Bill to punish rogue board directors passes crucial stage

Parliament during the delivering of state of the nation address by President Uhuru Kenyatta at Parliament building. PICTURE BY GOVEDI ASUTSA

A radical bill seeking to bar corrupt and incompetent directors from serving in public and private company boards has snaked its way to the second reading in Parliament.

Once passed, the draft law will see directors take personal liability for their actions and decisions made during their tenure in the respective organisations.

The bill sponsored by Ugenya MP David Ochieng will require that board directors meet standards set by the Institute of Directors Kenya (IoDK), which will have powers to vet, register, suspend and revoke certificates locking out appointees.

Mr Ochieng, who was speaking during the IoDK annual dinner on Wednesday, said they would strengthen clause 25 of the draft bill that requires that only those registered as members serve on company boards.

Ochieng said the law will allow IoDK to act fast even before the Government can catch up with rogue directors.

The draft law proposes that a disciplinary committee is set up that will have the power to issue a letter of admonishment, suspend the certificate of a member, withdraw or cancel a certificate, impose fines or remove a member from the directors' register.

The radical proposals come in the wake of concerns by Kenyans on the way the country deals with board members who preside over embezzlement of shareholders' cash and allow graft to flourish under their watch.

He said during his tenure in Parliament, he had witnessed 800 board appointments to public offices, out of which 700 were political favours. The bill, he reckons, will help professionalise such appointments.

"Political appointments are not a bad thing in my opinion but we want to be sure if you appoint someone, they go through a process that trains them for capacity," explained Ochieng.

He said the draft law would include a clause requiring that appointees are vetted by IoDK six months to their selection, to allow them to undergo training.

The Ugenya MP said the bill that has been under wraps faces tough opposition from the State Corporations Advisory Committee, which sees the powers granted to IoDK as an affront to their relevance.

"We want this bill to be passed before the end of the year, call your members of parliament and lobby them to show up when the bill comes up to the floor, those who can lobby the president do so that he can assent to it before the end of the year," he said.

Mr Ochieng said the bill had enjoyed a lot of support on the floor in the wake of failed public corporations and outright fraud that has hit companies in the past few months.

Recently, Kenya Airways got its board out of office and it was the same at Uchumi on issues touching on weak management and sloppy oversight by the board.

Imperial Bank directors are also facing regulatory action from Central Bank and the Capital Markets Authority for neglecting their fiduciary roles, while Chase Bank directors were thrown out of the lenders' office after they were caught covering up insider loans.