Health ministry to pay Sh34b over contracts termination

A National Assembly committee was yesterday told that the Ministry of Health will pay Sh34 billion in legal fees and court awards to three contractors following irregular termination of contracts and delayed payment for services offered.

The Public Accounts Committee (PAC) heard that the awards accrued since 1992 when the services from three contractors were sought.

At a meeting with Health Principal Secretary Susan Mochache, the MPs were shocked to learn that despite the awards, the ministry did not file any appeal following advice from the Attorney General that it should not appeal but instead pay the amount.

AG’s advice

Mochache, who appeared before the committee to respond to audit queries relating to the financial year 2019/20, told the committee that the Office of the Attorney General advised against appealing the ruling.

“The Attorney General advised that there are limited judicial options for the resolution of the matter and further delay in setting the matter would result in interest accrual and expose the government to greater loss of public funds,” said Mochache. 

The PS explained that, despite the ministry’s willingness to settle the bills, budgetary constraints had delayed the settlement of the debt.

Among the companies whose claims had ballooned include Equip Agencies limited which had its Sh1.7 billion claim increase to over Sh80 billion before it was scaled down through a court process, Vulkan Limited from Sh57 million claim to Sh3.1 billion and United Medical Suppliers from Sh196.89 million to Sh17.64 billion.

Committee chair Opiyo Wandayi sought to know why the ministry had failed to address the situation.

“These figures are mind boggling. How was this possible? This is a very disturbing scenario.

How the government goes about collecting taxes to pay court awards that don’t contribute to the GDP is a sad reality,” said Wandayi.