Auditor-General Nancy Gathungu has maintained that her office is responsible only for conducting audits, leaving it up to Parliament to take appropriate action following revelations of financial and contractual irregularities in the Sh104.8 billion Social Health Authority (SHA) system.
While appearing before the Senate County Public Accounts Committee, Gathungu faced criticism for not recommending punitive measures such as contract termination or prosecution of those responsible for the irregularities.
Nairobi Senator Edwin Sifuna took issue with the lack of concrete actions proposed in the audit report, arguing that individuals who violated procurement and financial laws should face consequences.
“The recommendations should have gone further to outline specific actions against those responsible,” Sifuna stated, adding that Parliament should move to cancel the contract immediately.
Homa Bay Senator Moses Kajwang’ also voiced concerns, describing SHA as a system that could facilitate the misuse of public funds.
“We cannot allow minor offenders to go unpunished while expecting only the President to take responsibility,” Kajwang’ remarked.
In response, Gathungu emphasized that it was up to Parliament to determine what course of action should be taken based on the audit findings.
The audit uncovered that despite significant investment in SHA, the government has minimal control over the system. According to the contract, the system is owned and managed by a consortium, limiting the government’s ability to modify or even access it fully.
“The ownership of the system, its components, and intellectual property rights remains with the consortium,” the audit report noted.
Additionally, a clause in the contract restricts the government from developing a similar system, effectively preventing the creation of a competing alternative.
The audit also highlighted concerns over the financial model of SHA, projecting over Sh111 billion in revenue within ten years from member contributions, hospital claims, and track-and-trace charges. However, questions have been raised regarding how these funds will be managed, as the agreement lacks transparency on the signatories to the Escrow account where the funds are to be deposited.
A clause requiring a five per cent deduction on hospital claims has also drawn criticism, as it imposes additional costs on Kenyans despite the government’s commitment to making healthcare more affordable.
“This clause introduces extra fees to the public, yet there is no evidence of public participation in the decision-making process, which goes against the principles of public finance outlined in Article 201(a) of the Constitution,” the report stated.
Another controversial aspect of the contract is a clause that mandates dispute resolution through the London Court of International Arbitration, effectively sidelining Kenya’s legal system.
“The agreement specifies that any disputes arising from the contract must be resolved under the rules of the London Court of International Arbitration,” the audit report noted.
With these revelations, the focus now shifts to Parliament, which is expected to determine the next course of action to address the irregularities flagged in the report.
