Disquiet as Corruption and Mischief Bedevil Nairobi Hospital

Staff and other stakeholders are in state of alarm as corruption and cronyism in The Nairobi Hospital threatens the very existence of the premier private hospital in the country.

Allegations of mismanagement, bribe-taking and other underhand dealings have rocked the hospital founded in 1954, wreaking havoc on staff morale and productivity.

At the centre of the controversy is the emergence of a cartel which appears hell bent on only getting rich quickly at the expense of the operations and well-being of the hospital.

Insiders who are privy to the goings-on intimate to Kenya Insights that the current chairman of the hospital’s board Dr. Chris Bichage has entered into an unholy alliance with the CEO James Nyamongo, Company Secretary Gilbert Nyamweya, Dr. Barcley Onyambu, Dr. Fred Kambuni, Dr. Meshack Ong’uti (not a board member) and other board members to the chagrin of other stakeholders. Mr. Nyamongo is said to have left Kenya Pipeline Company (KPC) before joining the Nairobi hospital under very unclear circumstances due to fraudulent activities.

He was also bundled out of office barely a week after being appointed the interim CEO at the National Oil Corporation of Kenya in 2019.

Dr. Bichage, a former MP for Nyaribari Chache, is no stranger to corruption allegations. Impeccable sources intimate Kenya Insights that Dr. Bichage was discontinued at the University of Nairobi during his undergraduate studies for academic non-performance. This makes his academic and professional qualifications to be questionable. In 2017, he was charged in a Kitale court with defrauding advocate of the High Court David Biketi Kes. 11.1 million by pretending he could sell him 10 acres of land in Trans Nzoia County. Dr. Bichage is said to have committed the offence between August 7, 2015 and March 11, 2016.

“The Nairobi hospital, being a top class hospital in the East and Central Africa region, is expected to have in place strong and robust corporate governance structures to govern and manage the institution both at the board and management levels,” said a senior manager, who requested to remain anonymous. However, the reality on the ground and practice in the institution is in total contrast to the expectation.

The latest controversy which should interest the Ethics and Anti-corruption Commission (EACC) is the billion-shillings tender to supply, implement, maintain and support a Hospital Management Information System (HMIS) and Enterprise Resource Planning (ERP).

In April 2022, the hospital advertised in the local dailies for a consultancy for the supply, implementation, maintenance and support of HMIS and ERP. After a thorough procurement process was undertaken, including due diligence and site visits, a Joint Venture (JV) of two companies; GoodX Enterprises(PTY) Limited, a South African company and DynamicNav Systems Limited, a Kenyan company, won the tender.

TNH signed JV agreeement TNH Executed Contract Agreement

The winning JV was awarded the contract in June 2023 at a contract sum of USD 5,643,334 (approximately Kes. 960 million) for a period of five (5) years, and the contract was signed in August 2023. The JV fulfilled all the required conditions as per the contract, including submitting a Performance Bank Guarantee of 5% of contract value (USD 282,167) within the time specified by the hospital.

The JV, which was referred to as “System Integrator” in the contract, immediately commenced the execution of its mandate in the project according to the work plan approved and in agreement with the hospital Project Implementation Team (PIT) requirements. The System Integrator was given an office in the hospital equipped with WiFi, a printer and a shredder. In addition, the System Integrator was given parking and identification badges to enable its staff access various parts of the hospital in the course of carrying out their work. The contract was signed when Dr. Irungu Ndirangu was the chairman of Nairobi Hospital board.

However, when the Kenya Hospital Association (KHA) conducted the Annual General Meeting (AGM) in September 2023, there was a change in the board of directors including replacement of the chairperson Dr. Ndirangu by Dr. Chris Bichage.
Immediately after Dr. Bichage took over, the System Integrator started to experience hostility, interference, resistance, non-communication and sabotage from the new board and management.

There were allegations from the current chairman, CEO and a section of the new board that the System Integrator had failed to meet the required conditions in the contract, which they themselves (Dr. Bichage and CEO James Nyamongo) had signed.

