Another Kibaki appointee faces wrath of MPs

By Alex Ndegwa

President Kibaki has suffered setbacks with some of his public appointments challenged and still, another of his high-profile appointee is under threat.

Parliament’s Public Accounts Committee’s indictment of Central Bank of Kenya Governor Njuguna Ndung’u alongside former Finance Minister Amos Kimunya over controversial printing of banknotes threatens the tenure of the chief banker the President fought hard to retain.

It has raised the stakes because were Prof Ndung’u, whose reappointment by Kibaki sparked a storm last year, to be removed from office, the President will no longer make such a unilateral appointment.

Competitive process

Through the Finance Act 2012, which the President assented in April and amendments to the Central Bank of Kenya Act opened up subsequent appointment of the governor to a competitive process.

Sections 47 of the Act, which also provided for parliamentary approval of the nominee for governor, is deemed to have come into operation on May 2, which means future appointments are subject to the new provisions.

“There shall be a governor who shall be appointed by the President through a transparent and competitive process and with the approval of Parliament,” the amendment to section 13 of the CBK Act says.

It would be a coup against Kibaki considering his re-appointment of Ndung’u for a second term last year sparked outrage.

But the President stood his ground stating his decision was guided by Section 11(2) of the CBK Act, which gives him the authority to appoint the CBK Governor, his deputy and non-executive directors.

It is after this standoff that MPs moved to effect the changes. Apart from the Governor, the appointment of the bank’s chairperson and deputy governors by the President is also through a transparent and competitive process and with the approval of Parliament.

Finance Minister Njeru Githae has incorporated the provisions in the Central Bank (Amendment) Bill, 2012, which is before Parliament.

Debate on the Bill could be punctuated with snippets from the damning PAC recommendations.

It also emerged a House Business Committee meeting turned stormy on Tuesday evening scuttling attempts to slot the PAC report for debate. Kimunya and Ndung’u have fought off the indictment over the loss of Sh1.8 billion in exorbitant multiple short term currency-printing contracts.

CBK said “no basis” had been established in the PAC report, which recommended the Ethics and Anti-Corruption Commission investigates Ndung’u and Kimunya over the cancellation of a competitive contract in 2006.

“Ndung’u acted on explicit instructions from the Treasury to cancel the new generation currency contract and all subsequent stop gap orders were with the approval of Treasury and the bank board,” said a statement by the CBK communication office.  “CBK would not have ignored guidance on currency procurement received from the Ministry of Finance, being the mother ministry,” it added.

The stopgap orders, it further stated, were undertaken with the approval of Treasury and the CBK board. Further, they were awarded by the Tender Committee in accordance with the public procurement rules, said the statement. This referred to interim contracts for the minting of 1.4 billion notes, which cost the taxpayer Sh5.5 billion. This was more than $51 million (Sh3.7 billion) it would have cost to supply 1.71 billion banknotes under the revoked 2006 international tender.

CBK claimed in the absence of legal basis, the call for Ndungu to step aside is “clearly actuated by malice and vendetta.”

“No evidence has been tabled nor insinuation made that Prof Ndungu personally benefited from the stop gap orders with De La Rue,” read the statement. The recommendations, CBK said the statement, are “personalized in nature and do not appear to be hinged on the facts presented to the PAC.”

It termed as glaring contradiction that PAC supported the joint venture initiative between Government and De La Rue but at the same time condemned Kimunya and Prof Ndungu for the stopgap currency orders, “which were necessary to allow the Government to conclude talks.”

Kimunya argues Kenya would have spent Sh8.4 billion in six years through the cancelled contract, compared to Sh5.5 billion spent in five years to print a similar number of currency pieces.

Changes to CBK Act

The Bill to amend the CBK Act firms up the gain made following an amendment in May to provide that “the chairperson shall preside at all meetings of the board.”

Prior to the change through the Finance Act, the “Governor, as chairman of the bank” chaired such board meetings, an arrangement MPs had criticised. The Bill provides for qualifications for governor and deputy governor, including they “shall be fit and proper persons of recognised professional standing”.

Such include more than 10 years experience at senior management level in the field of economics, banking, finance, law or other fields relevant to the functions of CBK.

The Bill defines “fit and proper” as possessing all the attributes to be taken into account in determining the suitability of a person to be appointed as governor.

These include the person’s general probity, competence and soundness of judgement for the fulfillment of the responsibilities of office and the diligence with which the person is likely to fulfill those responsibilities. The legislation provides the governor shall hold office for a term of four years, but shall be eligible for reappointment for one further term of four years.