12 governors risk charges in Covid-19 funds misuse probe

At least 12 governors could be charged over how they spent Sh7.7 billion Covid-19 funds received during the early months of the pandemic as agencies start to investigate massive irregularities revealed by the Auditor General.

The devolved units are on the spot for making double payments for procured items, splurging cash without work plans or budgets, paying for goods without contracts and disregarding procurement laws to give contracts to dubious firms.

A preliminary study of the audit indicates that at least 12 governors may find themselves in trouble over massive misuse of the funds allocated to them.

This is as pressure continues to mount on the government to account for Covid-19 funds.

The International Monetary Fund (IMF) last month gave the government until the end of May to provide an account of how it spent monies advanced to it by global partners on Covid-19 as part of the conditions of accessing a Sh255 billion shilling loan.

The Sunday Nation is aware that officials seconded from Bretton Woods institution have been camping at the Treasury helping to audit all government expenditures on the pandemic with a fine-tooth comb for the past three weeks.

The Senate's Health Committee began to question governors last week over how they spent monies advanced to them to fight the pandemic. Seven governors have so far appeared virtually before the Senate for questioning since last week when the exercise began.

These are Kisumu, Wajir, Murang’a, Vihiga, Kajiado, Kisii and Kitui. The exercise, which will continue for the next one month until June 3 will resume on Monday with Machakos taking the stand followed by Turkana.

Criminal liability

The rubber will, however, meet the road when the Ethics and Anti-Corruption Commission (EACC), which we are aware has picked up the matter, establishes if there is a criminal liability on the part of the governors from the counties in question.

“The procurement and inventory management systems for the county governments were found to be inefficient and ineffective in accounting for donated and procured items thereby raising doubt on value for money for these expenditures,” observed Auditor General Nancy Gathungu in her report.

“EACC and the Directorate of Criminal Investigations (DCI) should conduct further investigations to establish acts of criminality in inventory management of Covid 19 related items,” said the auditor.

In total, the 47 counties received Sh7,705,900 out of the Sh214,908,853,825 that the government borrowed between March 13 when the first case of Covid-19 was reported in Kenya to July 31 last year.

The Sh214 billion was borrowed by the Treasury from the European Union (EU), the IMF, World Bank and the Danish International Development Agency.

A further Sh58,158,600,000 was re-allocated by Parliament to cater to emergency responses.

However, once the funds hit their accounts, the counties suddenly found themselves with money they had not budgeted for. The result was a spending spree motivated by kickbacks and get rich quick schemes by the administrators put in charge of the money, which Kenyas will eventually pay as loans.

A summary of procurement irregularities by the Auditor-General has shown that 33 counties spent the money without having procurement plans in place. Embu, Homa Bay, Isiolo and Murang’a issued tenders to non-prequalified bidders while Bomet and Meru split contracts that they had already issued irregularly.

Busia, Kakamega, Isiolo and Meru issued tenders without conducting a market survey as demanded by law while Kajiado, Kirinyaga, Laikipia and Tharaka Nithi issued tenders for goods without valid contracts. The audit has also found out massive discrepancies between dispatch records at the Kenya Medical Supplies Authority (Kemsa) and products received in Elgeyo-Marakwet, Embu, Kakamega, Nandi, Narok and Nyeri.

Spending spree

The most glaring anomaly in the spending by counties is that all of them opted to procure Covid-19 related items expensively from private companies instead of Kemsa.

This left the agency, which was already on a spending spree of its own, with goods worth Sh6.2 billion by the time red flags began to emerge.

“The decision by the county governments not to procure the items from Kemsa was not justified,” the Auditor General has noted.

Embu, Kajiado, Machakos, Kiambu, Nyeri and Kirinyaga had poor records in their stores which made it impossible to know what was donated to those counties to help in fighting Covid 19. Kiambu in particular has no evidence showing that it received maize, rice, sugar, cooking oil, beans and green grams from the Emergency Response Fund.

While the above examples could be wished away as being results of poor record-keeping, 12 counties engaged in what is outright criminal in the way they handled the money they received.

Like in Homa Bay, the county transferred Sh2,080,000 from its Emergency Fund to the Homa Bay County Assembly Mortgage repayment account.

“There was no evidence availed (sic) explaining why the funds were transferred to a mortgage account,” noted the Auditor General. Additionally, the county used Sh4,425,000 to pay for maize and dry beans, which were procured in November 2019, four months before the first case of Covid-19 was reported.

Isiolo awarded two tenders worth Sh9.4 million to ineligible companies.

The first company Bertume Traders, which was given a Sh6.6 million tender to supply maize meal, was only two months old having been incorporated on February 20.

Hunain Contractors, which contracted to supply face masks at Sh2.8 million, was a construction company with no “verifiable experience in the supply of pharmaceutical products”.

Additionally, the county issued tenders worth Sh24 million to eight suppliers who were not prequalified and there is no evidence of invitation and approval for prequalification.

 Some of the companies that benefited include Musla Kenya Limited (Sh5.8 million), Pasaiba Tourmarine (Sh2.3 million), Grande Hotel (Sh3 million) and National Youth Devolution (Sh3 million).

Kisumu County bought surgical masks at different prices from two main suppliers. Darcindy Enterprises which received a Sh2.8 million tender supplied 1000 masks at a price of Sh56 per piece. Hella Intimates EPZ Limited supplied the same at Sh35.

In total Hella Intimates supplied 357,143 masks for a total price of Sh12.5 million, 257,143 re usable fabric masks at Sh9 million plus other items bringing their total income from Kisumu County during the three month period to Sh33.7 million.

Kitui county failed to conduct a technical evaluation while procuring formalin, ethanol, calcium hypochlorite, methylated spirit and gemitride. Nevertheless it proceeded to award Asumbi Pharmacy, Gruda Investment, Naxton Enterprises and Venus Extraneous Limited tenders cumulatively worth Sh6.5 million for the supply of the items.

Additionally the county issued a restricted tender to Archies Company Limited, Double Double Construction and Abbish Investment to supply 300 hospital beds, 30 tents, 300 mattresses, 120 infra-red thermometers and bedside lockers. The argument by the county on why it was using a restricted tender was that the items were needed on an emergency basis. The total cost was Sh21.3 million.

“The audit however observed that the contracts required the suppliers to supply their respective items within eight weeks. It is not clear why the suppliers were given eight weeks to supply emergency items,” notes the audit.

In Machakos four employees Martha Katumo, Regina Itumbi, Michael Musyoka and Muia Kioko who were front line health workers were found to have been paid double allowances of Sh30,000.

In Meru Petnash Construction Company Limited was awarded a Sh7.2 million tender for painting, renovation and installation works of Egoji Isolation Centre when it was not duly authorized or licensed for that kind of job by the Energy and Petroleum Regulatory Authority as required by the Energy Act.

In Tharaka Nithi, the county procured hospital beds using restricted tender at a price of Sh55,000 each. This is above the Public Procurement Regulatory Authority (PPRA) set price of Sh45,000. This resulted in a variation of Sh9,639 which is equivalent to 21 percent.

Additionally there was no signed contract between the county government and Tri Pillar Consultants Limited which was given the tender to supply the beds at a total cost of Sh8,436,00.

“As a result the county contravened Section 104 D of the Public Procurement and Disposal Act,” notes the audit.

Tharaka-Nithi also issued a tender for the construction of Water Towers at Chuka Referral Hospital at Sh751 million. The Auditor General has noted that this price surpassed the engineers estimate by 59 percent. The engineer had estimated that it would cost Sh279,866 to construct each of the tanks.

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