The NHIF building in Nairobi.
The National Assembly is yet to conclude investigations into the Sh21 billion siphoned from the National Health Insurance Fund (NHIF) coffers in fictitious payments through the Incurred But Not Reported (IBNR) claims, almost two years since a petition was filed.
The investigations were triggered by a petition from Mr Bernard Muchere, a former Internal Auditor at the National Treasury and currently a Fraud Risk Assessment Consultant, which was received on October 30, 2023.
Mr Muchere’s petition claims that the Sh21 billion was dubiously incurred but not reported by NHIF, which has since transitioned to Social Health Authority (SHA) as required by law.
House records show that the petition was conveyed to the House by Speaker Moses Wetang’ula on December 6, 2023 and committed on the same day to the Public Petitions Committee, little has come out of the committee.
However, the Public Petitions Committee, chaired by Runyenjes MP Karemba Muchangi, has only heard from Mr Muchere ever since.
National Assembly Public Petitions Committee chairperson Karemba Muchangi.
We asked Mr Muchangi why the investigations have taken so long and when he intends to report to the House.
“The committee will meet the (Health Cabinet Secretary Aden Duale) CS next week,” the MP said in a short message response.
However, what raises eyebrows is that although the House Standing Orders state that such petitions be concluded within 90 days of committal and a report tabled in the House, our investigations reveal that the committee is far from producing a report.
“Whenever a petition is committed to the Public Petitions Committee, the Committee shall, within 90 calendar days of committal, respond to the petitioner by way of a report addressed to the petitioner or petitioners and laid on the Table of the House,” reads Standing Order 227 of the National Assembly Standing Orders.
Reached for a comment, Mr Muchere said that the only communication he got from the National Assembly was the one requiring him to appear before the committee to prosecute his petition last year.
“I did my part as a citizen of this country to petition parliament on a matter of public concern. Their work on the matter is cut out. I will be happy to get a report on the matter,” said Mr Muchere.
But even as Mr Muchere spoke, our investigations revealed that since Mr Muchere appeared before the committee on September 10, 2024, no other witness has been summoned before the committee over the matter.
“In fact, the committee wants the petitioner to appear before it and give more clarifications on the matter,” a member of the committee who did not want to be quoted said, meaning that the committee is not about to conclude the matter anytime soon.
Mr Muchere had requested that the Committee summon the Ministry of Health, the board of the defunct NHIF, now Social Health Authority (SHA), to respond to the matter.
While committing the petition to the committee on December 6, 2023, Speaker Wetang’ula directed the committee to expedite the investigations.
“Having established that the matter raised in the Petition is well within the authority of this House, I hereby commit the Petition to the Public Petitions Committee for consideration,” directed Speaker Wetang’ula.
National Assembly Speaker Moses Wetang’ula during the Kenya Kwanza Kisumu County Tuk Tuk Sacco empowerment event on August 2.
The House Speaker added; “the Committee is required to consider the petition and report its findings to the House and to the petitioner in accordance with the Standing Orders.”
Irregular payment
Other than the Ministry of Health, the petition also puts the NHIF board and National Treasury in a tight spot on account that the irregular payment “caused a major crisis in the contributors’ medical coverage, resulting in most patients being denied treatment with vital consequences.”
IBNR, Mr Muchere explains, is a type of reserve account used in the insurance industry as the provision for claims or events that have transpired but have not yet been reported to an insurance company.
IBNR is therefore used by insurance companies, “particularly along the eastern Gulf Coast of the United States, where Hurricanes and other natural disasters are common.”
Mr Muchere claims that upon undertaking a fraud examination on NHIF financial statements, he established that during the preparation of financial statements for the 2021/22 financial year, the NHIF management “fraudulently created IBNR claims aggregating to over Sh21 billion.”
The creation, he says, was done and backdated to the 2019/2020 and the previous financial years.
“The facts enumerated in the petition provide proof that IBNR claims were deliberately created to siphon out NHIF funds,” Mr Muchere says adding: “Parliament should establish whether the Health Cabinet Secretary approved the ineligible claims.”
The Petitioner notes that the unbudgeted claims were then charged to the NHIF members’ contributory schemes like Health Insurance Subsidy Programmes for Orphans and Vulnerable Children, and the poor, Older Persons and Persons with Severe Disability (HISP- OVCs and OPPSD).
The dubious payments, Mr Muchere notes, includes Sh9.7 billion being proceeds from the National Health Scheme, Sh4.01 billion from National Police Service (NPS) and Kenya Prisons Service (KPS), Sh2.9 billion from civil servants scheme, Sh2.3 billion meant for Linda Mama program and Sh780.7 million from the parastatal scheme.
The others include Sh683.92 million from EduAfya scheme, Sh525.3 million from the county scheme, Sh190.2 million being proceeds from retirees’ scheme, Sh31.3 million from HISP- OVCs and Sh6.5 million from HISP- OPPSD.
Financial statements
In 2014, the government, through NHIF, rolled out HISP to cushion OVCs and OPPSDs through a cash transfer programme under the State Department for Social Protection.
What raises suspicion is that the NHIF CEO and the chairperson of the board in their reports contained in the NHIF’s annual report and financial statements for the 2021/22 financial year, “respectively, consciously avoided mentioning and explaining the basis for the IBNR claims.”
“The NHIF CEO and chairperson's noncommittal on IBNR claims is proof of their improbability,” the petition reads.
What should have been of interest to the petitions committee is that in the NHIF audited financial statements for the 2020/21, 2019/20 and the preceding financial years, IBNR reserves were non-existent and only “propped up in the financial year ending June 30, 2022.”
The petitioner claims that he established that the audited financial statements for the financial year ended June 2021 was deceitfully restated, “whereby”, part of the Sh18.7 billion cumulative retained earnings, Sh12.31 billion was converted to IBNR claims reserves.
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