USAid cited for deals with blacklisted firm

Parliament has put the US Agency for International Development (USAid) on the spot for contracting a blacklisted firm to distribute life-saving HIV and tuberculosis drugs while rejecting the services of the State-run Kenya Medical Supplies Authority (Kemsa).

The Health committee of the National Assembly Thursday questioned the award of the contract to the privately owned American firm, Chemonics International, which stands blacklisted in Nigeria for financial fraud.

“We need to defend this country from manipulation. The ministry has told us that USAid is reluctant to meet them over the change of contractor to distribute ARVs. We have information that the company engaged by USAid to distribute ARVs has been accused of corruption in Nigeria due to neglect of staff in review of invoices,” Joshua Kutuny, the vice-chairperson of the committee, said.

The Ministry of Health says that Kemsa had been marked to distribute the donated medicines across the country on behalf of USAid but the US agency later opted to give the job to the American firm.

Chemonics was accused of hiring Zenith Carex as a sub-contractor which defrauded grant programmes in Nigeria of $3 million (Sh324 million) by systematically inflating invoices for distributing commodities to warehouses and health facilities.

An investigation by the Global Fund found that Chemonics approved and paid Zenith’s fraudulent invoices for over two years.

“Inadequate financial monitoring in the local office and US-based headquarters, combined with potential collusion between Chemonics and Zenith staff, allowed the fraud to remain undetected, despite significant budget overruns in the Global Fund contract,” says the Global Fund probe report shared with the Health committee.

The Health ministry’s chief administrative secretary (CAS), Mercy Mwangangi, did not provide an answer on the decision by the USAid to drop Kemsa from the distribution of medicines.

The involvement of Chemonics in the import deal triggered a long-drawn feud between USAid and Kenyan tax authorities. The consignment has been lying at the port since January 18 after the State handed a Sh90 million tax bill to the firm.

Kenya argued that the import arrangement flouted the tax waiver policies on government-to-government donations and that Chemonics had to pay duty as a private entity before the cargo could be released.

The items that were withheld at the port include HIV testing, treatment and prevention commodities such as ARVs, laboratory reagents as well as TB diagnostic and prevention medications.

The Health ministry has since committed to pay tax for the Sh1.1 billion consignment of medicines, ending months of accusations and counteraccusations between USAid and the Kenyan government as millions of patients faced a shortage of drugs.

Health Cabinet Secretary Mutahi Kagwe said the ministry had committed to pay Sh45.8 million towards the tax demand to enable the release of the consignment.

“The purpose of this letter is, therefore, to request you issue the Commissioner General —Kenya Revenue Authority (KRA) with an undertaking by this ministry to pay taxes and levies amounting to Sh45.82 million,” he said in letter to the Treasury, requesting it to direct the KRA to release the commodities as the ministry finalises the payment process.

Catherine Ngugi, the head of National AIDS and STIs Control Programme (Nascop), said the country currently has 1.8 million doses of ARV drugs, which is a month of supply to cater to 1.2 million people living with HIV.

“900,000 clients use this ARVs and they have been receiving three months’ supply of doses. They are only able to access one or two months’ supply,” she said.

She said drugs for infant diagnosis has had a stock-out for the last one month, adding that all commodities procured under Global Fund and Kenya government arrangement will arrive in batches by May 15, 2021.