Deep seated rivalry between the National Hospital Insurance Fund (NHIF) board chairperson Lewis Nguyai and the Fund’s Chief Executive Officer (CEO) Peter Kamunyo has turned ugly and has degenerated to sharply divide the board and the senior management, The Informer can authoritatively reveal.
So tense is the situation that some senior managers are taking administrative and operational directives from Nguyai while one faction of the board is leaning towards Kamunyo.
The bitter leadership row believed to have been occasioned by competition and conflict of interest in influencing award of lucrative tenders and alleged fake payouts hospitals.
This has now hampered efforts to restructure NHIF due to the fallout between the board and top management.
Appearing before the National Assembly Health Committee yesterday, Nguyai revealed part of the staff in the scheme’s top management including directors are not qualified for the positions they are currently holding.
The push comes at a time the board has fallen out with the NHIF’s top brass including Kamunyo, highlighting behind-the-scenes fights at the cash-rich scheme.
Kamunyo was in the past accused of irregular hiring of staff without following due procedure.
There are also claims of nepotism, favouritism and blossoming illicit affairs.
Nguyai told the committee that the board, charged with policy guidance responsibility will meet on November 30 to endorse the new organisational structure that has already received approval from the State Corporations Advisory Committee (SCAC).
“There are staff currently holding positions they are not qualified for. The restructuring will see those who are not suitable exit. We will need to deal with some of them and we will need your protection as a committee to ensure that when we make a decision, we will not face a political barrage.” Nguyai said.
The board had in September threatened to ouster Kamunyo accusing him of insubordination following the revocation of contracts for 17 healthcare providers under the scheme.
Kamunyo cancelled contracts of the healthcare providers in September following an audit that unearthed massive irregularities under the Comprehensive Secondary School Student Medical Scheme, popular as EduAfya.
The restructuring plan comes at a time 65 per cent of the NHIF top management posts are being held in an acting capacity.
The board said the restructuring will also lead to the promotion of staff who have stagnated or acted in one post for a very long period of time.
NHIF has 1,835 employees against an approved staff complement of 2,200 and is seeking to hire 400 new employees to plug the staff shortfall.
Restructuring of the top management will result in some offices being scrapped, and employees redeployed or declared redundant.
NHIF will roll out Universal Health Care (UHC) as part of the government’s plan to provide affordable and quality healthcare to all Kenyans.
NHIF has for years been grappling with revenue leakages that are estimated to cost the fund between 10 to 20 per cent of its total annual revenues. The scheme is currently on a recovery path after years of losses that had pushed it to a negative cash surplus of Sh3.65 billion in the year ended June 2019.
Unaudited results for the year that ended this June show that NHIF had Sh800.97 million in surplus, representing a 78 per cent jump from Sh449.9 million held a year earlier.
The health fund’s premiums grew 29.4 per cent to Sh80.43 billion, while medical payouts jumped 31.9 per cent to Sh71.34 billion. Other costs increased by 10.3 per cent to Sh7.78 billion.
Cases of corruption have dogged NHIF for long.
The Auditor General Nancy Gathungu’s office raised queries over Sh336 million payment by NHIF to a law firm that had not been pre-qualified to bid for tenders with health providers.
According to Auditor-General reports, the law firm was not in the prequalified list of suppliers in contravention of Section 93(1) of the Public Procurement and Assets Disposal Act, 2015.
“The Public Procurement and Assets Disposal Act, 2015 states that an accounting officer of a procuring entity, where applicable, may conduct a prequalification procedure as a basic procedure prior to adopting an alternative procurement method other than open tender for the purpose of identifying the best few qualified firms for the subject procurement,” states the Act.
No money had been allocated to pay for legal services, making it go against the Public Finance Management Act.
Gathungu said the fund was in breach of the law and the propriety of legal fee of Sh336,339,000 paid to the law firm could not be confirmed.
The statement of comprehensive income and expenditure reflected an expenditure of Sh37,716,058,407 under National Health Scheme (NHS) benefits expenses which includes legal fees of Sh336,339,000 paid to a law firm in respect of drawing 6,700 with health providers at a negotiated total instruction fees of Sh432,800,000.
The law firm was to further charge an amount of Sh43,260,000 being cost for company search, printing, binding, travel costs and stamp duty and distribution of the contracts.
On November 5, 2018, the firm reviewed the terms of engagement and added 309 contracts for drafting, with an additional cost of Sh26,749,302 as legal fees. There was no consent from NHIF for the variation.
Further, the legal service was not in the approved procurement plan for 2018/2019 financial year which is contrary to Section 45(3)(a) of the Public Procurement and Assets Disposal Act, 2015 which states that all procurement process shall be within the approved budget of the procuring entity and shall be planned by the procuring entity concerned through the Annual Procurement Plan.
“Under the circumstances, NHIF was in breach of the law and the propriety of the legal fee paid to the law firm could not be confirmed,” the audit report states.
Early this year, a civil society organisation petitioned for Kamunyo’s removal from office for allegedly promoting corruption and other irregularities at the agency.
The Nubians Rights Forum accused Kamunyo of embezzlement of public funds, unjustified backdating of salaries and making irregular appointments and transfers of staff.
Through an affidavit sworn by Shafi Ali Hussein, the executive director of the organisation at the Employment and Labour Relations Court, Kamunyo has also been accused of abusing his office by allegedly directly discriminating against well-deserving and hardworking members of staff.
