Monday, June 11, 2012



By Jerry Okungu
Nairobi, Kenya
June 4 2012

The NHIF has been interesting reading in the last couple of weeks. The twists and turns of the story have continued to baffle and confuse whoever has cared to follow the drama.

Perusing the contents of the controversial Parliamentary Report presented in Parliament last week, one gets the feeling that some Parliamentary Committee members had already decided in advance that certain individuals were already guilty. The number of glaring contradictions in the report leaves one wondering whether the public should continue having faith in whatever MPs set out to investigate. Are some of our law-makers guns for hire?

At the close of the week, there seemed to be no end to the story as more drama unfolded. First it was Dr. Monda the chairman of the parliamentary commission investigating the scandal that claimed that his life was in danger. In his words, he has in the recent past been receiving threatening phone calls and texts possibly from powerful people connected with the NHIF saga. The question that went unanswered was; who would be interested in killing Monda for mere chairing one of the many alleged scandals in Kenya? If there were hit men out to eliminate parliamentary committee chairmen, Boni Khalawale, Gor Sunguh and many others would not walk the streets of Nairobi today.

As Monda delayed to produce the report that apparently had been disowned by a section of his committee members, some usual suspects interested in the NHIF funds were already blowing hot and cold with threats to reveal the names of those individuals sabotaging the production of the report.

The truth of the matter is; the current NHIF saga goes much deeper than Kenyans have been told. There are so many undercover operatives even within the defunct board that was keen to derail the Civil Service Medical cover for selfish reasons. They were acting on behalf of their principals in the private sector medical insurance companies that were not happy that NHIF had given full cover to thousands of Public Service employees and their families for a song.

The way the NHIF board members and their CEO have been handled raises more eyebrows. The normal procedure in a corruption case would have been to call in the Anti-Corruption officers, present them with evidence of alleged theft of public funds, arrest the culprits and charge them in court. That was the procedure used when ministers William Ruto, Henry Kosgey Andrew Mullei of the Central Bank and many others were suspected of having committed economic crime. This did not happen at NHIF.

The other interesting allegation was that the very minister for Medical Services had siphoned Ksh 900m to an offshore account from the same NHIF. Despite another story published by the Star newspaper indicating that the Ksh 900m in question was actually banked at KCB and never left the country; the rumour mill still persisted. If indeed the minister used his office to siphon Ksh 900m from NHIF to a foreign bank, why can’t the police arrest him and charge him with the available evidence?

As this saga has continued to grip the nation, insiders at NHIF have been telling interesting stories about the same Civil Service scheme.

According to reliable and confidential sources within government that are privy to confidential communications with the NHIF institution, it would appear like a cartel of insurance companies and private healthcare providers conspired with some Board members of the National Health Insurance Fund to discredit the Civil Service Health Insurance Scheme.

A recording of a telephone conversation between NHIF CEO, Richard Kerich and a Medical Doctor who represented the Insurance Industry and Private Healthcare Providers in the earlier negotiations revealed that some NHIF board members were compromised.

The medic told Mr. Kerich that certain powerful institutions represented in the NHIF Board were battling the Director of Medical Services to derail the Civil Servants Outpatient scheme.
He went ahead to promise Kerich the support of COTU and that of the Private Sector Healthcare fraternity if NHIF dropped its plans to offer outpatient cover to civil servants.
“Your board is your worst enemy,” the medic was heard telling Mr. Kerich, adding that, “these people are not adding value to your organization. They are like prostitutes who will go to bed with the highest bidder”.

The medic continued to tell Kerich that “Some of these organizations are in your board yet they are the same organizations that took you to court…. Their representatives who are sitting on your board are your worst enemies from within.”

Then Kerich responded in agreement saying, “It depends on what you have dangled out there. If the carrot is too big, what do you expect them to do, given their background?”
The medic responded, “Don’t bring individuals with loose morals on your board; bring people with brains.”

Mr. Kerich is reported to have sought a middle ground to the controversy that has since seen him and his board replaced by a caretaker board and a parliamentary committee constituted to probe the NHIF management.

The medic on the other hand is reported to have offered to mobilize the private sector and a COTU boss to support a doubling of NHIF contributions if NHIF promised to scuttle the Civil Service Medical Scheme which had promised to give the Civil Service staff unlimited annual cover at Ksh 2850 which private sector service providers rejected as untenable.

