Health Secretary James Macharia put in the spotlight over Sh80m alleged bank fraud

Updated Saturday, July 6th 2013 at 23:44 GMT +3

Health Cabinet Secretary James Macharia, who was formerly the NIC Bank managing director.

By  Kipchumba Some

NAIROBI, KENYA: The CID  is investigating a case in which the Ministry of Health lost  more than Sh80  million allegedly deposited in a local bank where the Health Cabinet Secretary was the managing director.

The ministry lost Sh80,923,440 under the East African Public Health Laboratory Networking Project ( EAPHLNP),  allegedly deposited at the NIC bank where the Health Secretary James Macharia headed before taking up the new post.

In letters seen by  The Standard On Sunday, the ministry  alleges that the money was fraudulently transfered from its accounts in late April to pay some five strange creditors whom it had not engaged.

The fraud came to light on May 8, 2013 after a transfer of Sh15,836,400 that the EAPHLNP’s Chief Accountant Mr Philip Olulo allegedly ordered to be paid out to a KCB account of City Link Opticians was rejected by the recipient bank.

Contractors unknown

There were other four recipients and the corresponding sums involved were:   Dan Ochieng Ombewa ( NIC Sh9,865,750), Impulse Holdings (Sh7,899,360 ECO Bank),  Batian Logistics (Sh38,649,500 Equity) and Welkings Enterprises (Sh8,672,430 Co-operative).

The Ministry of Health said it did not recognise the contractors and had n for any services. “These companies and the individual in question are completely foreign to us,” said outgoing Health PS Mark Bor.

In a letter  to the NIC, he said that fraudsters posing as the ministry’s employees forged cheques and signatures of authorised signatories to the accounts to steal the money, a position rejected by the bank.

In a short statement, NIC Bank  declined to comment saying the matter was under investigation.

However, in a letter in our possesion dated May 14, 2013, the bank defended itself against claims of wrongdoing saying it had transferred the money to five different accounts on the instructions of the project’s authorised signatory Mr  Olulo.

Failed transfer

The bank claims that its attempts to reach Mr Olulo, through its Relationship Manager Mr Samuel Atandi,  to inform him of the failed transfer were unsuccessful after  “Olulo failed and or neglected to pick the call and or return the call.”

 “Instead he wrote two short text messages with remarks “Meeting. Calling u.....,” a promise he did not keep. On  May 9, 2013, Mr Atandi called Philip Olulo again using a different number unkown to him which he answered,” the bank said.

“Philip Olulo was duly informed but questioned why the funds had been rejected by the recipient bank as the payment details were accurate. He notified the relationship manager that he was out of town in Mombasa and would resolve the issue once back in office.”

The transaction took place barely two weeks before Mr Macharia resigned his top position in the bank to join  the Cabinet. When contacted, he referred us to Mr Bor who concluded that the matter is nothing more than a bank fraud.

Although the matter is being treated as such, it could be treated as a case of corruption and misuse of office if any evidence of collusion between the bank and the ministry of Health employees is discovered. 

 Mr Bor said the matter has since been referred to the CID for further investigation although he was not aware of their findings so far.

He also added that the ministry had informed theWorld Bank of the disappearence of the money.

The PS said the EAPHLNP’S  project manager Dr Akhwale, the head of accounting unit, Mr Edward Were and Mr Olulo had been suspended. Dr Akhwale declined to comment on the matter saying it was under investigation.

Ethics and Anti-Corruption Deputy Director Irene Keino said she was not aware of the case but that the commission would institute its own investigations in to the matter. “It is a matter of public interest and we have a right to look in to it,” she said.