project commenced in May 2002 and was scheduled for completion in August 2003.
However, records available, indicate that the contract sum was later revised upwards to Sh1,179,611,756 representing approximately 30 per cent above the original contract sum of Sh909,709,305.
Although records available indicate that the car park was completed in July 2008 at a total cost of Sh3,342,120,239, a further amount of Sh626,635,998 and Sh4,706,521 was incurred in 2009/2010 and 2010/2011 respectively on the car park increasing its total expenditure to Sh3,973,462,758 as at 30 June 2011, or resulting to an increase of approximately 337 percent over and above the original contract sum of Sh909,709,305.
Further and as similarly observed in the prior years’ reports, the escalation of costs of the car park by 337 per cent, over and above the original cost was justified.
“Although the issue has been discussed by the Public Investment Committee, no action has been taken on the Committee recommendations as per the 19th and 21st reports which recommended that the Director of Ethics and Anti-Corruption Commission should institute and fast track investigation on the project with a view to preferring charges against all those who would be found culpable,” said the committee in its memo.
At the time of the audit, no progress report had been received from the commission (EACC).
In the circumstances, it has not been possible to ascertain whether the property, plant and equipment balance of Kshs.13,225,241,616 as of 30 June 2020 is fairly stated.
The auditor general's report also queried how a loan advanced by the fund to MTRH at an interest rate of 3 per cent per annum wasn't supported by any signed agreement between MTRH and NHIF.
The auditor general had an unquoted investment balance of Sh368,392,699 as of 30 June 2020, which included a balance of Sh314,192,699 in respect of a loan advanced by NHIF to MTRH, at an interest rate of 3 per cent, per annum.
However, though the loan was not supported with a signed loan agreement between the Fund and MTRH, MTRH has already disputed the advocates/legal costs amounting to Sh40,883,040 charged to its loan account.
At the time of the audit, there was no signed Memorandum of understanding (MoU) between NHIF, MTRH and IAEA.
“...to date, there is no signed financing agreement between NHIF and MTRH which defines the terms of the loan, purpose and the repayment methods,” stated the committee in a memo written to NHIF.
According to the committee, although the management has acknowledged the omission, it was not explained how the anomaly will be resolved and the fallback plan in case of default by the Hospital.
“The unquoted investment balance of Sh368,392,699 also includes consolidated bank shares of Sh 54,200,000 which are not traded and for which no dividend has been paid in the past.
Under the circumstances, the investment in consolidated bank shares is impaired. Consequently, the validity of the unquoted investment balance of Sh368,392,699 as of 30 June 2020 could not be confirmed,” added the committee memo.
In defence of the committee through submissions, NHIF management noted that MTRH wrote to NHIF vide a letter Ref NO. ELD/MTRH/ADMIN/1/VOL.IV/2015 dated 12th July 2017 forwarding a proposal requesting financing for the purchase of Radiation Oncology equipment.
A Board Paper was prepared and presented to the Finance and Investment Committee on the proposal to offer a loan facility to MTRH, and the board approved a loan facility of Sh312,669,869.20.
The fund is also accused of inflation of the cost of treatment by NHIF.
In the report, the auditor general questioned National Health Scheme (NHS) Benefit Expenses (overpayment above specified limits) Statement of Comprehensive income reflects an expenditure of Sh29,971,058,098 under National Health Scheme Benefits expenses.
However, the expenditure includes cumulative overpayments amounting to Sh828,729,148 paid contrary to the limits specified by the board for C-Section, Normal delivery, Minor surgery, Major Surgery, MRI, Rehabilitation, CT-Scan, Chemotherapy, Radiology, Kidney transplant and special surgery and overseas treatment.