The same medic further told Kerich, “I have no problem paying you more; even double what you are collecting now….. I can mobilize the entire private sector to pay you more even next week. You are collecting what? Ksh 4 billion?”
Kerich replied, “No, Six billion”
Amit said, “I will give you another 6 billion on top…”
Kerich asked, “How about the COTU boss, will he agree?”
Amit replied, “He will say yes; there is no way he will say no! He will give his
go-ahead and say tuendelee”.

For Kerich and the embattled scheme; he had to promise to abandon the decision to offer outpatient cover to the Civil Service members and concentrate on in-patient scheme so that he could get the endorsement of COTU in his bid to increase NHIF contributions.

What is even more interesting is that the Civil Service Benefits Plan was signed and stamped as early as September 2011 but the key players in the private sector disagreed among themselves. It was at this point that Clinix and Meridian took the risk and signed up to take the deal.
Interestingly, CLINIX has been supplying medicare to the following reputed institutions including the Kenyan National Assembly. Following is the full list of Clinix clientele:
1. AAR
2. Kenya Civil Aviation Authority
3. Heritage Insurance
4. Daystar University
5. Resolution Health
6. Rift Valley Railways
7. Kenindia Insurance
8. G4s Security Services
9. Sarova Group of Hotels
10. Welding Alloys
11. Madison Insurance
12. Kenya Wild Life Services
13. Kenya Revenue Authority
14. Kenya National Assembly
15. Sameer Africa
16. Kentainers Limited
17. British American Insurance
18. Kenya Airports Authority
19. Southern Cross Safaris
20. City Council of Nairobi
21. ASP Ltd
22. APA Insurance
23. Alexander Forbes
24. Walk-in Patients
25. Shrigee Enterprise
Other clients outside Kenya include:
1. KK Security Uganda
2. Securex Agencies Uganda
3. Bata Uganda
4. ARCE Engineering Works Uganda

The puzzle and possibly the nagging question must be: If all these reputable institutions are clients of CLINIX, can CLINIX be the ghost company that politicians and activists have condemned to eternity? If indeed CLINIX is that much of a fraudster, how come these institutions including our own National Assembly and KRA have been doing business with it before?

How did this Civil Servants Medical Scheme come into being in the first place? What were the underlying factors that necessitated its formation in the first place?

It was prompted by the Civil Service Union’s threat to go on strike to demand for more investment on their health by the government of Kenya. Earlier discussions to improve on their healthcare benefits and their families had fallen on deaf ears.

Interestingly the Ministry of State for Public Service did not wait for the strike to take place. Instead, the Ministry wrote to NHIF requesting for it to provide medical insurance cover for its employees giving reason that the private insurance companies did not have the capacity and competence and had many exclusions making the scheme unattractive and unfeasible to the Civil Service staff.

The Ministry of Public Service also prepared a comprehensive report in a letter marked MSPS.20/4AVOLIII (6).

Following this letter, NHIF was then tasked to develop a Technical and Financial Proposal for discussion with the Ministry.

NHIF wrote back later saying it would cost Ksh 4.78 billion to have a comprehensive cover.
The Ministry then wrote back on 30TH November 2011 seeking clarification on the Technical proposal and sought a financial implication analysis on a proposed reduction of dependant children from 4 to 3.

NHIF responded once more with the required clarifications and quoted Ksh 4.3 billion instead of the earlier figure.

16 days later, on December 16, 2011, the Ministry of Public Service wrote to NHIF accepting its quote for provision of comprehensive in and outpatient services. It would cover the civil servant, a spouse and three children and would also offer group life insurance and last expense cover for the principal member.

The letter confirming the offer was copied to all Permanent Secretaries who are the Accounting Officers in the government, Commissioner of Police, AP Commandant, Commissioner of Prisons and the Director of National Youth Service.

It was also copied to the Secretary, Public Service Commission, Head of Public Service and Secretary to the Cabinet and Treasury Permanent Secretary.

A government Circular Ref: MSPS2/7/2A VOL.111/(18) dated December 21 2011 was distributed to all government ministries stating that all Civil Servants and Disciplined Forces would have a comprehensive medical cover starting January 1 2012.

Despite the announcement which was later widely covered in the media, the contract between the Ministry of Public Service and NHIF was not signed until January 5 2012. The reason it was signed long after the announcement was due to the fact that the NHIF Board had gone for Christmas at the time of the announcement and had yet to meet to ratify the contract.

A day before signing the contract, on January 4, a Special NHIF Full Board Meeting was held on the 10th Floor of the NHIF Building and there was only one agenda- to discuss the Government Policy on the Medical Scheme for Civil Servants numbering 216789, their spouses and declared dependants.
That meeting started at 9.25 am and also discussed a key issue of Operational Framework for the Scheme’s Implementation. It was chaired by Dr. Richard Muga in his capacity as the NHIF Board Chairman.

