Research Article – Governance during COVID-19: Kenya’s graft practices

[This is an excerpt from an article in The Round Table: The Commonwealth Journal of International Affairs.]

Graft during COVID-19

According to Vrushi and Kukutschka (2021), corruption and emergencies feed off each other creating a vicious cycle of mismanagement and a deeper crisis. Given the acute need, the pressure to disburse large sums of money rapidly and the enormous organisational challenges in suddenly expanding the scope of assistance are a perfect opportunity for undue influence over policy responses, even more, in states with pervasive corruption with weak prevention mechanisms. This in turn undermines fair, efficient and equitable responses to crises. It also highlights fundamental concerns relating to the pattern of relationships between those in positions of authority who control resources and resource allocation on the one hand and the beneficiaries with dire need but little power. This ties into Cheesman’s neopatrimonial systems where leaders derive and maintain authority through patronage rather than through ideology and law and is evidenced in Kenya’s response to the pandemic.

After the outbreak of COVID-19, in addition to Kenya’s preparedness and response measures using national funds, the country also received international assistance for the citizenry to weather the pandemic. According to Transparency International’s Kenya COVID-19 Tracker, by December 2020, the government had received grants from the World Bank, the International Monetary Fund (IMF), the private sector, and other foreign missions estimated at around KES194.6 billion. Examples of monetary assistance included the World Bank Group which approved $50 million in April 2020 to support the country’s response to the global COVID-19 pandemic under a new operation – the Kenya COVID −19 Emergency Response Project. While in July 2020, the U.S. Agency for International Development (USAID) announced $50 million to support Kenya’s response and recovery efforts to meet the immediate and longer-term challenges of COVID-19.

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A few months after these measures had been put in place and donations received, corruption allegations with regard to embezzlement in procurement and awarding of contracts for COVID-19 equipment were rife in the country. KEMSA, the Kenyan Medical Supplies Authority Offices, was plagued with corruption allegations. During an exposé on a local TV station, details of the stolen consignment of Jack Ma’s donations to the country were uncovered. These included face shields, masks, medical disposable protective clothing and testing kits. The Chair of the Senate ad-hoc committee on COVID-19, Sylvia Kasanga admitted to engagements with KEMSA where receipt of the consignment was confirmed. ‘KEMSA, the body that takes care of medical supplies, confirmed to us that they had received them they even showed us their logs and we even tabled it in Parliament that these items were received, and they had tables and templates which showed us how they would be distributed within the counties’.

In response to the question regarding the public record of what happened to the consignment after receipt, Dr. Godwins Agutu, Director of Network Action Against Corruption (NACC) stated, ‘the reason why the public record is not there is because the system was manipulated [public records of the equipment having been received by the two companies – Mega Scope Healthcare and Crown Healthcare Ltd/Health Crown appointed by KEMSA and authorised to clear the consignment from Jomo Kenyatta International Airport]. Some of the items were sold to Tanzania … over ¾ went to Tanzania, [with] the ¼ that was left back were sold to other supplier companies by KEMSA, they then inflated the prices and sold them back to KEMSA’. Health Cabinet Secretary Mutahi Kagwe also confirmed that there were investigations ongoing over allegations of theft about the Jack Ma consignment. The Ministry of Health has been bedevilled by several corruption indiscretions, including the misappropriation of a Sh1.3 billion World Bank donation, also earmarked for fighting coronavirus. There was, therefore, evidence of those in authority taking advantage of COVID-19 to plunder donor and public resources from the government for private gains.

Given this proof, a request from the Senate’s Ad Hoc Committee on COVID-19 was made to conduct special audits on the utilisation of COVID-19 funds by KEMSA. Moreover, given the degree of allegations, in September 2020 President Uhuru Kenyatta issued a historic directive to call for transparency in all government-related procurement processes. He stated, ‘The Ministry of Health, within the next 30 days, must come up with a transparent, open method and mechanism through which all tenders and procurement done by the Kenya Medical Supplies Agency are available online’. The Auditor-General carried out the audit and confirmed that unlawful measures were applied to procure medical supplies for the pandemic using public funds. Irregularities in the report included engagement in business for which the supplier was not incorporated; failure to conduct market survey for items being procured; irregular extension of delivery deadlines; engaging un-prequalified suppliers, pre-qualifying suppliers without evaluation and approval; inconsistencies in price determination and insufficient stock management procedures.

