On July 23 this year, the Kenya Hospital Association (KHA), the corporate body that owns the Nairobi Hospital, wrote to Cooperative, NCBA and ABSA banks warning them not to advance a Sh4.2 billion loan to the medical services provider, threatening to file a lawsuit if a single cent was disbursed.
The letter was also addressed to Finaltus Investment & Transaction Advisor and copied to Central Bank of Kenya Governor Kamau Thugge and President William Ruto in his capacity as the KHA patron. Nairobi Hospital’s Board of Management had one month earlier resolved to borrow the funds to finance its operations in 2024.
Six days after the banks received the letters, Nairobi Hospital entered into a contract with Symbiafric Ltd in which the latter was tasked with scouring the earth in search for an offshore loan of $33 million (Sh4.2 billion) with friendly interest rates and a long repayment period.
Court filings indicate KHA did not have full knowledge of the board’s plans amid accusations that the board, led by chairperson Chris Bichage, had sidestepped Nairobi Hospital’s owners in a bid to secure the funding.
The board’s move was the last straw that broke the camel's back for some KHA members, who had over the years grown uncomfortable with the management style and decisions made by Dr Bichage’s team.
Court filings have now revealed some of the secrets behind a vicious and unique battle for the heart and soul of Nairobi Hospital as its owners fight to eject the 13 people they initially trusted to ensure the facility lives up to its reputation as one of the best medical services providers in sub-Saharan Africa.
The grievances are many and varied, including claims of tender fixing by some hospital managers who are doing business with the facility and questions about the identities as well as genuineness of 2800 members who own a stake of the premier facility. The push-and-pull has seen confusion reign amid mixed communication passed both internally and externally, and often requiring Nairobi Hospital to issue statements of clarification.
On September 16, for instance, KHA's Admitting Staff Association issued a strike notice as the hospital's top brass maintained that operations were running smoothly. KHA members now claim the hospital has been brought to its knees by wanton corruption, tribalism and nepotism in hiring of staff, retaining an overage CEO and outsourcing of mundane legal tasks among other issues.
The planned Sh4.2 billion loan, KHA lawyers Ahmdenasir Abdullahi Advocates LLP argue in court filings, will likely bankrupt Nairobi Hospital. On the other side of the fence, Dr Mutubwa Law argues on behalf of the Board of Management that the allegations made by the KHA members are baseless and that no evidence has been presented.
The Board of Management in its June meeting resolved to spend Sh2.4 billion to buy medical equipment, Sh970.4 million on maintenance of equipment, Sh501.2 million on software, Sh215.8 million on furniture and fittings, Sh50.1 million on software, Sh41.8 million on vehicles and Sh19.2 million on infrastructure improvements.
In calling for an extraordinary general meeting intended to fire the entire board, KHA members claim Dr Bichage and Mr Mwaisaka have done business with Nairobi Hospital through proxies, amounting to conflict of interest.
The KHA members accused the board of disregarding procurement procedures in the acquisition of a new ICT system leading to losses. The board also stands accused of failing to put in place measures to block theft of the hospital’s funds, irregular retrenchment that allegedly sparked several lawsuits, and directing most of its legal business to one unnamed law firm. On August 2, members of the KHA took out a requisition for an extraordinary general meeting with the sole agenda of firing all 13 board members — Dr Bichage, Philemon Mwaisaka, David Githanga, Irungu Ndirangu, Magdalene Muthoka, Ludmilla Shitakha, Fred Kambuni, Mbira Gikonyo, Philip Waki, Herman Manyora, Barcley Onyambu, John Mwero and Geoffrey Ngetich.
The requisition acknowledged that Dr Githanga, Dr Ndirangu and Ms Shitakha had resigned from the board. Dr Bichage responded by filing a defamation suit against all the 363 KHA members, claiming that words used in the requisition for the extraordinary general meeting were defamatory.
The Chief Magistrate’s Court issued an order blocking the KHA members from using or repeating the words in the requisition, which effectively scuttled plans to call for and hold the meeting.
Dr Bichage’s faction also filed a case at the Milimani High Court against 10 KHA members in a bid to block the extraordinary general meeting that would have forced the board’s exit. The court ordered for maintenance of status quo. The KHA members fired another salvo when they filed an application seeking to block Nairobi Hospital from borrowing Sh4.2 billion as the Board of Management was on its way out.
KHA member Agnes Gachoki in her affidavit said Nairobi Hospital is flat broke and struggling to pay suppliers, salaries and other operating costs, hence should not procure a huge loan that it will struggle to repay.