Despite denials by Richard Muga who chaired the Board Meeting, the meeting adopted the Capitation Financial Arrangement- meaning that whoever was contracted would be paid in advance.

Absent from this Board Meeting with apologies were:
1. Mary Ngari, Permanent Secretary, Ministry of Medical Services
2. Thomas Gichuhi , Association of Kenya Insurers
3. Jacqueline Mugo, CEO, FKE

After this Board Meeting, NHIF wrote to the Ministry of Public Service asking it to advise its members to select their facilities of choice.

Six days later, another Special Board Meeting was convened to be informed that the government had already released Ksh 2.16 billion to carry out the new medical scheme and a further Ksh 4 billion would be released in June 2012.

It was this meeting attended by Dr. Muga and Mr. Kerich that decided to form a committee to go round the country and bring back a report on the health facilities that would be used to carry out the scheme.

From the Public Service Ministry and Ministry of Medical Services- Andrew Nyanchoka was nominated to be part of the team alongside Peter Macharia from the Public Service Commission and Senior Assistant Director from the Ministry of Public Service.

Others were Deputy Commissioner of Prisons, Rose Muturi; Deputy AP Commandant, Frederick Mulandi; Charles Karege (AP) and Agnes Idza representing the Disciplined Forces. Others in the committee included representatives of the Union of Civil Servants, Jerry Ole Kina, Rehema Ibrahim and Allsokor Ishaq.

As this was happening, the management of NHIF was negotiating with major hospitals to allow Civil Servants to use their facilities. Almost all of them dismissed the offer on the table as too low.
The other crucial meeting took place in February 2012 and as the scheme got into the second month of operation, the NHIF Board considered the formation of a special Management Team to implement the Special Scheme for Civil Servants Medical Insurance Cover.

On sensing the magnitude of the new business unit, the NHIF CEO decided to set up a Strategic Business Unit to advice on and coordinate the scheme. The mini department had staff from relevant backgrounds ranging from Health Management, Finance and Statistics. The SBU was made up of young, fresh and energetic minds, most of them drawn from the private sector to ensure efficiency of the scheme.

So, where is the Problem?

First there was a meeting between government and different private healthcare providers. NHIF put on the table Ksh 2800 per person per year for its 216789 workforce, their spouses and their three children per family.

Private Sector players in their own words told Parliament that they quoted between Ksh 4000 and Ksh 9000 per person which was definitely beyond the budget prepared by NHIF. On that account only, their offer was rejected by the government as too expensive.

Thereafter, tenders were floated in the local national newspapers on diverse dates and Meridian and Clinix healthcare clinics later won the bids through a competitive process.
How does one win a government tender?

For a private company to win a government Tender, there are several steps to go through. In the case of the NHIF Tender, the individual clinic tendering must obtain a license for the clinic and the quality of healthcare offered must be checked.

Now licensing clinics and healthcare centers is not a function of the NHIF. That responsibility is vested in the Kenya Medical and Dentist Practitioners Board. NHIF relies on that board to vet and approve clinics.

More telling is the fact that Dr. Francis Kimani who is the Director of Medical Services represents the Ministry of Medical Services on that Board along with the Permanent Secretary Mari Ngari.

Once the Medical and Dentist Board approved Clinix and Meridian Healthcare clinics, the two institutions were issued with certificates which they in turn presented to Quality and Standards Department headed by Mr. George Midiwo as proof that the two institutions had credible health facilities.

The same Medical and Dentist Board however, declined to accredit Dr. Boni Khalwale’s clinic in Kakamega despite his personal application.

It may be remembered that Dr. Boni Khalwale has been most vocal in getting the Minister for Medical Services censored by Parliament and possibly forced out of office on account of the saga at NHIF. Why has he not declared his interest in NHIF as he prepares to move a motion of no confidence on Minister Anyang’ Nyongo’ in Parliament?

The amazing thing on Clinix is that Parliament is pretending not to know that this clinic exists yet there is documentary evidence to prove that from 2010 Clinix has been offering the same services to members of the august house through Parliamentary Service Commission.

As the nation delves into Dr. Monda’s report, we can only hope that Dr. Monda will take a deep breath and look again at the report he has produced to clean the confusion therein so that the government can conclusively deal with the NHIF saga and eradicate the rot perpetuated by some institutions that sit on its board.