The push and pull between the National Assembly and Central Bank Governor Patrick Njoroge, over the publication of banking regulations, took a new twist on Monday, MPs threatening to have him removed from office.
The lawmakers said his failure to publish the regulations, which prescribe customer deposits and withdrawals as provided for in the Banking Act following amendments to the Finance Act in August 2018, amounted to contempt of parliament.
They said this was reason enough to send home the governor, who was appointed in June 2015 for a four-year term that is renewable once, according to the CBK Act.
The President has the powers to renew Dr Njoroge's second term without the input of the National Assembly but the MPs vowed to make this difficult. They did not explain how.
According to the Finance Act, Dr Njoroge was required to publish the regulations with 30 days of their enforcement.
A group of civil society activists asked a court to block the requirement for the CBK boss to submit the regulations to the House within 30 days.
In his objection, the governor said the law could not be implemented as law and warned that relaxing money laundering and terrorism laws would frustrate the war against corruption and cut off Kenya’s banking sector from the best practices in the global banking system.
When he appeared before the House committee on Finance and National Planning last week, Dr Njoroge said Kenya would be in danger of being blacklisted by international bodies such as the Financial Action Task Force (FATF).
“The adverse effects of the amendment on the banking sector, would be immediate termination of relationships by foreign correspondent banks and closure of accounts of Kenyan banks (derisking),” Dr Njoroge said.
To regulate the sector, he has instead chosen to issue guidelines to the banking industry in the form of circulars and memos, but MPs have dismissed these as illegal.
Joseph Limo (Kipkelion East), chairman of the Committee on Finance and National Planning, on Wednesday faulted the CBK boss saying he had no authority to choose sections of the law to effect.
“He has implemented the law to suit their own interests. The nature of guidelines issued by the CBK in form of circulars are illegal and cannot be used at any time in a court of law. The governor continues to mislead the public that the implementation is opening the banking sector to fraud,” Mr Limo said in a statement he presented to the House.
Rarieda MP Dr Otiende Amollo said only parliament can make laws so no other government institution should choose the areas to implement.
“The governor’s action is nothing short of contempt of parliament. He is treading on very dangerous grounds because he is failing to obey the law. This House should consider removing him,” Dr Amollo said.
He also noted that the legalities of law are tested in the High Court.
House Speaker Justin Muturi said that “because those who tried to challenge the implementation of the law did not get conservatory orders, the law is in force as we speak".
Two committees of the House are preparing to question him next week.
Uasin Gishu Woman Representative Ms Gladys Shollei, who chairs the Committee on Delegation, warned Dr Njoroge that he cannot hide under international conventions that have not been ratified by parliament to circumvent the implementation of the law.
“We have summoned him to appear before our committee to give a status update on the regulations. You cannot create your own laws because this is not a banana republic. He is on notice. If he doesn’t, it will be a subject of his removal,” Ms Shollei said.
The Committee on Implementation, chaired by Narok South MP Moitalel Ole Kenta, wants the governor to face it next Tuesday.
“What this man is doing is undermining the authority of parliament and the executive. The President assented to this law. He should resign because he has no confidence in the authority of this House,” Mr Kenta. "This House does not act in vain and must be respected accordingly.”
Minority leader John Mbadi ?(Suba South) said that allowing Dr Njoroge leeway was akin to creating anarchy as public institutions will start creating their own laws.
“The governor should know that this House is not fighting the CBK. You cannot apply regulations that have not been passed by the House,” he said