Premium

CBK in legal breach over vacant top positions, says State audit

The Central Bank of Kenya (CBK) is in breach of the law as it is operating with seven instead of eleven board directors and without a second deputy governor, Auditor General Nancy Gathungu has warned.

In her latest CBK audit report for the year ended June 30, 2022, the banking regulator has four non-executive directors despite the law demanding that the President appoints eight board members.

She said this is in breach of the law as there has been no amendment to the Central Bank Act to provide for the reduction in the number of board directors or deputy governors.

The CBK board maintains full control over strategic, financial and operational issues of the CBK.

It is, however, not involved in the daily running of CBK as this is the responsibility given to the governor and their deputies.

This is the third time the CBK is being faulted for the board and deputy governor slots breach.

Ms Gathungu's criticism comes as the CBK scrambles to deploy its monetary tools to arrest record-high inflation and a weakened shilling that has hit new lows. The financial hardships arising from the twin challenges are squeezing consumers hard, posing an economic and political problem for President William Ruto's new administration.

"As was reported in the previous year, the Central Bank Act provides that there shall be eight other non-executive directors of the board," said Ms Gathungu. "During the year under review, the bank had in place four non-executive directors transacting business on its behalf."

Ms Gathungu, however, said this did not affect the requisite quorum of the bank during CBK board meetings.

"The Central Bank of Kenya Act states: 'There shall be two deputy governors who shall be appointed by the president through a transparent competitive process and with the approval of Parliament'," noted Ms Gathungu.

"During the year under review, only one Deputy Governor was in office."

The current board members were reappointed for another four-year term by former President Uhuru Kenyatta on 5 December 2020 and their current contracts expire on 4th December 2024.

The CBK's non-executive board members are Ravi J. Ruparel (a financial sector expert), Nelius W. Kariuki (an economist), Samson Cherutich (an accountant) and Rachel Dzombo (a management expert).

Ms Charity Kisotu who was appointed in November 2016 resigned in January 2019 reducing the number to four.

The other members are the chairman Mohammed Nyaoga, outgoing Treasury PS Julius Muia and CBK governor Patrick Njoroge.

Ms Sheila M'Mbijjewe is the current deputy Governor.

The pronouncement by the Auditor General comes as the race to select successors to Governor Njoroge and his deputy Ms M'Mbijjewe, whose terms end in June next year, intensifies.

Business
Premium Meru and Embu chew over fate of miraa, muguka after Coast ban
Business
Premium Too easy to tax: Why motorists are an easy target for Treasury
Business
Premium US, China set to compete over Kenya's crucial transport artery
Business
Korea-Africa Summit: Country says it is ready to do business