Ministry of Health is in serious negotiations with creditors to either reschedule or revise the K2.2 billion owed to suppliers of medicine and health equipment as part of government’s resolve to ease its debt burden, MakanDay understands.
A government source has told MakanDay that under the previous government, most procurement decisions were made from the ruling party secretariat. He said, as a result only those close to the former ruling party profiteered from medicine supply contracts.
“They (Patriotic Front - PF) used the law to give themselves an advantage…when you follow the paper trail, you’re going to find that there is nothing (wrong )which they did, but when you look at the pricing, that is when you discover the serious problems,” said a source within the pharmaceutical sector.
The PF party described the accusation as “witch-hunt” by the ruling United Party for National Development (UPND) which won the August 2021 election.
“If there was such a thing, let the UPND publish this,” said the former party Secretary General Davies Mwila. "What they’re doing is witch hunting."
Health ministry spokesperson, Dr. Abel Kabalo said, in response to questions from MakanDay that the K2.2 billion debt owed to suppliers of drugs and medical equipment will be settled in due course.
“I cannot determine the time, but I think soon, because the auditors are verifying the figures that you have mentioned before any payment is made,” he said.
Health ministry turned into the “Bee’s nest”
Some of the companies which did business with the Ministry under the previous government, include Braxyl Pharmaceuticals, Pharmanova, Sterelin, Augusta, NRB Pharma and Honey Bee Pharmacy.
Dr Kabalo defended the Ministry’s record on medicine and health equipment procurement, which observers say was plagued by systematic corruption during the PF rule.
“As far as I know, the suppliers owed by the Ministry show that all documentation has been okay unless you have evidence that there is something that was awarded corruptly which I’m not privy to,” he said.
But in 2019 government procured health centre kits for primary healthcare needs from Honey Bee, a tender which observers say was surrounded by a strong stench of corruption. This was despite Missionpharma, a Danish-based company having a valid Framework Contract to supply the kits to government, according to a well-placed source.
A former Missionpharma employee at the closed Zambian office told MakanDay, government used the debt as an excuse to push out the company.
“They (government) brought in another supplier, accusing Missionpharma of holding government to ransom. But honestly how can a private company operate for almost two years without payment?” Asked a former Missionpharma employee.
MakanDay Centre for Investigative Journalism has also established that government has so far paid US$ 5 million towards the US$ 12 million it owes Missionpharma - since 2011,the country’s traditional supplier of health centre kits.
Last year controversy swirled around Honey Bee, the company awarded an overpriced US$17 million contract for 22,500 health centre kits. MakanDay established that the normal price for the kit at the time was US$400, while the ones supplied by Honey Bee were pegged at US$ 790, almost double the price.
In February this year, some of the expired drugs and faulty condoms Honey Bee had supplied were recalled and sent to Zimbabwe for testing.
“You may wish to know that it’s Medical Stores that had sent the samples for examination gloves and condoms to ZABS (Zambia Bureau of Standards) after a pattern of maneuvers to cover up the quality inadequacies in the supplied medicines,” said a source with inside knowledge of Medical Stores operations.
He added that “officials of Zamra (Zambia Medicines Regulatory Authority) and Medical Stores were accused of disloyalty to the government due to their principled position not to distribute the kits procured under Honey Bee”.
After mounting pressure from the public, Zamra cancelled Honey Bee’s pharmaceutical licence on February 13 this year, accusing the company “of breaching the terms of its licence and failing to take remedial action over expired drugs and faulty condoms”.
Problems shift to Medical Stores
Later in the same month, the drugs procurement system slid even deeper into chaos with the dismissal of the head of medical stores, Chikuta Mbewe, a move seen by observers as scapegoat by the former government. That was after the sacking of the health minister and his permanent secretary at the start of the year.
Then health Minister, Dr Jonas Chanda scrapped Medical Stores Limited, which Mbewe had led, and set up a new agency, the Zambia Medicines and Medical Supplies Agency (Zammsa), to handle both procurement and storage of pharmaceuticals.
But even before the sackings, there were concerns the shelves at Medical Stores – a government’s storage facility where running empty, with much of the country battling severe Covid-19 outbreaks. Drug shortages still persist to this day with patients returning from hospitals with prescriptions even for over-the-counter medications.
In March 2020, as the first wave of coronavirus infections all but shut down the Zambian economy, government responded with rare speed, releasing K95.1 million for the fight against the pandemic.
Nevertheless, the Auditor-General exposed glaring irregularities linked to procurement of goods and services, poor contract management and other malpractices, such as "cover bidding" and over-commitment of expenditure at the Ministry.
The effect of the revelations from the audit of 1st February to 31st July 2020 was galvanising. MPs called for immediate action during the debate for adoption of the Public Accounts Committee (PAC) report on 14th April this year.
“It is… shocking that the Ministry of Health over-committed expenditure by entering into contracts that exceeded the total budgetary provision of K716 million by K63,783,528 without authority,” said Howard Kunda, then chairman of PAC. “It is unacceptable for the ministry to misconduct itself in such a manner.”
Ministry of Health graft and police coverup
With the health ministry accounting for one of the highest shares of Zambia’s national budgetary allocation (8.8% of the 2020 national budget), the upsurge of procurement scandals and unexplained cases of missing funds put the spotlight on the Ministry’s lack of financial accountability.
A complex matrix of health officials and top-ranking police officers lies at the heart of efforts aimed at frustrating the conclusion of cases of fraud and theft related to the Ministry’s medical supply procurement.
Police have been reluctant to comment on the matter, including suspected meddling in the now forgotten Medical Stores investigations which started in 2017 in which two key officers handling the case were mysteriously transferred from Lusaka.
Simultaneously, police are already handling two separate but related cases. In the first, two Congolese are in court for the October 2017 theft. The second involves 13 Medical Stores employees on suspension awaiting conclusion of investigations in connection with the theft.
For earlier thefts from as far back as 2016, the government paid back over US$ 1 million of taxpayers’ money to the Belinda and Bill Gates-backed Global Fund.
In November last year, Kathryn Hodson, head of investigations in the office of the inspector general at the Global Fund told MakanDay that “payment of recoveries was received by the Global Fund” in response to an emailed query.