Nairobi Hospital leadership dispute escalates

Leadership rows at Nairobi Hospital took another turn last week when a petition was filed to remove the board directors.

The squabbles, which came to the bare after the suspension of chief executive officer Gordon Odundo, now threaten to affect services at one of Kenya’s top private hospitals.

On Tuesday, almost 200 members of the Kenya Hospital Association (KHA), which owns the hospital, drafted a petition that could force the board to call an extraordinary AGM whose agenda is the removal of board chairman John Simba, his deputy Coutts Otolo — a former Mumias Sugar Company chief executive — and other board members.

In the letter, the petitioners say they represent more than a tenth of KHA members with voting rights, the threshold for demanding such a meeting.

“We require you to proceed to convene an extraordinary general meeting … for the purpose of considering the removal of the board of management members and an election,” the letter says.

SUSPENDED

There was a previous attempt to recall the doctors’ representatives in the board “for not championing the rights of their colleagues”, but that was ignored.

The letter came just weeks after Kenyans came to know all is not well at Nairobi Hospital.

On December 14, 2018, the CEO stayed put in his office for hours as a lawyer camped outside to deliver a suspension letter.

The hospital would later announce that Mr Odundo had been sent on a 90-day leave to allow the completion of an audit. The leave ends on March 14.

However, there are concerns about the audit as it was originally meant to cover the period Dr Cleopa Mailu — one time Health Cabinet Secretary and now Kenya’s ambassador to Switzerland — was the chief executive, but was directed at Mr Odundo.

REVENUE

As the suspended CEO awaits his fate, some workers have written to Dr Simba, accusing the board of abetting malpractices “that may bring our dear hospital to its knees”.

“The institution has close to 2,000 employees … Any disturbance is a threat to their jobs. They will, therefore, not watch as you supervise chaos,” the employees say in the January 27 letter.

The dispute points to money fights at the 67-year-old hospital whose gross income was Sh10.1 billion for the year ended December 31, 2017.

Of the amount, Sh1.7 billion was considered profit.

“There has been talk that the controversy is about powerful individuals fighting to control the Sh2 billion redevelopment budget. These claims need to be investigated,” said our source, who wanted to remain anonymous.

Some board members accuse the management of sidelining them.

One of the catalysts of the dispute is a draft audit report by Ernst and Young for operations at the hospital between January 1, 2013 and October 31, 2016.

MALPRACTICES

In most of the period covered, Dr Mailu was the chief executive. He was made Health Cabinet Secretary towards the end of 2015.

The audit, released in August 2018, revealed a number of improper dealings. Among them was bid rigging for services.

“We found four instances amounting to Sh91.2 million in which companies with common directors submitted bids under the same tender,” the report says.

The auditors also question the selling of a Mercedes Benz E300 and E350 to a senior official in 2014 and 2015 without the involvement of the disposal committee.

“The legal team informed us that its office did not have copies of the sale agreements,” the report says.

The audit also found evidence of millions of shillings collected in cash but not banked, financial transactions made by former employees, overstatement of income, excess supply of items and other malpractices.

ALLOWANCES

Some Sh61 million was paid to engineering firms towards the construction of a Sh1.2 billion parking silo.

The auditors found out that the amount was paid out long before the project started. Ernst and Young also stumbled on unsupported allowances to managers.

Mr Odundo wrote a letter to the board in November last year expressing his dissatisfaction with the audit.

“I was taken aback by reports that I was responsible for losses amounting to millions of shillings yet the audit was on payments for projects commissioned before my tenure,” he said.

The employees who wrote to Dr Simba appear to sympathise with the CEO.

“The desire by part of your team to secure favours from the CEO were trashed and so you began a game of witch-hunt,” they say.

CONFLICT

However, the board appears wary of the direction the management is taking the hospital.

“Silos have been created among staff and this is not healthy for the hospital,” the minutes say. The meeting was chaired by Mr Otolo since Dr Simba was away.

In the hospital’s document detailing the 2017 financial result, Mr Otolo’s stint at the troubled sugar miller has been left out at the section with the leaders’ short biographies.

Curiously, Mr Otolo is also a former chief executive of Ernst and Young, the company hired to audit the financial transactions at Nairobi Hospital.