Pressure mounts for Treasury to appoint CMA chief executive

By Alphonce Shiundu

Kenya: The National Treasury has come under fresh pressure to explain why the crucial body that regulates the country’s bourse has failed to pick a substantive chief executive, a full 18 months after the position fell vacant.

The chairman of the National Assembly’s Finance, Trade and Planning Committee, Benjamin Langat (MP for Ainamoi), told The Standard that it was “worrying” that the Capital Markets Authority (CMA) had failed to pick a substantive head.

He said the vacuum at the top of the regulatory body for the country’s stock and bond market should not be allowed to persist any longer.

“That’s a concern that we have had for a long time,” Langat said yesterday in response to queries about the inordinate delay in picking a CMA chief.

The Finance Committee chairman added that the current CMA boss, Paul Muthaura, who has been acting since July 1, 2012, may be disadvantaged because he may not have the courage to implement some decisions of the board.

“We are aware that he has been acting for some time now and that has had an impact on the performance of CMA, because an acting person might not have the courage to make some decisions,” Langat said.

“They may not be focused in implementation because their attention is divided... they are wondering whether they will be confirmed for the job if they take some steps,” said the House committee chairman.

The Cabinet Secretary for the National Treasury, Henry Rotich, had promised to appoint a chief executive from among three successful nominees in the interviews in November 2013, but then the curtains came down on the year without a substantive chief executive being named at the regulatory body.

Regional balance

A source familiar with the on-goings at the Treasury said three names were submitted, including that of the acting CEO, an international banker and a senior manager at a bank in the Middle East.

However, there was a flaw: One of the shortlisted candidates did not have the requisite 10-year experience at a senior management level “in securities and financial markets environment”.

There’s also trepidation about amendments to the CMA Act in the National Assembly because there are fears that qualifications of the authority’s chief have been lowered. There’s also fear that powerful elements within the CMA board are shopping for a pliant chief executive. 

The National Treasury is also torn over the regional balance within the authority.

The job has been advertised twice. First in 2012, and then in June 2013, but the names have always got stuck at the Treasury.

The former Finance minister, Njeru Githae, put the matter on ice in February 2013 because he wanted a new government to pick the CMA boss to chart a new path for the financial and securities market.

John Mbadi (MP for Suba) said the authority needed a substantive head to lead in the supervision of stockbrokers and other players in the financial and securities market.

“The CMA is not something to play around with. It is such an important body for the country’s economy that any disruption or any dysfunction in the capital markets might cause problems for the whole country,” said Mbadi when contacted for this story.

The Suba MP sits on the Budget and Appropriations Committee of the National Assembly. Like his colleague Langat, Mbadi said he was not aware of the boardroom machinations regarding the issue.

“This is a big issue. I spoke privately to the Cabinet Secretary and he promised to appoint the CEO in November. We haven’t spoken since then, but to us, this has been a very great concern,” Langat said in an interview with The Standard yesterday.

In the first set of interviews, management consultants Hawkins and Associates picked five names that they forwarded to the CMA board.

‘A’ status

Three candidates were picked from the five and their names forwarded to the Treasury to appoint one of them as the chief executive of the capital markets regulator.

Those who had made it to the final list included the head of the investment banking arm at Standard Chartered Bank (Kenya) Wanjiku Mugane, CMA Corporate Affairs and Communications Director Rose Lumumba and Afrika Investment Bank Chief Executive Paul Mwai.

Githae, however, rejected the three candidates that were presented to him for possible appointment.

Githae said at the time that the three candidates did not meet the Treasury’s requirements in line with the upgrade of CMA to category ‘A’ status of State-owned firms.