Good Afternoon, Ladies and Gentlemen; and thank you for once again attending our Media Briefing on the ongoing Internal Audit processes taking place at the Ministry of Health.

On Friday, 28th October 2016; I gave a briefing on the Agencies that have joined us in investigating the audit queries raised in the Interim Financial Audit Report. I also made clarifications on the Supplementary Estimates appropriated for the Financial Year 2015/16.

During Friday’s briefing, I promised to provide you and the Public with an update on all responses to the specific queries raised in the Interim Financial Audit Report. I also highlighted the fact that the Interim Financial Audit Report was leaked to the Public shortly before the internal responses were sought, considered and incorporated for the internal auditor to prepare the final Internal Audit Report.

Ever since the Report was leaked, the Ministry has made every effort to give timely updates to the Public, as well as disclosing all information pertinent to the Report that is in our possession. My regular briefings to the Media on this issue are evidence of our commitment to being as transparent as possible. We believe in accountability and the Public’s right to information.

The Ministry wishes to state, by way of providing clarification and context, that the issues raised in the Interim Financial Audit Report were a misrepresentation of material facts and circumstances; hinged on four specific audit queries.

This briefing therefore aims at providing the public with more information in regard to the specific audit queries raised in the Report; as well as explaining to the public the measures that were and are in place that guarantee prudence and legality in financial expenditure as promised in my last briefing.

Supplementary Estimates

The issue raised with regard to Supplementary Estimates was that the Supplementary Estimates did not meet the procedural requirements set out in the Constitution, as well as those set out in the Public Finance Management Act and its regulations. We wish to clarify that both the National Treasury and Parliament gave their respective approvals, for the Supplementary Estimates and that all legal requirements were complied with.

Transfer of Kes. 265, 781, 500 to Cooperative Bank

The Ministry would like to clarify that this was for a Letter of Credit which the Ministry opened for one of the vendors under the Food Supplement. The opening of Letters of Credit is a standard and acceptable mode of payment for imported goods, as it is a process that provides the supplier with payment in a form that ensures that the funds are used by the supplier strictly for the service being rendered.

**Expenditure against Supplementary EstimatesKes. 515,795,750

The amount of Kes. 515,795,750 was spent on food and rations, as follows:

  1. Kes. 249, 996, 696 was for local food supplements by four firms; and
  2. Kes. 265, 781, 500 was paid to Cooperative Bank through a Letter of Credit for the supply of food supplements which were being imported.

Curative and Rehabilitative Health Services

The Interim Financial Audit Report misrepresents the material facts by indicating that from Kes.800,000,000, Kes 530,000,000 was reduced during the Supplementary Estimates and Kes.350, 000,000 was added.

I wish to clarify that the Supplementary Estimates for the Financial Year 2015/16 indicates clearly that a sum of Kes.400,000,000 was additional funding; comprising of two items being Kes.350,000,000 and Ksh.50,000,000 respectively, under Programme-02-National Referral and Specialized Health Services.

Following the Terrorist Attacks in Lamu many lives were lost due to lack of adequate Theatre Facilities. In-fact we lost In this regard, the an executive decision was made to enhance the capacity of the Lamu Hospital –Accident and Emergency Facility necessitating an appropriation of Kes. 100M as a conditional Grant. Further, Kes.100, 000,000 for Bungoma County Hospital and Kes.200, 000,000 for Nanyuki County Hospital.

Thus, the particularly query is fully reconciled.

Budgetary Over-Expenditures

I wish to clarify that in of itself, over-expenditure is not LOSS OR THEFT of Public funds; in the course of implementation of Government spending over-expenditure can be incurred, we have a mechanism within the law that regularizes such expenditure though supplementary Budgets.

Supply of Portable Medical Clinics-Estama Investment Limited- Kes. 800,Million

We have confirmed that the contract for supply of 100 portable medical clinics was awarded to Estama Investment Limited on the 17th of July, 2015 following the procurement process, having been the joint lowest BIDDER with the bidder having not met the compliance threshold. Accordingly, we hereby also confirm that the Company provided the requisite Tax Compliance Certificate as well as its PIN Certificate as required during the procurement process.

The Company has supplied all the Clinics as required in the contract; and has since been paid up to Kes. 800 Million, in this regard the outstanding balance amount is Kes 200M.

The Free Maternity Fund

According to the Ministry’s records, the expenditure against that item was Kes.586, 491, 796.45 and not Kes. 889,053,456.90. The money was used in procurement of various medical supplies.



From the foregoing, we have so far been able to establish that all the Expenditure under the Audit Report have been accounted for.

It is also vitally important for me to clarify that the Report under reference only raised audit queries based on an assertion of unaccounted expenditure, not fraud or theft. I urge Kenyans to be patient and not rush into judgement, particularly in an information vacuum.

While we have serious concerns as to the quality of the Report and the probity of its methodology and findings, we affirm that we are committed to internal and External Audits as a way to improve our operations. Consequently, I hereby announce that we shall be inviting a private audit firm of international repute to conduct further independent evaluation of the Interim Audit Report and the Ministry’s responses thereto. I also urge EACC, KENAO, DCI and other State Agencies to expedite the ongoing Audits and Investigations to safeguard public interest.

On our part, we continue to affirm our commitment to excellence in Public Health and our dedication to complying with all applicable provisions of law in the discharge of our mandate.

We remain focused on advancing our TRANSFORMATIVE PROGRAMMES as well as driving forward our ongoing strategies with regard to Health issues that concern Kenyans. We are on track to continue to deliver on upcoming milestones, particularly in the areas of cancer and autoimmune diseases.

Ladies and Gentlemen of the Press, I invite you tomorrow at The Government Press Auditorium at K.I.C.C- 1st Floor at 3:00 O’clock in the afternoon for a detailed presentation on matters arising and hopefully to bring this matter to a close.




Dr. Cleopa Mailu, EBS


30th October 2016