Special Audits Finds Top Officials Conspired To Defraud Public Funds In The Sh63B Medical Equipment Lease

A special audit done on the Sh63 billion used for the Managed Equipment Services (MES) programme has now exposed how top officials manipulated procurement laws, contracts and finally coerced county governments into accepting the equipment.

Ministry officials allegedly exploited a loophole in the Public Procurement and Asset Disposal Act (PPDA 2005) that allows an entity to procure the good and services through restricted tendering data presented to a Senate committee chaired by Bungoma Senator Moses Wetang’ula showed.

The auditors from the office of the Auditor General further identified cases of non-compliance with the Public Procurement and Disposal Act 2005 and regulations of 2006 that expose the “programme to risks of failure to realise value for money.” The MES concept paper indicated that the programme was to be implemented through long-term lease arrangements for medical equipment in accordance with the PPP Act, 2013 based on the “Build lease-and-transfer model.

Auditors explained that six International equipment manufacturers were supposed to be paid Sh95.7 million annually for a fixed term of seven years to provide medical equipment, the deal was to be financed by all the 47 counties.However, the payments became varied along the way and the payments increased to over Sh200 million under uncertain circumstances.

“The MoH adopted the Managed Equipment Services (MES) model which required for outsourcing of all aspects of medical equipment to third party companies that specialises in providing the type of service required,” it adds.

The auditors condemned the ministry officials for abandoning the initial which was the established form of financing medical projects contrary to the Health Sector Policy of 2014, that only provides for the PPP model as the only acceptable form of financing health projects. The report shows the Cabinet Secretary Sicily Kariuki-led ministry abandoned the PPP and sidelined the counties in carrying out needs assessment and employing restricted tendering in procuring consultants for the project.

Investigation revealed that the equipment bought within the programme was overpriced, had short lifespan or was even disposable defeating the purpose of a programme originally set up to avoid a situation where counties would operate without standard equipment. The project turned into a bottomless pit in which taxpayers lost billions of shillings.

Governors had earlier urged the Senate to establish a select committee to investigate the viability of the Sh63 billion Managed Equipment Services (Mes)