Scam looming over purchase of machines

In what appears to be a familiar script involving insidious tenderpreneurs and greedy State bureaucrats in the pilferage of public resources, the taxpayer is about to suffer a loss of more than Sh8 billion in a deal that has been crafted by top Health ministry and National Treasury mandarins.

Coming hot on the heels of last year’s loss of Sh5 billion in the Health ministry in the tendering of mobile clinics which is yet to be resolved, the latest scam involves the purchase of CT scan machines whose price has been inflated by more than 30 per cent in unexplained circumstances.

In the deal, the ministry is to buy 37 CT scanners at a cost of Sh8.7 billion, with each machine costing Sh235 million— and already National Treasury, the custodian of public cash, has paid Sh1.7 billion in advance without Parliament’s approval.
But the racket was not exposed until after Treasury appeared before the National Assembly Budget Committee last month seeking the approval of Sh8 billion in the Supplementary Budget for the procurement of the equipment.

It has emerged that the Health Ministry plans to buy the machines at Sh235 million each as opposed to the market value of Sh75 million.

The transaction requires Treasury to provide 20 per cent of the total amount while the remaining 80 per cent is to be provided for by China through a bank loan.

If the scanners are procured, the taxpayer will pay Sh8 billion (including interest payable) for the equipment. Indeed, the committee is questioning why the ministry was purchasing equipment as opposed to leasing which is the policy of the government.

Further, the committee has reprimanded Treasury for flouting the law by paying Sh1.7 billion without the approval of Parliament.

Committee chairman Kimani Ichung’wa told People Daily that although his committee had approved the transaction, it raised fundamental queries on the purchase and cost of the machines.

“We had asked Treasury and the Ministry of Health to provide information on the type of machines to be purchased, market value among other details,” said Ichung’wa.

He added that the committee has reprimanded Treasury for operating in total disregard of the law by making huge payments without the approval of Parliament.

He cited the recent payment of Sh1.5 billion from the Contingency Fund for the purchase of the controversial Ruaraka land. The committee has since stopped further payments to the land owner.

“It has become a habit for the National Treasury to make payments for projects which are not an emergency in nature. We have questioned why the payments are rushed,” said the Kikuyu MP.

He said the committee will be touring all the health facilities to confirm whether the machines were indeed purchased and if they were the right quality.
Ichungwa said the committee expressed concern over the Treasury’s misuse of Article 233 of the Constitution that allows it to spend for emergency saying the purchase was not one.

He said the committee plans to review the law on leasing and direct purchase to stem misuse of public resources.
Minority leader John Mbadi questioned why the Health Ministry had resorted to buying the equipment instead of leasing.
A committee member, Makali Mulu said they (committee) had approved the purchase of the equipment but with revelations.

There has been apprehension over the payments done through the Supplementary budgets which have become new avenues for looting taxpayers money.

But responding to query on the Sh235m allocated for each of the machines, the Treasury said the figure includes the cost of constructing building to house the machines, training of radiographers and maintenance.

The infamous NYS scandal is one such expenditure requested in Supplementary budget that ended up being embezzled.
In the mini-budget, the State Department for Planning had requested for Sh5.8 billion that included Sh4.9 billion for National Youth Service. It is this money that ended up being looted under the NYS scandal.

In last year’s Health ministry scam, there were double entries under line item ‘non-residential buildings’ (such as offices, schools, hospitals), whose only distinction is a variation of one number in the codes, apparently to allow processing through the Integrated Financial Management Information System.

Under the first entry, the supplementary estimates total Sh350 million which was spent on nonresidential buildings, raising questions how this could be classified as an unforeseen expenditure.

In the other Sh800 million, which was budgeted for the same non-residential buildings, the government was left with a debt of Sh413 million again raising questions why officials had over-committed without available funds.

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