How NHIF was set up for plunder
A new status report on three major scandals involving the National Hospital Insurance Fund has detailed how the insurer has been plundered since 2001.
It paints the picture of a helpless institution at the mercy of managers who did everything to abet the loss of billions of shillings meant to pay members’ medical bills.
The report dated November 26 was given to the directors during last Tuesday’s board meeting where a resolution was reached to suspend Geoffrey Mwangi as chief executive.
It is believed that the report is part of the responses sought by the Directorate of Criminal Investigations (DCI) in an ongoing probe targeting past and present managers. All board members have been summoned to give an explanation on the scandals that have rocked the insurer for decades.
First was the controversial Karen land paid for in 2002 but which could be lost should a group of claimants have its way in an ongoing ownership battle in court.
Peter David Leparakwo and a group of about 90 other people claimed they inherited the parcel as a gift of appreciation in the 1980s from a departing settler.
However, the vendor that sold the land to NHIF in the report is listed as Kaskazi Traders – a private firm that was allegedly allocated the parcel only four months earlier.
A special board meeting of NHIF was held on January 16, 2002, which approved the establishment of a recreational facility on the land. A week later, the Government Chief Valuer was called in to assess the fair worth of the land and the value was given as Sh100.6 million.
Another board meeting was held on March 27, 2002, which approved a budget for purchasing the land and developing the facility, at Sh95 million and Sh85 million respectively.
A sale agreement was entered into on March 28, where NHIF would pay Sh93.7 million for the land, which would be transferred to the fund on December 20.
Days after the sale agreement was signed, the then chief executive, Ibrahim Hussein, was reported to have commissioned architects, engineers and consultants for the project.
Seven firms were contracted to carry out various activities, including drawings, a decision that would prove to be an expensive blunder that later exposed NHIF to a loss of Sh4.7 billion even though the project would never take off.
The contractors would later be paid over Sh400 million for no work done before a court ruled that they had no claim since the contracts were illegal from the onset.
As the Karen land saga simmered, another scam was developing relating to the building of the NHIF parking silo.
Directors have been told that there was a significant variation in design to justify the four-fold increase in costs from Sh909 million to Sh3.3 billion.
Among the variations indicated in the report is that an additional basement parking level was introduced leading to delays. This saw the completion date moved forward by five years from August 2003 to August 2008.
The third project whose queries the directors are supposed to respond to is the award of an insurance tender for civil servants, police officers and prison warders.
A consortium of Britam Life Assurance and Pioneer Assurance were awarded the tender, to the protest of another bidder, UAP Assurance, which claimed to have submitted a lower bid.
UAP Assurance successfully pleaded its case before the public procurement watchdog, which ruled that the tender should be cancelled.