August 21st 2017

Top Stories / National

Government statement on Sh5 billion scandal companies absolves president's relatives

The government also pushed back against the veracity of the interim audit report. The director for social media at State House, Dennis Itumbi, wrote Facebook posts promoting the line that the interim audit report was a mere management letter to diffuse the crisis.

By Free Press Reporternewsdesk@kenyafreepress.comFriday, 28 Oct 2016 14:46 EAT

A snapshot of the AG's statement.

A week after President Uhuru Kenyatta told the nation that his "hands were tied" in the war against corruption, details are emerging about the latest Ministry of Health Sh5 billion scandal that will put him under pressure to provide leadership in the war on graft. It has been reported, based on information from an interim audit report on the scandal, that recipients of some of the money that had been earmarked for strengthening health systems in county governments could include companies associated with the president's relatives.

However, Attorney General Githu Muigai released the names of directors of three companies that received more than Sh1 billion from the Ministry in irregular payments, a day after the The Standard newspaper reported that the companies' records had gone missing from the registry at the AG's office. The AG’s statement gave names of directors of Estama Investments, Medafrica andf Life Care.

The statement signed by the acting Registrar General indicated that Estama Investments has not filed annual returns since its incorporation on June 19, 2008, raising questions as to how it was able to get business with the government. Its shareholders were identified as Ambrose Makanga and Esther Wahito who each have 500 shares.

The directors of Life Care were identified as Richard Ngatia and Paul Wanderi, who each hold 500 shares, while Medafrica, which was registered on August 12, 2013, had Njage Makanga (400 shares) and Naomi Wanjiku (100 shares) as the directors/shareholders.

The AG's statement was apparently timed to undercut widespread reports on social media, including on Twitter handles and Facebook pages of prominent Kenyans, alleging that some of the president's relatives had a stake in the companies named in scandal. The names on social media included two female relatives of the president's, a list that was circulated widely, including by prominent lawyers and politicians.

The AG's statement to the media carried the same names as had been circulated on the social media posts but not any of the president's relatives. It is possible that some individuals with good knowledge of the companies had added the two ladies' names to the companies to taint their image. But unusually for a public disclosure on company information, the AG's statement did not indicate the share capital invested in the companies. 

Early this morning, a team of detectives from the Ethics and Anti-Corruption also raided Afya House, the ministry headquarters, to get documents that would enable their investigation of the scandal. The team was led by EACC deputy chief executive Michael Mubea.

The interim audit report on the scandal shows that the government Integrated Financial Management System (IFMIS) was compromised and payments made to dubious companies that had not supplied the services and goods in question. A similar system was used in National Youth Service scandals, where the government lost about Sh2 billion shillings, including Sh791 to a group of companies by a close-knit team of individuals.

At the same time, members of the National Assembly and Senate have called on Health Cabinet Secretary Cleopha Maillu and Principal Secretary Nicholas Muraguri to resign and pave the way for independent investigations into the scandal. The Senate Health Committee, the National Assembly Public Accounts Committee and Public Investments Committee have all seized the matter. The Senate committee has demanded that Dr Mailu and Dr Muraguri, both of whom failed to appear before it Thursday, step aside or be fired by the president to leave office pending investigations.

“We have taken great exception to these matters, which are already in the public domain. The Senate upholds and respects the rule of law. Embezzling public funds is something that has now become normal,” Migori Senator Wilfred Machage (Migori) said. The committee expects the two officials to appear before it on Tuesday November 1.

As the debate on the scandal evolves, the government also pushed back against the veracity of the interim audit report. The director for social media at State House, Dennis Itumbi, wrote Facebook posts Friday to diffuse the crisis over a perception of sky-rocketing coruption, explaining that the interim audit report was a mere management letter. “I refuse to shout corruption or Grand Corruption on the basis of a draft Auditor's report, it was not even a report but a letter asking for management response…. A raw copy of Audit, asking for answers, can surely not be my basis for identifying graft,” Mr Itumbi wrote.

That line of argument was, however, rejected by many responders, including government supporters who were demanding action on what has been termed by some analysts as the biggest corruption scandal under Jubilee. A Nyeri parliamentary aspirant called on government supporters, including members of the Kikuyu tribe, not to shy away from discussing corruption in government.

Ms Catherine Wanjiku Irungu, an aspirant for the Mathira parliamentary seat, wrote against the habit of ‘seeing no evil, speaking no evil’. “The MOH scandal is stinking and very heartbreaking,” she wrote on her Facebook wall. “In matters corruption and especially where 'our person' is involved most politicians from my region would rather keep mum or even mobilize each other in holding press conferences in support of the looters.

"They would rather lie low than be seen to fight 'Mundu witu'… I will speak out. I will stand to be counted. And I am saddened by this latest development because I know the people of Mathira have been on the receiving end, every weekend I have to attend over 10 medical bill harambees.” Ms Irungu also asked the president “give direction on the rampant corruption cases, that way we will promote better service delivery. Kikuyus must also learn to speak out! Stop suffering in silence.”

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