Dr Gachoki added that it would be in bad faith to allow the board to borrow when one of the key aims of removing the current officials is to bring in a team that will limit loans and help Nairobi Hospital recover. The KHA members want Dr Bichage’s team barred from accessing funds in fixed deposit accounts and provident funds of the KHA pending either conclusion of the extraordinary general meeting or further orders from the court.
On August 21, Dr Bichage’s team filed an application seeking to lift the freeze orders. Their lawyer, Mr Wilfred Mutubwa, said operations would grind to a halt and that the orders put the hospital at risk of being sued by suppliers and other contractors.
Dr Mutubwa maintained that the Sh4.2 billion loan had been lawfully approved by the board and that Symbiafric Ltd was already on the hunt for a financial institution. On September 3, KHA members published a fresh requisition, calling for an extraordinary general meeting on September 18. Once again, the sole agenda was to fire the entire board.
Dr Bichage’s team filed another suit, this time at the High Court, arguing that the document was inconsistent with the KHA’s articles of association. They argued that the requisition did not give a 21-day notice for the meeting, and that its author was a law firm, Ahmednasir Abullahi Advocates LLP, which is not a member of the KHA. Justice Peter Mulwa stopped the AGM pending the hearing of the case.
The judge scheduled the matter for mention on October 8 after directing Mr Abdullahi, who filed the case on behalf of 400 KHA members, to serve the board with the suit papers.
In the application, Mr Abdullahi had submitted that the board members called for the extra-ordinary AGM at a Nairobi hotel through a notice published on September 3. He said the court was never told that the members had called for an AGM that was slated for September 21.
According to Mr Abdullahi, the court was being invited to the centre of boardroom wars as the members issued a notice, paid for the venue and were ready to proceed with the meeting for the removal of board members.
Mr Robert Shaw, a member of the KHA, said that, after the board failed to call for the meeting, he and 387 other members made a requisition for the extra-ordinary AGM as required by the articles of association of KHA and the Companies Act.
He said the suit by the board was a “desperate attempt” to use the court process as a shield against lawful proceedings and subject themselves to members either to remove or sustain them.
“The company is struggling financially and certainly has no capacity to repay loan instalments of over Sh4 billion. Committing the company and its assets as above shall most certainly drive the company to insolvency,” he said.
In yet another case, Director of Criminal Investigations (DCI) Mohamed Amin and Director of Public Prosecutions (DPP) Renson Ingonga have been roped into the Nairobi Hospital wrangles, after a judge directed that they be served with court documents in an ongoing case.
High Court judge Lawrence Mugambi also directed that the Registrar of Companies, the Data Protection Commissioner and the Attorney-General be served with the court documents. He made the decision following a request by Dr Gathukia Kinyua, a member of the KHA’s Admitting Staff Association.
Dr Kinyua had moved to court in July arguing that he was concerned that the wrangles would affect the affairs of the hospital and the quality of services.
Dr Kinyua said he wrote to the management seeking information on June 28, 2024 but got no response. The information he sought included a list of the current and past officials of KHA, past and present members, copies of rules and regulations of admitting staff association and list of present and past members of admitting staff association, among others. When no response was forthcoming, he moved to court to compel the management to release the said information to “protect his rights” as a member of the KHA and Admitting Staff Association.
The board opposed the petition stating that the register sought contained information relating to members and their families and therefore, personal information. Dr Kinyua said he sought the information as a constitutional right under Article 35 as well as section 4 of the Access to Information Act and section 96 of the Companies Act.
The hospital said it has approximately 2,800 members and that it informed Dr Kinyua that it was legally restricted from disclosing information related to the list of present and past members and the details sought, as it contained personal data.
The hospital admitted receiving the letter from Dr Kinyua on July 23, 2024 requesting to inspect the register of the members and get copies under section 96 of the Companies Act. Further, Dr Kinyua allegedly threatened to lodge a complaint with the DCI against the board,CEO and company secretary. The hospital said it wrote back to the medic stating that the letter failed to meet the requirements of section 96 of the Companies Act as well as the requirements for accessing members’ personal data under Data Protection Act.
The management denied claims that suit filed in court has affected the quality of services as Nairobi Hospital was a large corporation with specialist officers in each department competent to carry out functions unaffected by any litigation.
In a counter-petition, the hospital now wants an order directing the Data Protection Commissioner, Registrar of Companies, the DCI and the DPP to take necessary measures and steps — including undertaking or concluding investigations in a timely manner — to ensure that the members’ personal data is protected and that the individuals who have caused any data breaches are prosecuted.
