How shadowy firms controlling flagship projects are protected
e-Citizen is not fully owned by the government, meaning deductions are made before the money reaches State accounts
As Kenyans continue to raise questions on accountability and transparency in government, it has been revealed that a network of shadowy firms registered by proxies of powerful political figures have been controlling flagship projects raking in billions of shillings.
At the heart of the controversy are e-Citizen, the Social Health Authority (SHA) system and the Affordable Housing Programme.
Auditor General Nancy Gathungu, in her 2023/24 report, revealed shocking details of how the web of firms controlling the projects pocketed huge amounts of money.
Investigations by the Informer Media Group reveal that Web Masters Limited, which was founded by James Ayugi, is paid millions of shillings every day for operating the platform even as more details about Pesaflow and Olivetree Limited, which also collaborate with the government to run the platform remain scanty as they are highly guarded.
e-Citizen is not fully owned by the government, meaning deductions are made before the money reaches State accounts. More than 19,000 public services are currently available on e-Citizen, out of which 15,440 have been fully on-boarded.
“Preliminary review of operations of the e-Citizen Government Digital Payments (GDP) platform indicate that, despite the strategic importance of e-Citizen, the government does not have full control of the system and [relies] significantly on the vendor for some critical functions,”Gathungu pointed out.
The AOG said that significant control of the system by the vendor has made it difficult for the Government Digital Payments Unit (GDPU) to onboard some services.
In her report, she also points out that the completeness and accuracy of the receivers of revenue receipts amounting to Ksh 15,570,013,245 and bank balances amounting to Ksh 611,179,132 could not be confirmed.
The report also says that the adequacy and effectiveness of the current IT controls on e-Citizen may not guarantee the integrity of the data processed through the system while the adequacy of internal controls over reconciliations and settlements through the e-Citizen Government Digital Payments Platform could also not be
confirmed.
Similarly, the governance arrangements in support of the E-Citizen platform could not be confirmed.
The report also points out that users may not have any rules and procedures to follow to minimise the
risk of errors, fraud and the loss of data confidentiality, integrity and availability.
Gathungu reveals in her 2023/24 report that e-Citizen, Paybill No. 222222, and SHA are vulnerable to mismanagement, with billions at risk due to private control.
“The ownership of the system, its components, and all intellectual property rights remain with the consortium,” Gathungu noted as she warned that it severely limits state oversight.
She also says the restrictive contract clauses further tie the government’s hands, preventing it from developing a competing system.
According to National Treasury and Economic Planning Cabinet Secretary John Mbadi, e-Citizen generated Sh100.8 billion in the 2023-2024 financial year.
On the other hand, the SHA system, which has been marred by controversies from hanging to not authorising verifications by hospitals among others, is run by the integrated tech system for the Universal Healthcare tender which includes Apeiro Limited, a firm that was registered a few months after President William Ruto took over.
Its is fully owned by SIH Africa Limited, whose owners are indicated as Aswanth Bindhu (India) and Nishant Mishra (Kenya). Apeiro’s directors include Rufus Maina, Inder Deep Singh Virdi, and Judy Mwende Gatabaki-Ndii.
Konvergenz Network Solutions Limited is 90 per cent owned by Konvergenz Holding, which was registered in May 2023.
“If you search, you’ll find out that Apeiro was registered at the start of July when the search for a system to run the SHA had begun. It is a firm registered in Dubai,” our source revealed.
Sources said that the firm is linked to influential political and business people.
We also learnt that there has been tension between the Ministry of Health, SHA, and advisors of the government over the Sh104 billion IT system.
However, according to President William Ruto’s Economic Advisor David Ndii, it is not true that the system cost Ksh 104 billion, saying it will be recovered over the 10-year contract period.
“The government of Kenya has not spent a shilling on the system. The Sh104 billion is user fees that are payable for the ten-year contract. We paid Sh77 billion in the last year. The platform is expected to provide similar capabilities at Sh10 billion per year, with hospitals paying Sh50 per visit,” Ndii told a local press.
SHA deducts 2.5 per cent per transaction, further limiting health funding. The government Paybill number is also privately managed, raising concerns about transparency in revenue collection.
Financial projections estimate e-Citizen will raise Ksh 111 billion in revenue over 10 years from SHA contributions and health facility claims.
However, the absence of a baseline survey raises sustainability concerns and suggests possible increases in health-care costs.
“The projected revenues include a 5 per cent deduction from claims made by health facilities, effectively increasing healthcare costs for citizens,” the AOG states.
Previously, in an interview, former deputy president Rigathi Gachagua revealed that the State House is at the centre of all the financial dealings in the country.
“I was told to defend housing, but I learned that the Housing Levy is about business. To win tenders, you must sign pre-contracts with suppliers. And these suppliers of iron sheets, cement, and other materials are linked to government officials,” Rigathi claimed.
The legitimacy and property ownership questions on affordable housing units have also been raised after it emerged that Kenya’s government signed Ksh 49.5 billion worth of contracts on land without title deeds.
The absence of these important documents adds to the confusion and distrust that many people feel about the programme.
Prime Cabinet Secretary Musalia Mudavadi, however, recently said that owners of the units will be issued with sectional title deeds.
