Sh30million Bribery Claims Stalk AAR Insurance-City Hall Medical Cover Deal

Fresh bribery claims have now emerged in the ongoing Nairobi County government workers’ medical cover impasse between regional medical underwriter, AAR Insurance and the former despite the union threatening to call for an industrial action.

According to impeccable sources from within, the ongoing medical cover crisis that has seen hundreds of workers either turned away from the AAR accredited medical facilities with at least 20 people dying within a span of one month is believed to be artificially precipitated to force fast-tracking of the somewhat already sealed deal.

At the center of the negotiated deal that has predisposed the 12,000 county workforce to health risks due inaccessible health services, Sh30million has allegedly exchanged hands to renew and extended the cover through single-sourcing.

Investigations by the Directorate of Criminal Investigations (DCI) and the anti-graft body, Ethics and Anti-Corruption Commission (Eacc) are likely to unmask the said underhand dealings allegedly masterminded by top county executives, Nairobi County Assembly officials and the insurer agents.

Owing to the crisis, the Kenya County Government Workers Union, Nairobi branch has threatened to call for undisclosed strike effective today if the matter is not resolved forthwith.

The Nairobi branch union Secretary General Festus Ngari said they have so far lost at least 20 members between March 16 and April 8, 2021, with five dying last Saturday alone.

“If the impasse pitting AAR health insurance and the county government is not resolved, we will take an undisclosed industrial action by close of the business on April 9, 2021. Our members should be on high alert as we can blow the whistle anytime,” Ngari noted.

He explained that City Hall has been paying insurance premiums in piecemeal despite the contract sum having been known in advance and budgeted for.

Acknowledging the situation, Nairobi Deputy Governor Ann Kananu said her administration is working with the Controller of Budget to resolve the stalemate.

“The payment has been delayed by government processes but I am sure the money will be out today (Thursday) and we will clear the payment by end of business,” she said.

The Union’s Secretary also said staff are also being turned away in facilities accredited by the National Hospital Insurance Fund (NHIF) despite dues being deducted every month.

“NHIF should give us service commensurate to value for our money. There can be no taxation without representation,” Ngari added.

The Union has accused the county government of failing to pay their insurer, AAR Insurance Kenya Sh530 million leading to an impasse.

This has led to the staff being turned away in some of the accredited health facilities while seeking medical services.

On February 12, 2021, AAR raised the flag and wrote to City Hall reminding them to settle a premium balance of Sh530 million.

Having no response, on March 9, 2021, AAR Managing Director Nixon Shigoli wrote to the county government informing them that due to failure to settle the arrears, they won’t continue to offer uninterrupted services to the staff and their families.

“This letter serves to inform you that we will be forced to suspend credit facilities for the scheme effective March 19, 2021, should we not have received the outstanding premium payment by then,” reads the letter in part.

Shigoli further noted that claims incurred during the credit suspension period will be settled directly with the members of staff after a full premium payment is received and subject to the usual policy terms.

Nairobi County Executive for Finance Allan Igambi responded to AAR on April 7, 2021, highlighting that the delay in paying the outstanding money had been caused by the late passage of the county’s supplementary budget for the Financial Year 2020-21.

He claimed on January 11, 2021, an initial payment of Sh325 million was paid and the remaining Sh270 million will be settled on or before April 9, 2021.

In what may turn out to be a long-running contractual scam, in 2019, the media was ejected out from a Nairobi County Assembly Public Accounts Committee (PAC) grilling session probing the controversial Sh1.7 billion AAR Kenya medical insurance scheme for City Hall staff.

Nairobi County government was accused of irregularly paying more than Sh652 million in excess of the medical scheme’s contract term of Sh1.07 billion.

According to the Auditor General’s report for the financial year ending June 30, 2018, City Hall made a total payment of Sh1.73 billion to AAR Insurance Kenya Limited although the contract sum was Sh1.07 billion.

“Although the total payment made so far to AAR Insurance Kenya Limited is Sh1, 725, 488, 939, no explanation has been given for paying Sh652, 786, 602 in excess of the contract sum of Sh1, 072, 702, 337,” read the report in part.

In addition, a comparison of the annual contract sum shows unexplained growth in value of the insurance cover even though there was decrease in number of staff by 402 during the year under review.

In financial year ending June 30, 2016, the number of employees were 13, 348 with the contract value of Sh346.3 million, the same for 2016/2017 which had 13, 097 employees.

In the financial year ending June 20, 2018, the contract sum for the medical insurance scheme shot up exponentially to Sh1.1 billion although the number of the employees had reduced to 12, 695. Currently there are 12, 499 employees at the county.

This was the second time the media was asked to leave the committee sitting before county administrators could answer any queries regarding the controversial AAR medical cover. The request was also granted at the time.

AAR and senior Nairobi County government officials have continuously blocked media’s presence in all committee sessions probing the long-running controversial deal.