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EACC to go for Governor Sonko, County officials involved in AAR Medical insurance scandal

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Before the dust settled on the illegal procurement of a garbage tender worth Sh357 million that saw Nairobi Governor Mike Mbuvi Sonko arrested, charged at Milimani Law courts and later set free on bail term of upto sh15 million, another tender may see him spend his Christmas in custody.

The controversial Sh1.7 billion AAR Kenya medical insurance scheme scandal has raised a lot of questions over overpayment of the premium

In the latest probe at City Hall, the Nairobi county’s headquarters, the media were asked to walk out as the county assembly public accounts committee(PAC) began grilling more than seven members of the county executive regarding their role over the contentious Sh1.7 billion county staff medical insurance.

Nairobi County government is on the spot for 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.

What Transpired

254News.co.ke has learnt that the AAR Kenya medical insurance scheme scandal is so deep and has a chain of influencial people behind it.

In 2015, Acting County Secretary Gregory S. Mwakanong, signed a medical scheme with premium of Sh.689,436. Later, Dr. Robert K. Ayisi, also acting County Secretary and head of county public service reviewed the tender number NCC/HR/T/258/2014-2015-2017 for the medical scheme to AAR on June 2016.

According to records in our possession, there was a curious extension of the medical cover after it expired at the end of former Nairobi Governor Evans Kidero’s term. The small extension of about a month cost the county over sh320 million. If a whole year of medical insurance cover was only sh800 million. How comes the extension of about a month cost almost a half of annual premium?

More filthy stuff are happening in the tenure of the new acting County Secretary Leboo Morintat who sent the media out of the room where the inquiry about this medical scheme was happening earlier on.

Gregory S. Mwakanong’, Dr. Robert K. Ayisi, Leboo Morintat, the tender Evaluation panel which includes Daniel Kibet, Jack O. Wanyanga, Minas Jelimo, Kefa Omanga, Preston Miriti, Benson Nzinzi, Richard Mugoko, and Pauline Wanjiku and of course Governor Mike Sonko will soon be answerable for the rot and EACC is coming for them.

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.

The AAR cover has come under stern scrutiny since the deal was signed with former Governor Evans Kidero’s administration in 2015 where the firm has been earning between Sh1.06 billion and Sh1.3 billion every year.

The firm’s contract with the county government was to end on June 30, 2017, but Governor Sonko’s administration extended the deal by three months to allow time for fresh procurement. This led to outcry from a section of the MCAs who filed a case in court.

In January this year, Kenya County Government Workers Union raised alarm over lack of a medical cover following revelations that county staff had stopped receiving the cover from December 31, 2018.

Examination of the records

Examination of records revealed that AAR Insurance Kenya Limited was paid Ksh1,725,488,939 for staff medical insurance cover during the year under review.

Audit has also revealed that this payment was made outside IFMIS contrary to regulation 109(1) of Public Finance Management [County Governments] Regulations, 2015.

Further, examination of Other Operating Expenses revealed that an undisclosed law firm was paid Kshs. 15,000,000 through voucher number 15649 dated 29 June 2018 for the services purportedly rendered in respect of the staff medical insurance cover.

Excess Payments

Although the total payment made so far to AAR Insurance Kenya Limited 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.

Growth in Contract Value

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.

More details

The second extension was contrary to section 88(13) of the Public Procurement Act and PPOA was not consulted. There was collusion between finance and Procurement officers and AAR

Award of the tender to AAR was not competitive, it was unilateral, hence kickbacks were involved.

The other scandal

As the Nairobi Governor Mike Mbuvi Sonko is still barred from accessing his county offices until the investigations over the Nairobi garbage collection tender scandal in which detectives say the county lost Ksh357 million are complete, some of the people he was charged along with are still walking at large. One of the people wanted for loss of Ksh357 million in the garbage tender scandal is Web tribe limited CEO Danson Muchemi.

Mr. Muchemi, the CEO of Web Tribe limited which is operating as Jambo Pay, has made billions from the county through offering payments services. He is said to be in hiding. The detectives have been trailing him to no avail.

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