Kenyans to pay Sh7.6b for illegal Kemsa deals

Solicitor General Kennedy Ogeto appearing before the Public Investments Committee (PIC) in Parliament, Nairobi yesterday. [David Njaaga, Standard]

Solicitor General Kennedy Ogeto yesterday declared the Sh7.6 billion Kenya Medical Supplies Authority (Kemsa) procurement illegal but said the taxpayers will still have to pay for it.

Ogeto, who appeared before a parliamentary committee yesterday, said the Covid-19 equipment were tendered by the agency in contravention of the procurement law, therefore, was null and void.

This came as members of the Public Investments Committee (PIC) mulled over how to recover millions of shillings from the suppliers who charged exaggerated cost. The MPs suggested the establishment of a multi-agency team to determine the market price of the items. Firms already paid will have to return the excess payments.

The latest development in the alleged corruption scandal comes against the backdrop of a revelation that the agency rejected an offer to procure personal protective equipment (PPE) at Sh4,500 and instead bought them for Sh9,000 per unit. The grilling of some of the suppliers and officials revealed how the agency abused the emergency created by the pandemic to award contracts without tender documents.

Most of the 102 firms that traded with Kemsa supplied goods worth millions of shillings on the basis of a commitment letter and signed contracts after making deliveries.

Without evidence

Ogeto yesterday told the committee chaired by Mvita MP Abdulswamad Nassir that Kemsa procured the items at a higher price. The agency also ended up spending money meant for the Universal Health Coverage in a procurement spree.

“During the period under review, Kemsa irregularly utilised Universal Health Coverage and Capital Budget to procure Covid-19 related items worth Sh7,632,068,588 without evidence of approval of the budgets by the relevant authorities,” Ogeto said.

He said the procurement was not initiated based on need-assessment and planning, resulting in over procurement of Covid-19 related stock, which is still being held at Kemsa warehouses. But he said that refusing to pay the suppliers would be unfair to them because they have delivered the items, some of which have been sold to the counties.

“We wish to point out that the law provides a remedy for quantum meruit in instances where a contract does not exist or cannot be performed. The doctrine means reasonable payment for work done,” he told the committee.

He said the import of the doctrine was to ensure that even where there has been non-compliance with the law, none of the parties to the illegal contract benefits from the contract at the expense of the other.

Some members of the committee, however, raised concern with the decision, saying it may encourage rogue contractors and suppliers to break the law but still demand payment.

Wajir North MP Ibrahim Ahmed said the decision to pay the suppliers even when the contract was illegal would entrench impunity. Budalangi MP Raphael Wanjala also raised an issue with the decision, questioning why the suppliers should not be ordered to take back their stock.

Ogeto also supported the establishment of the multi-agency team comprising the Treasury, Office of the Solicitor General, Office of the Auditor-General, and Public Procurement Regulatory Authority.

The decision could however trigger a court battle between the agency and the suppliers since it implies being paid based on the new price that would be agreed on by the team.

Ogeto said that any considered recommendation in relation to any contract entered into by Kemsa will require a case-by-case analysis, adding that it is only after such analysis that the office will make informed recommendations, including as to “the applicability of the doctrine of quantum meruit.”