Mr. Bernard Muchere, the auditor from the National Treasury who revealed a shocking Sh. 5.2 billion loot at the Ministry of Health has stated that the ministry is unable to account for the looted funds.
Addressing a Senate committee, the auditor accused the accounting and procurement departments of denying his office documents on three major payments, saying he had been forced to rely on data in the Integrated Financial Management Information System (Ifmis) to generate an interim audit.
“Prudent financial management requires that government entities procure only when they are sure funds are available, which was not the case when Sh200 million meant for free maternity services were paid to Estama Ltd that supplied the mobile clinics. A Sh350 million supplementary budget was also released so close to the end of the financial year, creating opportunities for fraud,” he said.
He said there were four suspicious payments in the interim audit, which included Sh515 million for the purchase of “food and rations” for the National Aids Control Programme, Sh265 million of which was irregularly paid to Cooperative Bank and Sh249 million to five firms although a similar programme was being funded by donors, leading to the risk of double payments.
On the Letter of Credit (LC) that the Ministry opened at the Co-operative Bank by depositing Sh.265 million, Mr Muchere explained that a 1997 Treasury circular made it clear that LCs could only be opened for overseas suppliers.
“A Letter of Credit cannot be executed for local suppliers,” he told the committee when asked whether the ministry had put money in the bank for the benefit of the supplier, adding that the same loophole had been used in the Cereal Boards scandal that was associated with wheeler dealer Jacob Juma, who has since died.
Mr Muchere also told the committee that the Sh.350 million supplementary budget was released to the ministry four days to the close of the financial year, when government procurement, which closes a month to the end of the financial period had lapsed.
“The Sh.350 million appeared to have been spent although no payment vouchers were available,” he said and blamed the ministry for re-allocating Sh.530 million from the Sh.800 million set aside for the “mobile clinics” to which Sh.350 million was again added, before Sh.647 million was paid to suppliers, leading to an over-expenditure of Sh.418 million.
The Kenya Medical Training Centre, is also reported to have misappropriated over Sh.452 million after reporting Sh.184 million in pending bills and a Sh.268 million over-expenditure from its Sh.2.2 billion budget.
The auditor also raised questions as to whether Estama Ltd, which supplied the 100 portable clinics, at Sh.10 million each, was qualified to win government tenders, saying it did not supply Kenya Revenue Authority PINs (Personal Identification Numbers) and Value Added Tax receipts, among other documents, suggesting it did not pay taxes.
