Agency probes NSSF over Sh2.8bn scandal

 

NSSF headquarters in Nairobi. Photo/FILE 

By BENJAMIN MUINDI bmuindi@ke.nationmedia.com

In Summary

• Unit wants to find out basis on which the pension fund paid claims to firms

A government agency has launched investigations into questionable payment of Sh1.4 billion to three companies by the national pension fund and loss of Sh1.4 billion through a stock brokerage firm.

The Efficiency Monitoring Unit, which falls under the Office of the Prime Minister, said the investigations were meant to determine the basis on which the National Social Security Fund (NSSF) paid claims to three firms.

The entities paid are Mugoya Construction and Engineering Company, S.K. Jirongo/Sololo Outlets and Pan African Builders and Contractors (PABCO).

A letter from the permanent secretary in the Prime Minister’s Office, Dr Mohamed Isahakia, addressed to his Labour counterpart Beatrice Kituyi, shows that the three companies were paid Sh320 million, Sh490 million and Sh590 million, respectively.

However, NSSF acting managing trustee Tom Odongo defended the out-of-court payment of Sh590 million to PABCO, saying it had helped reduce the liabilities.

Dr Isahakia’s letter says: “In view of the foregoing, the unit has been directed to investigate and report on the authenticity, legal and commercial basis for the payments made by the NSSF to the various law firms involved in the settlement of the claims by the three companies.”

The investigations will also determine the circumstances that led to loss of Sh1.4 billion placed with the stock brokerage firm Discount Securities Exchange.

Also to be investigated are the qualifications of current trustees of the fund, and the effectiveness of the board process for evaluation of the outgoing managing trustee.

Mr Odongo denied any malpractice in the payment made to PABCO, which NSSF contracted during the Moi regime to build houses, apartments and a shopping centre in Kitisuru.

In a statement, Mr Odongo said his board, “in negotiating the matter out of court, has substantially reduced the contingent liabilities which are a burden to the members in the long-term and also obtained cost savings”. He said after completion of the work, PABCO “rendered their final accounts to the fund’s consultants” but were never settled.

PABCO then sued the fund for Sh1.3 billion, Mr Odongo added.