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Economy

Treasury recalls auditor who unearthed Afya House scam

Bernard Muchere: We need more auditors to complete the work. PHOTO | FILE
Mr Bernard Muchere testifies before the Senate Committee on Health November 15, 2016. Mr Muchere is now expected to perform general functions at the Treasury — commonly known among Treasury mandarins as “cold room duties”. PHOTO | FILE 

The Treasury has recalled the internal auditor who unearthed the Sh5 billion questionable contracts awarded to dubious suppliers at the Ministry of Health, raising fresh queries over the government’s commitment to fight corruption and wastage within its ranks.

Treasury secretary Henry Rotich included Bernard Muchere’s name in the list of auditors he moved in a mini-reshuffle through a memo dated November 28, 2016.

Mr Rotich said in his communication that the changes are necessary to ensure efficient service delivery.

“It has been found necessary to make the following changes to ensure efficient service delivery to the public and the changes are to take effect from December 9, 2016,” said Mr Rotich.

“Consequently, the affected officers are advised to carry out a smooth handing/taking over exercise before reporting to their new stations.”

Mr Muchere, who published the explosive internal audit report questioning multi-billion contracts, manipulation of the IFMIS platform and irregular payment of cash to shadowy suppliers, has been posted to the Treasury.

Mr Rotich said in the circular that the 17 internal auditors, including Mr Muchere, had been moved as a result of recent promotions of eight senior internal audit staff to the Directorate of Schools Audit under the Education ministry.

Mr Muchere is expected to perform general functions at the Treasury — commonly known among Treasury mandarins as “cold room duties”.

His transfer comes despite the Senate Health Committee’s recent directive that Mr Muchere extend his audit to three other departments in the Health ministry namely; the Government Chemist, the Radiation Protection Board and the National Quality Control Laboratory (NQCL).

Spirited effort

Mr Rotich’s decision to move Mr Muchere is the culmination of a spirited effort by Health Principal Secretary Nicholas Muraguri to have the auditor moved from Afya House.

Dr Muraguri kicked off the campaign to oust the auditor on July 12, 2016 through a letter to Mr Rotich asking that Mr Muchere be moved because “his qualified audit opinions were causing trouble with donors.”

Mr Muchere got into trouble with the corruption networks at Afya House while executing Health secretary Cleopa Mailu’s directive that he investigate the management of funds at the ministry, resulting in the publication of the damning internal audit report.

When he appeared before the Senate Health Committee to answer audit queries, Dr Mailu said that upon reading media reports that plans were afoot to move Mr Muchere, he called his colleague at the Treasury, Mr Rotich, who acknowledged receiving requests, including that from Dr Muraguri, to have the internal auditor transferred.

“I let the matter lie and continued to do my work. I want this committee to digest that information but I won’t comment further,” said Dr Mailu.



Health CS Dr Cleopa Mailu (left) with PS Nicholas Muraguri during a recent Press conference. PHOTO | FILE
Health CS Dr Cleopa Mailu (left) with PS Nicholas Muraguri during a recent Press conference. PHOTO | FILE

Dr Muraguri had claimed that the Ministry of Health receives “huge” funding from World Bank and other donors to finance various projects in addition to funds from the exchequer and that such funding was in jeopardy because of the qualified audit opinions.

“During the past few financial years, the ministry has been getting qualified audit reports due to ineligible expenditures, which could have been avoided if strong internal controls were in place,” said Dr Muraguri in the letter to Mr Rotich.

“The purpose of this letter therefore, is to request for posting of internal auditors in senior positions who are conversant with audit of donor projects and other funds.”

Mr Muchere has been replaced at Afya House by Francis Njau — an assistant internal auditor-general from the Ministry of Transport.

Mr Njau has been working with James Macharia, who headed Afya House when the questionable transactions took place.

It is also telling that contrary to Dr Muraguri’s claim that a senior auditor is all he needed to solve Afya House’s problems, Mr Muchere had only a few months earlier replaced Moses Karanja, a more senior auditor who worked in the ministry for three years without raising a finger on the questionable deals.

Mr Muchere, a principal internal auditor, is in job group N while Mr Karanja, an assistant internal auditor-general (AIAG), is in job group P.

Mr Muchere had told the Senate Health Committee that the small sample covered in his audit was an indicator that “there could be a wider scheme wherein the ministry could have incurred huge losses”.

Earlier he had formally complained to Dr Mailu that stonewalling by account holders had made it difficult to complete the internal audit.

“The audit is experiencing setbacks in terms of audit facilitative environment contributing to slow delivery of audit work which is necessary in management decision making and fraud risk mitigation,” he said in a letter to the Cabinet Secretary.

The Business Daily in August published an exposé detailing how senior Health ministry officials attempted to manipulate the IFMIS system to steal Sh30 million through fake payments for laboratory chemicals and reagents under NQCL.

The process was thwarted, but the whistle-blower maintains that the public could still have lost Sh18 million.

“The documentation to steal the Sh30 million underwent the normal IFMIS process until approval by the former Chief Finance Officer (CFO) Khadiagala,” says the note from the whistle-blower, who confessed to having played a part in the scam.

“It is at this stage that I was following then I realised the documentation had been intercepted by NQCL and I was asked to explain as I have done.”  

The Directorate of Criminal Investigations and the Ethics and Anti-Corruption Commission are yet to publish their findings on the Afya House scandal.

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