Kagwe: Yes, we have a problem at Kemsa but no money was lost

Health Cabinet Secretary Mutahi Kagwe yesterday said no money was lost to graft but accused the Kenya Medical Supplies Agency (Kemsa) of mismanagement of funds by over-procuring health equipment for Covid-19, and inefficiency.

Kagwe who appeared before the National Assembly Health Committee, said Kemsa was stuck with billions of assorted stuff whose prices have fallen by 50 per cent.

“Kemsa currently has Sh6.2 billion worth of equipment that they are holding in their stores and cannot sell because the prices have gone down. The problem was the agency’s failure to find the right balance in procuring of the equipment,” he said.

He exonerated himself of any wrongdoing, saying those accusing him of putting pressure on Kemsa were those who had become casualties of his tough decisions on the operations of the ministry, including the agency.

Kagwe was named by suspended Kemsa CEO John Manjari as one of the senior ministry officials who exerted pressure for award of tenders for supplies and equipment to support the Covid-19 fight.

But the CS said the discourse around graft allegations had been weaponised.

“We must not be naive to the issue of the politicisation and weaponisation of the Covid-19 issue, we live in a country that is fairly political and it is a fact that there is weaponisation of the politics of it all,” he said.

Manjari recently revealed that Kagwe and his Principal Secretary Susan Mochache made several requests, including making numerous in-person visits to prevail upon the agency’s executives to expedite award of tenders for procurement of Covid-19 supplies.

The suspended CEO had appeared before a joint Senate Health and Ad Hoc Committee on Covid-19 where he was tasked to explain an expenditure without clearance by the Kemsa board.

However, Kagwe said since he entered the ministry, he had never visited Kemsa premises. He said there was a need to reform Kemsa and its monopoly removed if the agency is to function effectively.

He said the agency had most of its tenders skewed and not on need analysis, and this would continue to hound it unless it was reformed.

In the meantime, he asked Kemsa to consider selling the health equipment at the market price, recover part of the money before the prices go down further.

“They bought the equipment like PPEs at Sh9,000. Today, after my direction for local purchases of the products, the prices came down to Sh4,300 and there is a possibility that the prices could still go down. The best thing for them to do is to sell, declare the losses and then the government will review the matter,” said Kagwe.

He said his duty was to provide policy direction and coordination in the national response to Covid-19 and it is his direction that occasioned the drop in prices of stuff.

Suspended

Manjari was suspended by the Kemsa board on August 14 alongside Eliud Muriithi (Commercial Director) and Charles Juma (Procurement Director) to pave way for a probe by the Ethics and Anti-Corruption Commission (EACC).

The suspensions followed reports of mismanagement of monies appropriated to support efforts to combat the novel coronavirus.

Kagwe said since he got into Afya House five months ago, he has been battling to clean the ministry of graft cartels and it is work in progress.

“When I got to the ministry there were officers, including procurement officers, who had stayed for over nine years in one station, which was not a good thing. The cleaning is work in progress, I have not relented,” he said.

He said he is the one who invited the Directorate of Criminal investigations (DCI) to look into the operation of Kemsa and by extension the ministry. He said the law allowed for emergency procurement.

Mochache also turned the screw against the Kemsa management, accusing them of even attempting to by-pass the ministry and seeking money from the National Treasury to pay suppliers without getting the approval of the board.

She produced a letter where Manjari and his team had sought over Sh5 billion from the Treasury, behind the Health ministry’s back, after they undertook procurement out of their budgetary allocations.

Mochache said they only learnt of the anomaly after Treasury reached out to them, demanding to know why the parastatal was making the request without the ministry’s approval.

“As a ministry we could not approve of such funding,” she said.

The PS denied claims that she had influenced award of tenders at Kemsa, insisting that at no time did she get involved in procurement processes at the State corporation.

“I have never been under any influence to push for anyone to be awarded tenders at Kemsa. Nobody came to me asking for favours to undertake procurement. I have never involved myself on matters of procurement there,” she said.

The PS was however at pains to explain a letter she wrote to Kemsa’s commercial director, with MPs demanding to know whether as the accounting officer of the ministry she was allowed to make direct correspondences to employees of a State corporation.

She, however, said she only wrote to the director, as the matter of securing supplies was under his docket and required urgent actions. She said she copied the same letter to the CEO.

An exposé aired on NTV also suggested supplies donated by Chinese business magnate Jack Ma had been diverted from Kemsa warehouses and sold to private firms in Tanzania.

Cargo not delivered

There were also claims that an Ethiopian airline that transported the cargo had not delivered 21 batches to the government.

However, the Ministry of Transport yesterday said no donation from Jack was stolen, adding that all the donations received by the ministry were handled by Kenya Airways as an official agency handler.

Transport Chief Administrative Secretary Chris Obure told the National Assembly Health Committee that the cargo was cleared by the Government Clearing Agency and handed over to the Ministry of Health and Kenya Medical Research Institute (Kemri).

There had been allegations that the cargo was cleared by a private firm.

“Upon arrival at JKIA, the ground handler, Kenya Airways, moved the cargo from the aircraft bonded warehouse after which the clearing process was undertaken by the Government Clearing Agency,” said Obure.

According to Obure, the consignee verified the details and quantities of the goods received were consistent with the details in the airway bills.

The committee asked the Transport ministry team to reappear today to give more details on Jack’s donation.

[Additional reporting by Rawlings Otieno]