Home Business Taxpayers to lose Sh2.3 billion in EACC, Kemsa auction deal

Taxpayers to lose Sh2.3 billion in EACC, Kemsa auction deal

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Economy

Taxpayers to lose Sh2.3 billion in EACC, Kemsa auction deal


Kemsa offices

The Kenya Medical Supplies Authority’s offices in Industrial Area, Nairobi. FILE PHOTO | NMG

Summary

  • The Anti-graft agency has cleared the Kenya Medical Supplies Authority (Kemsa) to auction Covid-19 protection kits bought at inflated prices in a sale that will cost taxpayers Sh2.3 billion.
  • Health Principal Secretary Susan Mochache disclosed Thursday that the Ethics and Anti-Corruption Commission (EACC) clearance had been submitted to the Cabinet for final approval.
  • Kemsa bought the Covid-19 emergency equipment at Sh6.3 billion at inflated prices in a procurement the EACC flagged as irregular and recommended charges against some officials.

The Anti-graft agency has cleared the Kenya Medical Supplies Authority (Kemsa) to auction Covid-19 protection kits bought at inflated prices in a sale that will cost taxpayers Sh2.3 billion.

Health Principal Secretary Susan Mochache disclosed Thursday that the Ethics and Anti-Corruption Commission (EACC) clearance had been submitted to the Cabinet for final approval.

Kemsa bought the Covid-19 emergency equipment at Sh6.3 billion at inflated prices in a procurement the EACC flagged as irregular and recommended charges against some officials.

Audit findings imply that Kemsa may realise a loss of Sh2.33 billion if the products, which are stuck at its warehouses, are sold at the current market price.

“The ministry resubmitted memo on Jul 6, 2021 communicating the clearance of EACC and sought approval for disposal of the commodities which the country needs at this time that there is a surge which is expected to culminate into a fourth wave,” Ms Mochache told the National Assembly Public Investments Committee (PIC) committee.

“The matter is under consideration and discussion is to be made by the Cabinet.”

The Public Procurement Regulatory Authority (PPRA) catalogued instances of alleged inflation of prices for products procured by Kemsa.

Paracetamol tablets sold at Sh40 per pack were bought for Sh66.50 during the pandemic, while alcohol-based sanitiser priced at Sh313 was purchased at Sh495.

“There was no evidence of indicative price indices obtained through market survey,” the PPRA said.

It also alleged that most “tenders were retrospectively negotiated and evaluated after the deliveries” and “some of the negotiated prices were not as per the prices proposed.”

The Kemsa management also rejected discounts by suppliers of Covid-19-related items, a special audit revealed.

The forensic audit by the Office of the Auditor-General found that Kemsa officials chose to pay for a pack of 50 face masks at a price way above that quoted by suppliers.

A report tabled in Parliament said Ms Gladlab Supplies Limited had on April 9,2020 offered to supply Kemsa with surgical face masks with ear-loops at a discounted price of Sh3,183 per box of 50 pieces, down from an earlier quote of Sh4,750.

Auditor-General Nancy Gathungu said Kemsa chief executive officer Jonah Manjari, however, ignored the discount offer and instead requested the company to supply the items for Sh4,500 a pack as had allegedly been agreed during negotiations between the supplier and the agency’s tender evaluation committee.

Kemsa failed to conduct a comprehensive needs assessment of the Covid-19 purchases, leaving it stuck with stocks worth about Sh6.34 billion in its warehouses.

About 97 percent of the Covid-19-related stocks have been lying in the Kemsa warehouses for more than a year, implying inadequate market forecasting and planning by the managers of the State agency.

Out of the Sh7.6 billion set aside to procure Covid-19-related items, data shows that Kemsa has since paid Sh4.7 billion to suppliers, leaving a balance of Sh2.9 billion.

Dr Manjari was forced out alongside directors Eliud Muriithi (Commercial) and Charles Jume (Procurement) while investigations continue into the Covid-19 procurement saga.

The International Monetary Fund has pressured Kenya to disclose the identity of secret shareholders in firms with State contracts and prosecute those implicated in graft, including the Covid-19 scandal.



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