- A petitioner, Bernard Muchere, told the committee IBNR does not raise suspicion and can only be flagged by experts.
- IBNR is a reserve account used by insurance companies to compensate for claims that have not yet been reported.
Image: FILE
A parliamentary committee has been told the National Hospital Insurance Fund lost Sh21 billion in the 2021-22 Financial Year through manipulation of books of accounts.
The Public Petitions Committee chaired by Vihiga MP, Ernest Ogesi, heard that the fake claims were engineered through Incurred But Not Reported (IBNR) claims by NHIF.
IBNR is a reserve account used by insurance companies to compensate for claims that have not yet been reported.
A petitioner, Bernard Muchere, told the committee IBNR does not raise suspicion and can only be flagged by experts.
"I can conclusively state that the IBNR reserves were fraudulently created to siphon NHIF funds,” Muchere, a fraud risk management consultant and a former internal auditor at the National Treasury, said.
He had written to Parliament claiming the national health insurer incurred Sh21 billion loss in fake claims in 2021-22 financial year.
Meanwhile, Auditor General Nancy Gathungu warned that counties could be losing billions of shillings through dubious accounts.
She told senators that some counties open bank accounts with the intension of stealing public funds.
Appearing before the Senate Public Investments and Special Funds Committee, Gathungu said some counties have as many as 200 bank accounts. She said a county should ideally have 10 bank accounts.
The committee chaired by Vihiga Senator Godfrey Osotsi was told devolved units have engaged private revenue collection firms whose collections cannot be ascertained.
“You will find an account dormant for three years and then suddenly there is money channelled to it, but all of a sudden it disappears,” she said.
In most counties, she said, each department in the executive operates its own bank accounts, but the money is channelled to other uses.
Senators are also probing the Kenya Ports Authority over numerous issuance of waivers to importers.
Members of the Senate Roads and Transportation Committee believe the waivers are denying the government billions of shillings in revenue.
“We are concerned about this issue because corruption loopholes have been sealed by the use of E-Citizen,” committee chairman Karungo Thang’wa said.
The lawmakers launched the probe after it emerged that KPA issued exemptions amounting to Sh1.4 billion in the last financial year.
The committee is seeking to know how the waivers were decided by the KPA management.
The committee raised concern that Kenya is losing millions of shillings due to the waivers and singled out Uganda as one of the biggest beneficiaries.
Documents tabled before the committee show that out of the 34 companies that were given the waiver, 10 are from Uganda.
The others are from Kenya, Congo, South Sudan, Brazil, DRC and Tanzania.
KPA Managing Director William Ruto defended the waivers stating that they have a strong policy that guides issuance.
Ruto told the committee that of the Sh67 billion that they got as their income last financial year, they only gave out two percent as waivers.
“This waiver is mostly on storage charges, not any other mandatory costs,” he said.
He further stated that they also give waivers to the Government of Kenya and related bodies and where the courts has made a decision.