Economy

State eyes houses, cars bought with Kemsa loot

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Kenya Medical Supplies Authority offices, Industrial Area, Nairobi. FILE PHOTO | NMG

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Summary

  • The National Assembly’s Public Investments Committee (PIC) has recommended that the ARA recover excess money paid to more than 110 firms that supplied Covid-19 items to Kemsa.
  • EACC documented evidence of “criminal” behaviour in the purchase of Covid-19 kits and declared there was “irregular expenditure” of Sh7.8 billion.

Parliament has directed the Assets Recovery Agency (ARA) to trace and seize bank accounts and property such as cars, homes and land that was bought using proceeds of irregular procurement of Covid-19 emergency equipment by the Kenya Medical Supplies Authority (Kemsa).

The National Assembly’s Public Investments Committee (PIC) has recommended that the ARA recover excess money paid to more than 110 firms that supplied Covid-19 items to Kemsa.

The Ethics and Anti-Corruption Commission (EACC) documented evidence of “criminal” behaviour in the purchase of Covid-19 kits and declared there was “irregular expenditure” of Sh7.8 billion.

Past trends indicate that cash from theft of taxpayer money is splashed on assets like high-end cars, land and homes.

“Once the overpaid amount is determined by a multi-agency team, ARA should move to recover the money from the firms that were overpaid,” Abdulswamad Nassir, who chairs the committee, said.

The ARA is charged with recovery of assets such as buildings, land and cash stashed in bank accounts that are suspected to be proceeds of crime or money laundering.

Kemsa bought the Covid-19 emergency equipment at Sh6.3 billion in a procurement the EACC flagged as irregular and recommended charges against some officials.

A special audit by Auditor-General Nancy Gathungu showed that Kemsa may realise a loss of Sh2.33 billion if the products, which were stuck at its warehouses, are sold at the current market price.

In a separate report, the Public Procurement Regulatory Authority catalogued instances of alleged inflation of prices for products procured by Kemsa.

Paracetamol tablets sold at Sh40 per pack were bought for Sh66.50 during the pandemic, while alcohol-based hand sanitiser priced at Sh313 was purchased at Sh495, the report said.

“There was no evidence of indicative price indices obtained through market survey,” the report said.

It also alleged that most “tenders were retrospectively negotiated and evaluated after the deliveries” and “some of the negotiated prices were not as per the prices as proposed.”

In its damning report tabled in Parliament last evening, the PIC wants all firms that supplied Kemsa at inflated prices to refund the government the excess payment within a month.

Scores of public officials and business people have appeared in court in recent months on charges relating to alleged theft of hundreds of millions of shillings from public coffers.

As a result of the cases, the State has either frozen or seized hundreds of millions of shillings in bank accounts and confiscated assets such as homes, land and luxury cars from the suspects.

Official data shows that the State agencies recovered assets linked to graft worth Sh12.8 billion in the year to June last year, up from Sh3.8 billion in the year to June 2018— reflecting the government’s aggressiveness in recovering stolen public properties.

However, lack of a legal regime guiding the use of assets seized by the State agencies has seen seized land and homes remain unused and millions of hundreds of shillings untouched in banks. Moveable assets like cars have been lying at police stations, with their values depreciating fast, making it difficult to auction the properties.

TWO FIRMS

The parliamentary committee also wants the Kenya Revenue Authority commissioner-general, Githii Mburu, to launch investigations into all the suppliers that delivered Covid-19 equipment to Kemsa to establish whether they declared and paid taxes to the authority.

The MPs said in the event that there were firms that failed to declare and pay taxes, the KRA should commence appropriate legal action against them.

The committee chaired by Mr Nassir has singled out 110 companies that were paid inflated sums for supply of KN95 face masks and surgical masks between March and July 2020.

The MPs said only two firms followed the right procurement procedures in the supply of Covid-19 items.