House Adopts report on Procurement of Group Life Insurance
EALA is strongly recommending for strict compliance with the EAC Financial Rules and regulations and punitive action taken for those who violate the same in the wake of malpractices in the procurement of the group life insurance for the EAC.
Consequently, the need to enact laws on financial and procurement management is now a necessity. With it, the Secretariat is also required to ensure there is continuous life insurance cover to the Community and should not expose Members of the Assembly and the staff of the Community to risks.
The above are contained in a raft of recommendations in the Report of the Committee on Legal Rules and Privileges on the matter of investigation of Procurement of Group Life Insurance Company for the EAC adopted by the House today. The Assembly has meanwhile resolved that all recommendations be effected and that the Council of Ministers reports back to the House by March 2017.
The investigation arose following a Motion raised by Hon Bernard Mulengani on matters of public importance including among others, allegations of irregularities in the procurement of Group Life Insurance and insurance of Members for the period between the period 1st July 2016 and 30th June 2017.
The Speaker then referred the matter to the Committee on Legal Rules and Privileges for investigation.
The Report was presented to the House yesterday but debate left for this morning following a Motion moved by Hon Mumbi Ngaru under Rule 14 of the Rules of Procedure to allow for the Assembly Members, more time to digest the report.
Presenting the report to the House yesterday, Chairman of the Legal Rules and Privileges, Hon Peter Mathuki stated that 7 Bidders for the Group life Insurance included SunLamp Life Insurance (Tanzania), Alliance Life Insurance (Tanzania), Britam Life Assurance Company (Kenya) and Liberty Life Assurance (Kenya). Others were ICEA Lion Assurance (Kenya), Metropolitan Cannon Assurance (Kenya) and Jubilee Insurance (Kenya).
The Procurement Committee according to the Report reviewed the procurement process and verified it was conducted within the provisions of Regulations and a notice of award of contract to the Britam Life Assurance Company (Kenya) limited for Group life and Personal Accident cover. A lowest evaluated bidder notice was uploaded on the EAC website giving a holding period of 14 days after approval of the selected contractor in accordance with regulation 78 (3) of the Financial Rules and Regulations and no complaints were received. However, later, there was a revocation of notice of award of contract to M/S Britam and extension of contract awarded to M/S Liberty.
According to the Report, the Secretary General appointed a review team comprising of 4 Officers to undertake a review of the procurement process of Group Life insurance, a move the Committee affirmed was irregular and maintained such appointment undermines the independence of the procurement process and stifles the functioning of the Community.
The Committee further observed the whole process of extension of contract was irregular because management did not obtain approvals from the Procurement Committee, extended an expired contract while ignoring legal opinion from the Counsel to the Community.
“Issues of value for money, effective competition, Transparency and Accountability were further disregarded”, the report said in part.
The Committee however further noted the Secretary General informed them the files had since been cleaned and that the negotiations with Britam had proceeded and the contract was already signed and insurance cover duly in place.
The Committee observed new developments in terms of reforms by the Secretary General to include changes of composition of the current Procurement Committee and the appointment of alternative Members to sit in absence of the substantive Members.
At the same time, the Secretary General is making it mandatory for the Procurement Committee to hire or co-opt an expert from inside or outside EAC for any procurement of USD 100,000 and above.
During debate, Hon Bernard Mulengani said the credibility of the Community stood to be eroded if the regulations are flouted and called for sterner measures and further investigations to be carried out. He remarked that it was important to copy international standards such as the UN to the fullest.
The legislator said the Community’s management needed to adhere to principles of governance and to live by example. He said it was vital for the Audit Commission to look into the areas raised on the report.
Hon Martin Ngoga said there were shortcomings in the instruments in place of accountability and this needed to be corrected. He said the exercise was a technical one and it had no intention of targeting any Partner State. “No Partner State condones malpractices in any case”, he said.
Hon Mumbi Ngaru said there was need to give the Executive Office (Secretary General) time to transit smoothly. The Member said, it was vital for the Committee to have dialogue with the Executive and the same made available in the report.
Hon Abubakar Zein said the report was akin to cases of attempted fraud, conspiracy, and serious irregularities. “The management also ignored the legal advise of the Counsel to the Community and in so doing put the Community and those who serve it at risk”, Hon Zein said. The legislator said the monies contributed towards the running of the Community was taken from the publics and there is need to guard the monies. He called for the total break of the matters of impunity. He asked the Council of Ministers to ensure corruption is addressed for the posterity of the Community.
Hon Dr James Ndahiro said the issues contained in the report were largely managerial in nature. He said the Assembly was mandated to flag out issues but without no capacity to fix.
“The role of the Audit Commission is not only to audit financial issues but other glaring issues as well. It is important for the Council of Minsters’ to ensure the Audit Commission ensures the recommendations contained in the report are adhered to.”, Hon Dr Ndahiro said.
Hon Nancy Abisai said integrity was fundamental. She added that violation of rules and regulations need sterner measures to be taken. Hon Mike Sebalu said the Committee had made firm observations but that the recommendations needed to be stronger.
Hon Isabelle Ndahayo called for the external auditors to do more scrutiny on the issue and report back to the House. She called for respect of procedures and authority.
Others who supported the report were Hon Patricia Hajabakiga, Hon Mukasa Mbidde and Hon Leonce Ndarubagiye.
The Secretary General, Hon Amb Liberat Mfumukeko said as the Chief Accounting Officer, he put to halt the procurement process owing to flaws including the lack of quorum and other irregularities. He mentioned that the Internal Audit department had similarly realized a number of flaws in the process.
“I could not endorse the report of the Procurement Committee to give the contract to Britam, but it was necessary to have consultations with the Executives in station to come up with a way forward. We had to be covered and so decided to extend the contract to M/S Liberty (the existing Company) until such time, the final decision is made”, he said.
The Secretary General affirmed that some of the processes had to be re-done and the process was duly followed.
“I want to confirm that the Community is doing a number of things and we need to keep the confidence of stakeholders up”, he added.“As Accounting Officer, I am committed to reforms geared to correcting challenges faced in the Community. Last year for example, we passed the Fiduciary Risk Assessment and the EAC Accounting Department was ISO certified”, he said. “ We have indeed made some progress”, he added.
The Secretary General further appreciated the Assembly and thanked them for their oversight role which enables the Community to improve.
Hon Chair of the Council of Ministers, Dr Susan A. Kolimba, affirmed that the Council of Ministers would take into consideration all the recommendations contained in the report.
Tags: EALA