Shadowy firms controlling billions in Ruto’s flagship projects

A network of shadowy firms, backed by powerful political figures, is quietly managing billions of shillings from President William Ruto’s flagship projects, raising alarm over transparency and public accountability.

These projects, designed to streamline government revenue collections, taxes, and levies, are being controlled by private entities instead of state institutions. The arrangement has placed sensitive public data in private hands and made it increasingly difficult for the Auditor-General to track movement of public funds, leading to billions of shillings in revenue turning out unaccounted for.

At the heart of the controversy is the e-Citizen platform, which, by October 2024, had generated at least Sh127.2 billion while being operated by private companies, according to the Auditor-General. The Social Health Insurance Fund (SHIF) is expected to handle Sh104 billion annually, while the government’s Paybill number reportedly collects more than Sh900 million daily.

Our investigations now reveal that Webmasters Kenya Ltd—founded by a Kenyan James Ayugi—developed the e-Citizen platform. The government also collaborates with Pesaflow Limited and Olivetree Limited to manage its operations, though details about these firms remain closely guarded.

SHA/SHIF services are being provided by companies involved in the Integrated Information Technology System for Universal Healthcare tender, including Safaricom PLC (lead bidder), Apeiro Limited, and Konvergenz Network Solutions Limited.

Safaricom PLC is 35% government-owned, with Vodafone holding 39.93%, institutions 0.83%, and individuals over 24%. Apeiro Limited is fully owned by SIH Africa Limited, whose owners are Aswanth Bindhu (India) and Nishant Mishra (Kenya). Directors include Rufus Maina, Inder Deep Singh Virdi, and Judy Mwende Gatabaki.

Konvergenz Network Solutions Limited is 90% owned by Konvergenz Holding, registered in May 2023. Pitfield Auto Limited and Abdullahi Abdi Sheikh share the remaining 10%. Issa Sheikh Mohamed is a director. Dorothy Kiprono owns Pitfield Auto, holding 5%.

Konvergenz Holding is owned by Issa and Abdullahi Abdi Sheikh (1,000 shares) and Kenyan firms Commtech Consortium and Galva Investments. Directors include Nancy Waithera (alternate to Peter Okaalet) and Nuru Said Ahmed.

Reports suggest political and business influence behind the deal. Tensions exist between the Social Health Authority (SHA), the Ministry of Health, and advisors over the Ksh104 billion IT system.

With no government funding and SHIF contributions meant for healthcare, SHA’s 5% administrative budget—Ksh15 billion—would be insufficient for salaries, operations, and the Ksh10 billion Safaricom contract.

The consortium includes Safaricom PLC, Apeiro Limited, and Konvergenz Network Solutions Limited. Registrar of Companies records show that Apeiro Limited was registered on July 5, several months after the search for a system had already begun.

“Apeiro is registered in Dubai. If it wants to do business in Kenya, it has to be registered locally,” Medical Services PS Harry Kimtai said in September last year.

According to a statement read by the Chair of the National Assembly Committee on Health, Robert Pukose, the Ministry of Health had furnished the committee with a formal clearance from the Attorney General, “thereby complying with all the legal requirements that were intended to safeguard public money through an assurance that there is value for money in any government transaction.”

Ruto’s economic advisor says the UHC digital platform is fully outsourced.

“GoK has not spent one Ksh on it. Sh104b is user fees payable over a 10-year contract period. For comparison, we paid Safaricom Sh77b in M-Pesa fees last year. The platform will provide similar capability at Sh10b/year ~Sh50 per hospital visit,” Ndii said.

Prime Cabinet Secretary Musalia Mudavadi recently admitted the health fund has struggled. “SHA is not perfect, and we still have challenges. As one of the top government officials, I don’t want to hide and say everything is okay,” he said in Kakamega, days after private and mission hospitals pulled out of the scheme over Sh30 billion in unpaid claims.

As the Auditor-General’s scrutiny of these financial black holes intensifies, a bill before Parliament aims to strip the Auditor-General of budgetary, staffing, and decision-making powers, transferring them to an Audit Advisory Board, which could weaken oversight and expose public funds to greater political interference.

“To empower the Audit Advisory Board to provide advisory on budget plans, human resource management, and other matters, to establish and abolish offices in the Office of the Auditor-General, and to appoint and confirm appointments,” reads the bill, sponsored by National Assembly Budget Committee Chair Kimani Ichung’wa.

The timing of the bill has raised concerns, particularly as reports emerge of SHA funds being siphoned by suppliers and Housing Levy collections being redirected into government bonds.

Former Deputy President Rigathi Gachagua has accused State House of being at the center of these financial dealings and corruption. In an interview with The Standard, he claimed road construction projects were fraudulent. “I was told to defend housing, but I learned that the Housing Levy is about business. To win tenders, you must sign pre-contracts with suppliers. And these suppliers of iron sheets, cement, and other materials are linked to government officials,” he said.

President Ruto, however, has vowed to fight corruption. “The government is determined to eliminate corruption to ensure Kenyans get value for their money in all sectors, including health,” a State House statement read on December 5, 2024.

Yet, the Auditor-General’s latest findings paint a different picture. The report warns that e-Citizen, Paybill No. 222222, and SHA are vulnerable to mismanagement, with billions at risk due to private control. e-Citizen, for instance, is not fully owned by the government, meaning deductions are made before revenue reaches state accounts. SHA deducts 2.5% per transaction, further limiting healthcare funding. The government Paybill number is also privately managed, raising concerns about transparency in revenue collection.

Auditor-General Nancy Gathungu’s report reveals that despite massive public investment, the government neither owns nor controls the Sh104.8 billion SHA system. “The ownership of the system, its components, and all intellectual property rights remain with the consortium,” she noted, warning that this severely limits state oversight.

The report further exposes that SHA was procured through a Specially Permitted Procurement Procedure, bypassing competitive bidding—a violation of Article 227(1) of the Constitution. “This process was contrary to Article 227(1), which requires fair, equitable, transparent, competitive, and cost-effective procurement of goods and services,” the report states.

Financial projections estimate Ksh111 billion in revenue over ten years from SHA contributions and health facility claims. However, the absence of a baseline survey raises sustainability concerns and suggests possible increases in healthcare costs.

“The projected revenues include a 5% deduction from claims made by health facilities, effectively increasing healthcare costs for citizens,” the audit states.

According to the Auditor, restrictive contract clauses further tie the government’s hands, preventing it from developing a competing system. Disputes will be settled in the London Court of International Arbitration, sidelining Kenya’s judicial framework.

Despite the damning findings, some government allies have dismissed the Auditor-General’s report. Former nominated MP Wilson Sossion accused Gathungu of misrepresenting facts. “I doubt the Auditor-General. Quite a number of facts will not fall in place,” he said on Citizen TV, arguing that the Ministry of Health deserves a right of reply.

Even as Kenyans express concerns over shrinking paychecks and the potential misuse of public funds, Ruto’s economic advisor, David Ndii, dismissed corruption fears.

“Unpopular opinion. Corruption is a constant… It’s not a hill I am going to die on,” he stated.