How MPs planned to send CBK governor Patrick Njoroge home

Sunday June 18 2017

CBK Governor Patrick Njoroge

CBK Governor Patrick Njoroge in December last year responding to questions from members of the Finance Committee on an audit report on collapsed banks. PHOTO | FILE | NATION MEDIA GROUP 

By KIPCHUMBA SOME
More by this Author
By JOHN NGIRACHU
More by this Author

Members of Parliament quietly planned to send home the Central Bank of Kenya (CBK) Governor Patrick Njoroge, his deputy Sheila M’Mbijiwe as well as the board of directors just before the term of the 11th Parliament came to an end.

Hidden in the Finance Bill 2017 tabled in Parliament in April were proposals to amend the CBK Act which would have required all top bosses at CBK to re-apply for their jobs and be vetted afresh.

According to a letter dated May 25 from Dr Njoroge to Finance Cabinet Secretary Henry Rotich, the apparently alarmed CBK governor said that the amendments were proposed by Nominated MP Johnstone Sakaja (Jubilee).

However, Mr Sakaja, who is vying for Nairobi County senate seat in the August 8 elections, has distanced himself from the plot to kick out the CBK governor.

PROPOSED AMENDMENTS

He told the Nation his only proposed amendments were to the Kenya Deposit Insurance Corporation Act.

He wanted to insert a provision where, upon the collapse of a bank, the customers would be entitled to a mandatory payout of up to Sh100,000.

“I have never wanted to amend (anything on) the CBK Act,” said Mr Sakaja.

In his letter to Mr Rotich, Dr Njoroge rejected all the three proposed amendments to the CBK Act.

“We are not aware of any circumstances that have arisen subjecting the directors to fresh approval by Parliament,” said Dr Njoroge.

LEGAL PROVISIONS

In response to the proposed amendments, Dr Njoroge added: “Any misdeeds by the chairman, governor, deputy governor and any member of the board can be addressed under the existing legal provisions.”

The proposals required the governor, his deputy and the directors to provide clearance certificates from the Kenya Revenue Authority, the Ethics and Anti-Corruption Commission, the Directorate of Criminal Investigations,  the National Intelligence Service, the Higher Education Loans Board and the Credit Reference Bureau.

Dr Njoroge pointed out that he, his deputy and the directors were interviewed and vetted by the Public Service Commission and approved by Parliament.

“In view of the reasons given above, we are opposed to all the proposed amendments,” he wrote to Mr Rotich. 

Attorney-General Githu Muigai sided with the governor. 

POWERFUL CARTELS

“When the amendment was proposed, I wrote to the Clerk of the National Assembly and the Leader of Majority in the House opposing the inclusion of that provision because its effect would have been to undermine the independence of the office of the CBK governor whose independence is critical for the proper functioning of the institution,” he said.

The proposed amendments are the latest in a series of attempts by powerful cartels in Kenya’s financial sector to have Dr Njoroge kicked out of office for his firm stand on corruption within the banking industry. 

We could not establish if the top Jubilee administration was aware of the move to kick out the governor.

The other proposed amendment concerned the opening of a Trust Account with CBK by companies offering telecommunications services.

BANKING PRACTICE

Dr Njoroge rejected the proposed amendment on the grounds that it will require CBK to open accounts for private entities against the law and banking practice.  

The third proposed amendment concerned additional requirements for candidates to the position of governor, deputy and the chairman of the board.

Dr Njoroge’s view was that the proposed additions were administrative and should be taken into account during the vetting process and need not be spelt out in the CBK Act.

It is not clear what prompted the proposed amendments. Going by what is on the Hansard, it appears possible that someone in Parliament could have wrongly indicated that the amendments were proposed by Mr Sakaja.

When an MP proposes an amendment to a Bill being processed in Parliament, their proposals are drafted into the proper legal language by the Legal Department.

REJECT AMENDMENTS

The department also advises on whether the amendments are feasible and what their effect would be.

Working with the Clerk, the department also advises the Speaker on whether to approve or reject the amendments.

To guard against mischief, Speaker Justin Muturi has also, in some cases, ruled against amendments that would fundamentally change the direction of a proposed legislation.

This has mostly been in the case of omnibus Bills such as the Finance Bill and the Statute Law (Miscellaneous Amendments) Bill, which come with opportunities for mischief.

National Treasury Cabinet Secretary Henry Rotich at a past event. PHOTO | NATION MEDIA GROUP

National Treasury Cabinet Secretary Henry Rotich at a past event. PHOTO | NATION MEDIA GROUP
This was also guided by the Standing Orders for the 11th Parliament, which stated: “No amendment shall be permitted to be moved if the amendment deals with a different subject or proposes to unreasonably or unduly expand the subject of the Bill, or is not appropriate or is not in logical sequence to the subject matter of the Bill.”

REJECTED PROPOSALS

In striking out some amendments, the Speaker referred to some by Kibwezi West MP Patrick Musimba. He rejected his proposals on the CBK Act, the Kenya Deposit Insurance Act, the Kenya Information & Communication Act, the Income Tax Act and the Value Added Tax Act.

He said several of them had “money Bill” effects and had not been subjected to public participation.

Mr Musimba did not receive the calls we made to him or answer text messages we sent him on whether he was the one who proposed the amendments.

Mr Musimba is associated with Porting Access Ltd company, a telecommunications firm which was once entangled in legal suits with Safaricom.

POWERFUL PEOPLE

Dr Njoroge’s efforts to instill discipline in Kenya’s financial sector have brought him into the crosshairs of  powerful people who are not happy with stringent banking rules he has instituted since being appointed to the position by President Uhuru Kenyatta two years ago.

Last year, the Majority Leader in Parliament Aden Duale accused Dr Njoroge of trying to introduce “the Catholic’s Opus Dei rules” in the banking sector.

Dr Njoroge belongs to the Opus Dei, an organisation within the Catholic church that places special emphasis on the importance of work and professional competence.

His stance on corruption within the banking sector has rubbed the cartels in Kenya’s financial world the wrong way.

Last year, an e-mail from a presidential adviser to a top state lawyer seeking advice on options to remove the governor was leaked to the media.

UNDER RECEIVERSHIP

In June last year, Parliament amended the law that gives CBK autonomy over supervision of banks.

Consequently, CBK is required to seek the Treasury’s approval before putting a bank under receivership.

In one of the fights against Dr Njoroge, prominent city lawyer Ahmednasir Abdullahi wrote to the Ethics and Anti-Corruption Commission and the DPP, accusing the governor of “abusing his office” in the decision taken on Imperial Bank, Dubai and Chase banks.