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Queries over NSSF’s Sh1bn lost in Ngong and Karura forests

Sh1.1 billion invested in gazetted public forests and millions of shillings in uncollected rent yet to be remitted to national pensions fund are some of the disappointing highlights of how the taxpayers’ money is being mismanaged.

National Social Security Services (NSSF) sank billions of shillings in buying two quarries in Ngong and Karura forests and Sh93 million in some Karen land — deals which have cost Sh400 million in consultancy fees.

The 2011/2012 State Corporations audit report has exposed various malpractices and loopholes within the NSSF and the National Hospital Insurance Fund (NHIF) that could have resulted in loss of billions of shillings.

Gazetted areas

The audit questions a decision by NSSF to invest more than Sh1.1 billion of workers’ money in public forests which cannot be privately owned or developed.

The agency invested in the land knowing it was part of Karura Forest Reserve and Ngong Forest. 

NSSF has long outstanding sundry debts with Sh30 million in rental income collected from tenants in Bruce House, Hazina, View Park Towers and Nyayo Estate by various property agents not remitted to the Fund as at June 30, 2013.

In Nairobi’s Embakasi estate, the NSSF is faulted for advancing payment to a contractor, Mugoya Construction and Engineering firm Sh324 million without a collateral security.

A recent report to the National Assembly’s Public Investment Committee indicated that Nairobi residents who bought NSSF houses in Embakasi’s Nyayo estate might have paid more than the original prices of the houses to cater for inflated construction cost.

“More half a billion shillings was inflated in various phases of the housing scheme in the last five years through variations in bid prices,” the report tabled by the current Managing Trustee Richard Langat read.

Mugoya Construction, built the estate’s Phase One that comprised 1,156 units between 1998 and 2000.

Their contract was terminated in 2004 and Mugoya sued NSSF for damages worth Sh7 billion for breach of contract, with NSSF making a counter-claim for Sh9 million. The matter is still in court.

A senior official at NSSF said he refused to comment, saying policy issues were directed by the board.

NHIF, on the other hand, bought land in Karen at a cost of Sh93 million. It contracted consultants to do a feasibility study towards the construction of a Resource Centre. 

On completion the consultants demanded a Sh734 million but after arbitration, they were paid Sh407 million for their work.

The report also states that the fund paid Kenyatta National Hospital only Sh19 million of Sh331 million owed to the hospital. NHIF record indicate the whole amount was paid. That leaves Sh312 million unaccounted for. 

The cost of building the NHIF multi-storey car park at Upper Hill has also been queried in the report. 

The cost, record show, increased from the original cost Sh900 million to Sh3.9 billion without justification.