KENYA: Owners of troubled Nairobi Hospital seek special meeting to oust directors

October 2019 BusinessDaily; Nairobi Hospital’s shareholders have sought an extra-ordinary meeting (EGM) to discuss the ouster of the institution’s directors, escalating wrangles at the premier health facility.

More than 230 members of the Kenya Hospital Association (KHA) — which owns the hospital — have drafted a petition seeking the removal of eight directors through the EGM.

The push for the shareholder meeting, the second in less than six months, is set to face opposition from the directors, further deepening wrangles that started with the suspension and later sacking of the hospital’s chief executive, Gordon Odundo.

The directors had opposed a similar EGM that was held on May 15, arguing that the petition summoning the meeting breached rules because it failed to disclose a specific agenda and was signed by some members who had not paid their subscriptions.

“Convene an extra-ordinary meeting (EGM) for the purpose of removal from board of management the underlisted directors and election of new members of board,” a section of KHA members told the chair of Nairobi Hospital, John Simba, through their lawyer.

The meeting will seek the removal of the directors, including Mr Simba and his deputy, Coutts Otolo — a former Mumias Sugar Company chief executive.

Poor oversight

Some of the shareholders accuse the directors poor oversight of infrastructure projects at the hospital, whose costs the petitioners say were inflated.

They also claim that the hiring of top executives was irregular and that the board had also failure to file tax returns for eight years, exposing the hospital to KRA penalties.

The board has also been faulted for delayed payments to doctors, suppressing a forensic audit that revealed suspect procurement and the failure to call for fresh directors’ election at the June Annual General Meeting (AGM).

“The directors have failed to properly manage capital infrastructure projects of the company leading to overshooting of budgets at astronomical sums, prejudicing the company financially,” said the petition backed by KHA members who say they own at least a 10 percent stake in Nairobi Hospital.

The forensic audit revealed tender rigging, stalled projects and irregular variations of projects.

Nairobi Hospital has in recent years been on a multi-billion shilling expansion spree, including the construction of a 12-storey building, a convention centre with a 400-seat auditorium and one of the region’s biggest laundry.

The hospital makes more than Sh1.5 billion in annual profits with sales in excess of Sh10 billion.

In May, some KHA members failed in their push to kick out the directors via an EGM that appointed nine new directors set to serve temporarily for three months.

The hospital blocked the ouster saying the EGM was in breach of rules. The nine include lawyer Richard Omwela, wife of Baringo Senator Gideon Moi, Zahra Moi, architect Otieno Odongo, former MP Chris Bichage and the chief executive of CBA Bank Kenya, Jeremy Ngunze.

Board changes

About 96 KHA members voted unanimously for the board changes, with their lawyers saying the voting was in line the Articles of Association.

According to the KHA Memorandum and Articles of Association, the quorum needed for such a meeting is just 20 of the nearly 2,000 members. Two thirds of those present can pass a vote.

Mr Odundo was sacked in mid-April after months of wrangles with the hospital’s board.

The standoff first played out in public on December 14 last year when Mr Odundo resisted attempts to serve him with a suspension letter.

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