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House asks Kibaki to probe CBK boss over Charterhouse

The Central Bank Governor Njuguna Ndung’u. FILE
The Central Bank Governor Njuguna Ndung’u. Photo | FILE  Nation Media Group

Parliament has asked President Mwai Kibaki to appoint a tribunal to investigate the conduct of Central Bank of Kenya (CBK) governor Njuguna Ndung’u over his failure to reopen Charterhouse Bank.

The Committee on Implementation, in a report tabled Wednesday, said Prof Ndung’u should be penalised as per section 23(a) of the House Powers and Privileges Act for failing to implement a resolution that the bank, which was closed in 2006 on allegations of economic crimes, tax evasion, money laundering and violations of banking Act be reopened.

If Parliament adopts the report, the CBK governor risks being fined an amount not exceeding Sh2,000 or one-year jail term or both for failure to implement the House resolutions as adopted in the Departmental Committee on Finance, Planning and Trade 2010 report.

“Any person who— (a) disobeys any order made by the Assembly or a committee for attendance or for production of papers, books, documents or records, unless his attendance or production is excused under section 17; shall be guilty of an offence and liable, on conviction before a subordinate court of the first class, to a fine not exceeding Sh2,000 or to imprisonment for a term not exceeding 12 months, or to both such fine and imprisonment,” states Section 23(a) of the House Powers and Privileges Act.

The committee chaired by Tharaka MP Alex Mwiru investigated the circumstances under which Central Bank of Kenya had failed to implement the House resolution to reopen the bank.

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This followed a question by Kilome MP Harun Mwau who sought to know the reasons that led the banking regulator to appoint PricewaterHouse Coopers to investigate criminal offences in Charterhouse Bank.

Finance minister Njeru Githae in response to the questions in September last year said he had no power to force the bank to disclose information as to why the institution, which is under statutory management remained closed.

Not responsible

When he appeared before the probe team, Mr Githae said he was not responsible for the closure of the bank.

The minister said he had written to the governor informing him of the resolution of the House to reopen Charterhouse Bank, and advising him to do as the House had resolved.

In response, CBK quoted Article 231 of the Constitution and that it was not compelled to be under direction of the minister.

The committee said Mr Githae informed them that the CBK was an independent institution and that he had no powers to compel the Central Bank in any way.

“The committee noted that CBK was reluctant for some unclear reasons to open Charterhouse Bank. It was finally resolved that legislation to check the powers of the Central Bank needed to be amended,” the report says.

Prof Ndung’u failed to testify before the committee, citing a case in court where some parties had sued CBK over the matter.

“The governor of the Central Bank was in contempt for failure to appear before the Committee, therefore breaching Article 125 of the Constitution and section 14, 17 (2) and 18 of the National Assembly Powers and Privileges Act,” said the MPs.

The MPs noted that the depositors’ funds were being used to pay for expenses such as rents, utilities and the salary for the statutory manager.

They said that the independence of institutions such as the central bank, the director of public prosecutions does not relieve them of accountability to the nation.

“Parliament as a representative of the people has the right to exercise oversight over public institutions that provide services to Kenyans,” they said. They recommended that CBK reopens the bank.

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