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The National Health Insurance Fund (NHIF) was last week on the receiving end from Members of Parliament over-investment in two properties that could see it lose more than Sh4 billion.

Acting Chief Executive Samson Kuhora was hard-pressed to explain how the cost of constructing its multi-storey car park in Nairobi’s Central Business District (CBD) went up by about 340 per cent.

Kuhora and his team were put to task on how NHIF purchased a 10-acre piece of land in Nairobi’s Karen area at Sh2 billion whose ownership was in dispute at the time.

National Assembly’s Public Investments Committee on Social Services, Administration and Agriculture chaired by Navakholo MP Emmanuel Wangwe turned away the NHIF team for allegedly attempting to give misleading information on the two projects.

NHIF was ordered to re-appear before the Committee on April 26, 2023, with comprehensive information on the two projects. “After listening to your responses, I have formed an opinion that you could be agents sent to mislead this committee to write a false report. I will not chair a session that will end up misleading this committee. Can you go back, prepare yourselves and come back with a more comprehensive report to present,” Wangwe ruled.

Wangwe expressed concern that the CEO could not provide satisfactory answers and documents required to prove his case. He said the CEO had deferred a number of responses despite being under oath.

The NHIF found itself on the receiving end when the Committee was told that according to the Auditor-General’s report, Sh900 million was budgeted for the entire project in May 2002 and the contract was awarded to a local construction firm.

Kuhora, who was accompanied by among others, the acting Director of Finance Fransisca Mwanza, could not explain why the project was delayed despite elapsed timelines. In the end, the Committee was told, the project was inflated by more than 300 per cent from the previous amount.

The contract sum was first increased from Sh910 million to Sh1.2 billion, an increase of 30 per cent.

The additional amounts on the Car Park project were later increased to Sh3,973,462,758 as of June 30, 2011, which was a 337 per cent increment from the original amount.

Committee members were furious that the reason for the drastic increment was not given. “The escalation of costs of the car park by 337 per cent over and above the original cost has not been justified while at the same time, the final completion certificate for the project had not been issued to the fund as of June 30, 2012,” the Auditor General’s report indicates.

The storeyed car park cost Sh4 billion against the Sh910 million agreed with a local contractor in May 2002 with an August 2003 completion target.

Car park

The Auditor General says more money was paid for the car park from 2009 despite records showing it was completed in July 2008 at Sh3.3 billion. “A further amount of Sh626.63 million and Sh4.7 million was incurred in 2009/10 and 2010/11 respectively on the parking, increasing its total expenditure to Sh3.97 billion as of June 2011,” says the report.

MPs now say the massive inflation of the project cost was most likely driven by corruption at the fund, noting that developers would have built a larger and grander facility with Sh3.9 billion.

The lawmakers also contend that NHIF’s delay in completing the project may have inflated the cost due to an increase in the prices of building materials over the years.

Kuhora told the MPs that the land, bought in early 2000 was meant for the construction of a resource centre which later stalled after the matter was taken to court by three other contestants, Crownland Freighters and others.

The MPs questioned why the health insurance provider went ahead to invest over Sh2 billion on land under dispute. “What is your core mandate now and then when you were undertaking this transaction? What is the current status of this investment and can you tell us about your policies on investment?”, Martin Owino (Ndhiwa) asked.

Owino further questioned: “How much have you spent on the legal tussles and how has it affected your revenue? Some of the responses we are not able to handle, we shall ask the legal team to handle.”

Saboti MP Caleb Amisi questioned why due diligence was not done before the purchase of the land as he pressed the NHIF management why it did not raise suspicions on the value of the land before the audit queries were raised.

Amisi now wants the immediate former NHIF CEO Peter Kamunyo and past board members summoned over the two investments to shed more light. “We need the immediate CEO and board members to also appear before this committee. We also need to look at the entire system of NHIF apart from what auditors have done. Next time you come back, bwana CEO, bring us your investment policy, so that you will be engaging in investment when you fully know your core mandate,” Amisi told Kuhora.

Suna West MP Francis Masara urged Wangwe to declare Kuhora and his team as hostile witnesses due to their unsatisfactory answers. “He is not providing search documents, land agreements and payment schedules. For an institution to buy land, there must be a valuation report. Can they provide a valuation report? The CEO is on oath and yet giving us wrong information on the land acquisition,” Masara said.

Mary Wamaua (Maragua) accused Kuhora of providing the Committee with information that is completely different from what is contained in the Auditor General’s report. “It is obvious that this land transaction was fraught with fraud. It is better for members to be given more time to go through the report because there is a big difference in the report and what we are hearing from the CEO and team,” Wamaua implored.

Scrutinise thoroughly

Geoffrey Wandeto (Tetu) asked Committee members to thoroughly scrutinise the NHIF report to detect fraudulent transactions. “Kenyans are losing a lot of money through fraudulent transactions in NHIF. This needs to be unearthed and stopped,” Wandeto remarked.

But Kuhora told the MPs that though the Ethics and Anti-Corruption Commission (EACC) was invited to investigate the issue, it has not yet finalised its findings and taken any action.

Kuhora urged the EACC to fast-track its investigations in order to prosecute all those found culpable. “The DCI also commenced investigations into the acquisition of the land in 2018. All key stakeholders such as the National Lands Commission and Nairobi county government have been roped in the investigations. All communications between DCI and NHIF are available,” Kuhora told the Committee.

He disclosed that though the Court of Appeal had at some point ruled in favour of NHIF in a dispute between it and some surveyors, there are three other pending cases, including Crownland and others, all contesting for the title deed.