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The Auditor-General’s report revealed companies that were given contracts despite having only been in existence for less than a year and which could not be deemed to have the necessary experience in supplying specialised medical equipment and products (Office of the Auditor-General, 2020). These included companies such as Kilig Ltd. and Shop ‘N’ Buy Ltd. whose dates of registration were 22 January 2020 and 14 January 2020, respectively. The contract value of Shop ‘N’ Buy was valued at KES970,000,000 (Ibid.). This was considered by the audit report a red flag indicating potential procurement fraud and collusion. Wafula adds that in attempts to hide crucial information on tenders, reasons of justifications were not given for the selection of companies that were beneficiaries of millions of Shillings worth in tenders (Wafula, 2020). This revealed a major weakness in the tender process that went against the usual practice.

Additionally, the audit report reported evidence of overpricing of items by suppliers. For example, Gladlab Supplies Limited was the company contracted to supply surgical masks at KES4,750 for a pack of 30 facial masks. This was the price quoted in its letter of intent dated 8 April 2020. The facial masks were received at KEMSA on 9 April 2020. A subsequent letter by the same company quoted KES3,183 as the price for a box of 50 surgical masks. The company was then invited to tender for the supply of surgical masks on 21 May 2020. The Evaluation Committee’s minutes on 22 May 2020, indicated that they negotiated from KES4,750 to KES4,500. The supplier was awarded a tender to supply the masks at KES4,500, which is higher than the KES3,183 that they had proposed in their letter of intent (Office of the Auditor-General, 2020).

KEMSA also violated section 53 (8) of the Public Procurement & Asset Disposal Act, 2015 (The Kenya Constitution, 2015) that mandated accounting officers of procurement entities to commence procurement proceeding only when satisfied that sufficient funds to meet the obligations of the resulting contract reflected in its approved budget estimate. Moreover, it was also in contravention of section 43 (6) of the Public Finance Management Regulators (PFMR) 2015 that requires accounting officers to ensure that public funds are only utilised for the purpose for which they were appropriated (Ibid.). Commitments were also made by KEMSA to suppliers without proper controls and procedures undertaken to confirm the availability of budgets.

According to the audit report, age analysis of stock was also conducted to establish the length of time stock had been in KEMSA warehouses from the time of delivery. It was established that 97% of COVID-19 related items had been at the warehouses for more than three months despite the urgency and demand for the material (Ibid.). Additionally, not only did products remain unutilised, they tied up KEMSA’s working capital. This level of inefficiency was noted even though the items had been procured using the direct procurement method based on urgency. This was confirmed by KEMSA to the National Assembly’s Public Accounts Committee that the government agency was holding stock of PPE worth KES6.2 billion despite the majority of healthcare workers lacking the equipment.

The embezzlement and theft of COVID-19 funds and in-kind donations contributed to soaring new infections among health workers from June through August 2020. This is because of reported PPE shortages in medical facilities and the provision of inferior PPE by the government. During the course of the pandemic (from March – September 2020), it was reported that 1000 doctors were infected with 10 having succumbed to the disease. As the health minister eloquently stated, ‘Let’s say, theoretically, there was money meant for setting up a COVID-19 isolation ward, or for PPE for healthcare workers and that money has been misappropriated … . definitely, that can be correlated with deaths. And it’s true to say then that corruption has led to [COVID-19] deaths in this country’ (Igunza, 2020).

Sandra Ochieng’-Springer is a Temporary Lecturer in Political Science and International Relations, University of the West Indies, Cave Hill Campus, Barbados and Heline Odhiambo is a Development Researcher, Nairobi, Kenya.