Economy

Audit queries CBK law breach over board members

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The Central bank of Kenya, Nairobi. FILE PHOTO | NMG

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Summary

  • Auditor-General Nancy Gathungu has once again raised concerns over Central Bank of Kenya’s (CBK) legal breach operating with seven instead of 11 directors and the absence of a second deputy governor.
  • Ms Gathungu said in her latest CBK audit report for the year ended June 30, 2021, the banking regulator has four non-executive directors despite the law demanding that President Uhuru Kenyatta appoints eight of the board members.
  • She said there has been no amendment to the Central Bank Act to provide for the reduction in number of directors or deputy governors adding that CBK was therefore in breach of the law. It is the second time the CBK is being faulted for the quorum breach.

Auditor-General Nancy Gathungu has once again raised concerns over Central Bank of Kenya’s (CBK) legal breach operating with seven instead of 11 directors and the absence of a second deputy governor.

Ms Gathungu said in her latest CBK audit report for the year ended June 30, 2021, the banking regulator has four non-executive directors despite the law demanding that President Uhuru Kenyatta appoints eight of the board members.

She said there has been no amendment to the Central Bank Act to provide for the reduction in number of directors or deputy governors adding that CBK was therefore in breach of the law. It is the second time the CBK is being faulted for the quorum breach.

The Auditor-General raised the query previously in the audited books of the CBK for the year ending June 2020.

She said in her latest report that there remains gaps, in the management of the apex bank, including a lack of a second deputy governor as set out in the law.

“As was reported in the previous year, the Central Bank Act provides that there shall be eight other non-executive directors of the board. During the year under review, the bank had in place four non-executive directors transacting business on its behalf,” she said in her reported dated September 27 this year.

“The Central Bank of Kenya Act states ‘There shall be two deputy governors who shall be appointed by the president through a transparent competitive process and with the approval of Parliament’. During the year under review only one Deputy Governor was in office,” said Ms Gathungu. Ms Sheila M'Mbijjewe is current deputy Governor.

The CBK’s non-executive board members are Ravi Ruparel, Nelius Kariuki, Samson Cherutich and Rachel Dzombo. Ms Charity Kisotu who was appointed in November 2016 resigned in January in 2019 reducing the number to four.

The other members are the chairman Mohammed Nyaoga, Treasury PS Julius Muia and CBK governor Patrick Njoroge.

The board maintains full control over strategic, financial and operational issues of the CBK but is not involved in the conduct of day-to-day business as this is the responsibility given to the governor.