Some Kemsa suppliers were neither pre-qualified, nor their business history known in the country, legislators were told on Thursday.
A case in point was that of Shop N Buy, which then eight weeks old. But it beat established pre-qualified companies in the multibillion-shilling supply tenders.
It was a top beneficiary of the plum but irregular supplies tenders now haunting the Kenya Medical Supplies Authority.
The MPs are investigating tender irregularities at the state agency.
Records of the questionable company show it was formed last February and two months later, the Kemsa management trusted it to supply face masks, personal protective equipment and other items worth Sh900 million.
The parliamentary Health committee members questioned how a two-month old company was able to mobilise resources for the life-saving supplies and also convince Kemsa to consider it for the multibillion-shilling job.
But Shop N Buy owner James Chelule defended his company from allegations of tender fraud. He says that his is a clean business.
Chelule registered Shop N Buy as a limited liability company on February 14 and has since been trading in medical equipment, farm machinery and household equipment from Ambassador Court, Suite A4 Milimani Road, Nairobi. It also has a telephone contact in Eldoret.
“Between the period early March and April, we were among the first company (sic) to sell all Covid-19 products starting from face masks, PPEs and hospital beds,” Chelule told MPs.
“On April 29, we wrote a letter of intent to Kemsa that we had capacity to deliver 100,000 complete PPEs kits and another 100,000 KN95 masks. On April 30, we received commitment letters from Kemsa accepting our request,” he said.
The then eight-week-old company embarked on airlifting the items and between June and July they had kept their part of the bargain, according to Chelule.
But MPs were unconvinced. Some doubted the soft-spoken Chelule was the owner of Shop N Buy and whether he was just providing paper face to the firm while real beneficiaries controlled things from behind.
“Are you really the owner of Shop N Buy or you are here representing someone else?” committee chairperson and Murang’a Woman Representative Sabina Chege asked.
Charles Njagagua (Mbeere North) also doubted the ownership of the company, insisting that there must be powerful beneficiaries and Chelule is a mere agent.
“You may be the front of the company but there is a beneficial owner. That brings me to my question; who is the beneficial owner?” he asked, adding: “Our curiosity is drawn to the fact that Shop N Buy was incorporated in the month of February and by May had supplies worth a billion.”
Tongaren’s Eseli Simiyu said it was mind boggling how the Shop N Buy found its way into the Kemsa millions.
“I am just surprised that a company incorporated in February and in a space of two to three months landed an order running into billions plus shillings,” Eseli said.
The lawmakers also questioned the company’s financial muscle to do a supplies job worth a billion shillings in just two months of existence.
But Chelule said he had financial acumen having been in business for 15 years and that he had supportive friends and suppliers “who are ready to supply Covid-19 related items within the shortest time”.
He did not disclose the identity of his supportive friends and networks during the Thursday afternoon grilling.
“I am a businessman. I also do other businesses. My background – if you check – is real estate and have been in business for 15 years,” he maintained.
He said he owns Elite Ventures Limited, a real estate company. A quick check by the Star on the company’s website shows it is a land buying company majoring in sourcing prime land for clients both in government and the private sector.
Seme MP James Nyikal also questioned how a little-known company and very new in the market had connections to engage in the multibillion-shilling deal.
“In just two months you have incorporated yourself, other (suppliers) can argue that they have been in the field and Kemsa knows them. How did Kemsa get to know you?” he asked.
But Chelule claimed he was selling to the Kemsa suppliers when the pandemic broke out and that is how he ended up developing interest in the state agency.
“Kemsa had other suppliers; some were supplying small number of masks and PPEs and they were buying from me,” he said.
He did not name the suppliers who were buying from him when pushed to so by the MPs.
The committee also met representatives of two top Kemsa suppliers – Megascope Healthcare (K) Ltd, and Crown Healthcare (K) Ltd.
Megascope CEO Richard Ngatia appealed to Parliament to protect private businesses from “mob lynching” by certain members of the public.
Ngatia said his company has been unfairly linked to the mess at Kemsa when all it did was honest business to help the government fight the pandemic.
He denied that his company was among private clearing firms involved in clearing Jack Ma’s donation.
“Megascope has never been registered as clearing agent and we have no mandate to clear,” he said.
Health Chief Administrative Secretary Chris Obure had earlier told the committee that no private firm was contracted to clear any of the Covid-19 donations from Chinese billionaire Jack Ma.