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Githae under fire for pressuring CBK to re-open Charterhouse Bank

NEWS
By - | October 15th 2012

By MWANIKI MUNUHE

Finance Minister Njeru Githae has been accused of trying to strong-arm Central Bank of Kenya to re-open the controversial Charterhouse Bank.

Sources say the move would free some Sh67 billion in frozen cash — which is the subject of fierce court battles and high-level political scheming — into the market.

Parliament wants the bank reopened to unfreeze billions belonging to 35 powerful depositors. However, accusations of tax evasion and money laundering that have dogged some depositors since its closure in 2004 have yet to be settled.

The United States government opposes the reopening of the bank and has named one of the 35 depositors as a “foreign narcotics kingpin”.

Githae is alleged to written a letter dated September 20, 2012, ordering CBK Governor Njuguna Ndung’u to re-open the bank. This followed an earlier letter dated September 7 in which he asked Prof Ndung’u to “take necessary action” after Parliament’s adoption of a parliamentary committee report recommending the bank’s reopening.

This prompted an interested party to write to Githae opposing what he termed a “high-handed, illegal and unconstitutional” directive in the September 20 letter.

Court orders

Through Ahmednasir, Abdikadir and Co. Advocates, Abdisalam Sheikh threatened to sue Githae over alleged abuse of office. In a letter dated September 24, Mr Sheikh notified Githae and Ndung’u he would seek court orders blocking any attempt to re-open Charterhouse Bank.

The letter, a copy of which The Standard has obtained, was also sent to the President, the Attorney General and the Speaker of the National Assembly. It demanded the withdrawal of the directive to avoid a lawsuit.

On October 2, the Minister told Parliament he was “a frustrated man” after CBK invoked constitutional protections from the direction or control of any other person or authority. He urged the parliamentary committee on Implementation of House Resolutions to put pressure on Governor Ndung’u to re-open the bank.

“It is our client’s instruction that the (September 20) directive is not only high-handed but also illegal and unconstitutional, as the powers you purport to exercise have no basis at law, statutory, constitutional or otherwise,” the letter reads in part.

“To this extent... your actions are not only ill-advised but are unconstitutional and smack of the worst form of abuse of public office and meddling in the affairs of independent institutions.”

The letter also points out there are unresolved court cases over the same bank that the Minister disregarded when he issued the directives.

“Your directive, even assuming you had the mandate to issue the same, would be in contravention of valid court orders,” reads the letter in part.

Independence

Meanwhile, CBK has declined to take direction from the Treasury or Parliament on the Charterhouse Bank matter, citing its constitutionally protected independence. Officials say the closure of the bank was in the best interests of the public.

Githae claims he has no idea why the bank has remained closed for the last seven years.

“I am a frustrated man because, as the Finance Minister, I deserve inside knowledge on why Charterhouse Bank remains closed,” he told Parliament recently. “Yet the Governor had refused to come clean.”

Githae’s efforts to force CBK’s hand are understood to have annoyed Prof Ndung’u and others, who point out that it was the Treasury initiated the closure of Charterhouse after serious malpractices by the bank came to the fore.

“The Governor is steadfast on this matter,” said a source at CBK. “The bank will remain closed.”

Efforts to reach the Finance Minister were fruitless as his phone went unanswered or was switched off for the better part of the day on Sunday.

The complainants concern is that once the bank is re-opened, there could be a cash flight from the bank


 

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