To the surprise of the System Integrator, the board members who were making the allegations were from the same tribe as the hospital’s chairperson, chief executive officer and the company secretary, supported by other board members who apparently had been compromised. They claimed that the System Integrator failed to submit a Performance Bank Guarantee as specified in the contract. The guarantee was indeed sent to the hospital, addressed to the CEO. The bank attempted severally to contact the CEO but he declined to collect the original copy from ABSA Kenya Limited, Trade Finance Department, Bishops Gate, which is a walking distance from the hospital. The System Integrator made the effort to collect the original Performance Bank Guarantee from the bank and delivered it to the CEO’s office. Unfortunately, the CEO instructed the secretary not to accept its delivery. Eventually, the System Integrator sent a copy to the CEO via email.

The email.

In October 2023, the System Integrator submitted to the Nairobi hospital an invoice of USD 1,594,948 for the services already rendered from the date of signing of the contract. The hospital however declined to acknowledge receipt nor honor the invoice. The System Integrator has now come to find out that after the September 2023 AGM, a section of the new board is out to cancel the contract and give it to a company called ICT Health, which had competed in the previous tender but was technically knocked out. This company is allied to James Nyamongo, the CEO, who is past retirement age.

Nyamongo’s contract expired in December 2023, but was renewed under mysterious circumstances against the Nairobi hospital’s human resource code of regulations, to fulfil his personal interest in the HMIS-ERP contract. On the other hand, Nyamongo and section of board members are happy to maintain the status quo with the current hospital’s ICT system, which has serious financial leakages for whatever reasons known to them. Furthermore, it is alleged that the CEO has never gone on leave for the last three (3) years when in office, which raises many questions about the corporate governance levels of the Nairobi hospital.

The hospital has gone ahead to initiate a direct tendering process for selected companies by writing to companies like Microsoft, which supplied the Joint Venture with the ERP in the current HMIS-ERP project which has a running contract. This is in complete breach of the hospital’s procurement rules where an open tender is required for any goods or services worth more than Kes. 5 Million.

Furthermore, it has to be passed by the full board as opposed to a section of board members.
Reliable sources has revealed that Nyamongo and other board members; namely Philomen Mwaisaka (a former Provincial Administrator) and Dr. Magdalene Muthoka (Chief Manager, HR New KCC) received bribes from ICT Health (based in Jakarta, Indonesia). It is said that the CEO has used the money to build residential flats in Riat, Kisumu County. Curiously, a contractor by name EPCO which is doing construction work for the Nairobi Hospital is the one which built the flats from Nyamongo. Dr. Magdalene Muthoka should also be investigated by the head of public service, New KCC board and EACC for being in two payrolls; at New KCC as a public servant and on retainer at the Nairobi hospital.

Another issue is that the Indonesian firm favored by the cartel is not the owner of the system, but are just resellers. The system is developed and owned by an Indian company in Cheney, India. ICT Health also do not have local representation as purported. They gave an address of an office in Loita Street which turned out to be a government office. “The local contact person they gave, a Mr. Mogaka, turned out to be an employee of TechMahindra who were the consultants who drew the ToR for the RFP. They were not eligible to bid due to conflict of interest,” said the source.

Historically, the hospital has been known to have serious governance issues, which is in the public domain. Recently, the US government, under U.S. Trade and Development Agency (USTDA), granted the Nairobi hospital USD 1.1 Million to undertake a feasibility study to expand and improve healthcare access in Kenya. The study was to support the hospital’s intent to establish five medical centres across Kenya, digitize its operations, and expand cancer treatment services at the hospital. The US government did this on the premise that the governance issues in the hospital have been resolved.

It is apparent that the governance at the hospital is currently at its lowest since the changes in the board in September 2023 with a lot of questions regarding processes of revenue collection, recurrent and capital expenditures and asset management. There are several unresolved issues surrounding the hospital operations, staff welfare and safety, including the death of the former acting Finance Director who was murdered under mysterious circumstances.

The current situation at the Nairobi hospital therefore, calls for the trustees, shareholders and all stakeholders to urgently step in and seriously interrogate the management and operations of the hospital under the current board and the CEO, whose contract was recently renewed under dubious circumstances