Overhaul Kebs board to stop the rot in the standards agency
What you need to know:
- When you look at the composition of the board, you don’t see an attempt at following sound corporate governance practice on appointment of members.
- Meddling by politicians is how actions and decisions by this this strategic state agency has, at times, been marred by total confusion.
When I grow up, I want to write a book under the title, “How to protect economic regulatory agencies from undue influence by corrupt elites”. I will devote a complete chapter to Kenya Bureau of Standards (Kebs).
Something urgently needs to be done to stem the corporate governance crisis at Kebs and remove this critical economic regulatory agency from the stifling grip of corrupt elites.
The other day, I had the opportunity to peruse through its board papers and minutes to track and follow how the appointment of the new CEO, Lt-Col Bernard Njiraini, came about.
I concluded that it was made in blatant disregard not only of the State Corporations Act but also of the guidelines of the State Corporations Advisory Corporation on appointment of CEOs of Parastatals.
SOUND CORPORATE GOVERNANCE
When you look at the composition of the board, you don’t see an attempt at following sound corporate governance practice on appointment of members.
In modern corporate governance, you don’t appoint individuals with personal vested interests to a board of an independent economic regulatory agency.
When it comes to appointment of board members in Kebs, it seems that this principle is honoured more in breach than in practice.
Meddling by politicians is how actions and decisions by this this strategic state agency has, at times, been marred by total confusion.
UNABLE TO MAINTAIN PREDICTABILITY
In recent times, we have seen situations where decisions made by politicians rendered Kebs in a position where it was unable to maintain predictability and transparency when it comes to rates and fees to importers who have broken rules.
A gazette notice introducing new fees and rates can be published today, changed after six months and reintroduced into law a few months later.
Here is a good example. Some time last year, the Cabinet secretary for Trade and Industry directed Kebs to charge importers a 20 per cent penalty on goods arriving at the port of entry without a certificate of conformity. Hardly a month later, was Kebs directed to reduce the penalty to 15 per cent.
In February this year, Kebs was directed to reduce the penalty to five per cent pending publication of a gazette notice.
There as a time when a new rule required that fees for destination inspection fees can only be paid after authorisation by the CS himself. And why drag a whole CS into such mundane affairs?
RENT-SEEKING OPPORTUNITIES
It is all about creating rent-seeking opportunities. You introduce as many points of authorisation, stages and procedures as possible in a process and you have created as many bribery extraction points and toll stations.
I have always wondered why the political elite show little regard and value to the critical role and function of pre-shipment inspection.
We all know that it allows you to verify unit prices and make it possible to examine the quality of imports before they are shipped into the country.
Conducted well, pre-shipment inspection is what helps you control over invoicing and misclassification of imports.
Perhaps the most glaring example of meddling by the government in a pre-shipment inspection programme is what happened early this year to the contract on pre-shipment inspection on motor vehicles.
Out of the blue, the government forced Kebs to float another tender revising the programme to enable engagement of two additional contractors. In the process, two new players were engaged; namely, ATJ Inspections and EAA Inspections.
BLATANTLY IRREGULAR
That was blatantly irregular for the following reasons. First, Kebs brought in the two despite the existing contract won by QSJ Ltd under a competitive contract two years before being in force.
Secondly, the decision went against the legal opinion the Office of the Attorney-General and advice by the Office of the Public Procurement Authority.
Thirdly, since ATJ and EAA had participated in the competitive bid that was won by the incumbent contractor, QSJ, hiring the two when the existing contract had not expired amounted to introducing an irregular variation. It also amounted to gifting them a contract through the back door.
Pre-shipment inspection of used motor vehicles coming into Kenya is very big business. As a matter of fact, Kenya ranks among the top destinations for used cars.
PRE-SHIPMENT INSPECTION
The stakes are usually high. Indeed, procurement of motor vehicle pre-shipment inspection services is always shrouded in mystery and allegations. It is the main reason why it has become practice that every Trade and Industry minister prefers to appoint his own CEO and directors at Kebs.
The controversy over the additional contractors is not without context. It is basically about the impact of power shifts in that space.
The new kids on the block, who came after the lucrative had long been awarded, also wanted a piece of the action.
