Parliament can decide on fate of Sh104.8bn SHA contract - Auditor General
Gathungu maintained that her role is limited to auditing and that Parliament must take action.
Following an audit exposing irregularities in the Sh104.8 billion Social Health Authority (SHA) system, Auditor-General Nancy Gathungu has maintained that her role is limited to auditing and that Parliament must take action.
Appearing before the Senate County Public Accounts Committee, Gathungu faced criticism for not recommending the termination of the contract or prosecution of those involved.
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Nairobi Senator Edwin Sifuna criticised the lack of accountability.
"The recommendations should have had actual consequences on officers who breached the law,” he said. The senator argued that the contract should be cancelled immediately.
Homa Bay Senator Moses Kajwang’ also condemned SHA, calling it a tool for looting public funds.
"We must not let the small thieves go scot-free thinking that it is only the President who will take responsibility," he said.
Gathungu responded by saying the ultimate role and responsibility of prescribing what is to be done rests with Parliament.
Little control
The audit revealed that the government has little control over the system, despite heavy investment.
The contract states that the consortium behind SHA will host the system, while the government is only allowed to connect to it without installing the software on its devices.
"The ownership of the system, system components, and all intellectual property rights shall remain in the ownership of the consortium," the report reads.
Additionally, the contract prevents the government from developing a similar system. "Clause 16.2.5(c) of the general conditions of the contract states that the procuring entity shall ensure neither the procuring entity nor the government health agencies nor the procuring entity authorized users shall access all or part of the system in order to build a product or service which competes with the system or undertake similar functionalities to the system or attempt to do so," the report notes.
The financing model also raised concerns, as it projects over Sh111 billion in revenue over a decade from SHA member contributions, health facility claims, and track-and-trace solution charges.
These funds are required to be transferred to an Escrow account daily or weekly, yet the agreement lacks clarity on the signatories, raising transparency issues.
Furthermore, a five per cent deduction on hospital claims means that citizens will bear additional costs for healthcare, despite the government's pledge to make medical services more affordable.
"This is a material fact which entails levying fees from the public but is not supported by evidence of public participation, contrary to the principles of public finance as outlined under Article 201(a) of the Constitution," Gathungu stated.
Another contentious clause in the contract stipulates that any disputes must be settled by the London Court of International Arbitration, bypassing Kenya’s legal mechanisms.
"Clause 39.1 of the contract agreement requires any dispute arising from the contract be settled by arbitration under the rules of London Court of International Arbitration," the report notes.
Gathungu questioned why the agreement does not adhere to Kenyan laws despite being procured under the Public Procurement and Asset Disposal (PPAD) Act, 2015.
The findings in the report have sparked outrage, with calls for urgent action to rectify the situation and ensure accountability in the management of public funds.
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