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CS nominee Njuguna Ndung'u put to task about CBK tenure and collapse of Imperial Bank

Cabinet Secretary nominee for National Treasury and Planning Prof. Njuguna Ndung'u appeared before National Assembly's Appointments Committee on Tuesday 18th October 2022. [Elvis Ogina, Standard]

President William Ruto’s Cabinet Secretary nominee for National Treasury and Planning Prof. Njuguna Ndung’u was at pains to clear his name when he appeared before National Assembly’s Appointments Committee today.

 Committee chairman Moses Wetangula began by asking the nominee to declare his net worth.

“I’ve registered my net worth as roughly about Sh 950 million. Currently, I’m earning in dollars but everything is translated into Kenya shillings,” said the economist.

Born in 1960 in Kandara constituency, Murang’a County, Prof. Njuguna Ndung’u acquired his education both in Kenya and abroad.

He is a scholar, and economic researcher and served as the eighth Governor of the Central Bank of Kenya (CBK) for eight years, between March 2007 and March 2015.

When Wetangula opened the floor for committee members to question the nominee, Majority Leader Kimani Ichung’wah shot the first question.

“I would want to know how many banks collapsed under your watch as CBK Governor.

"At the time you were CBK Governor we have two sworn affidavits in our files alleging that you were adversely mentioned in the sale of Grand Regency Hotel and you also face abuse of office charges involving the irregular award of a Sh1.2b-security tender while serving as CBK Governor in 2014.

"Do you think with such allegations you are the right man for the job? Are you the man who will inspire confidence in the economy considering that our economy is not doing well at all?” posed Ichungw’ah.

Ugunja MP Opiyo Wandayi brought back the ghosts which rocked Njuguna Ndungu’s previous positions specifically as CBK Governor.

“As someone who is nominated to be in charge of national coffers, you should be ideally like Caesar’s wife; be beyond reproach.

"Unfortunately, despite your stellar record in academia, your long stint in the CBK, on the face of it leaves a lot to be said. It would appear that during your time at CBK, every single mega project you undertook was dogged by matters of corruption,” asked Opiyo.

Opiyo took his time to explain why, if approved, the docket Njuguna would occupy was not to be gambled with.

“In the year 2012, the Public Accounts Committee of the National Assembly did indict you; in fact, it barred you from holding a public office on account of irregular procurement of printing contract to De La Rue [Kenya]. It went further to recommend serious investigations into your conduct and that if criminal culpability would be established you should be taken to court and charged. You may want to update us on what became of this,” said Opiyo.

The matter of the sale of the Grand Regency Hotel in Nairobi also came up during the vetting.

“The issue of the irregular sale of the Grand Regency Hotel in 2008 whilst you were at the helm of the Central Bank of Kenya. A report of the commission of inquiry into the sale of Grand Regency Hotel found you guilty of flouting procurement rules.

"It also went ahead to accuse you of lacking transparency, honesty, and good faith and of other unprofessional actions  ---serious accusations that if you juxtapose with the requirements of chapter six of the constitution and article ten of the constitution on values and principles of governance, then you even wonder why you’re before us before clearing your name,” posed Opiyo.

Suna East MP Junet Mohamed on the other hand put more questions to the treasury CS nominee.

“In 2011 when you were the CBK Governor, parliament investigated you for collusion with commercial banks to weaken the Kenyan shilling which became the worst-performing currency in the world then. Your failure to protect the shilling coupled with your monetary policies saw massive repatriation of US dollars from Kenya which collapsed the money markets in the Kenyan shilling.

"Even a Reuters survey named you as one of the least effective bankers in Africa. With all these failures, what makes you so attractive to preside over Kenya’s economy during even these hard times?” posed Junet.

“There is the issue of the collapsed Imperial Bank. The shareholders revealed in court findings that your spouse, extorted the then Managing Director of the Bank. The bank paid for her holiday in a luxurious hotel in Thailand. When these things came to light you were in a hurry to liquidate the bank and cover up the role. What is your response to that?” posed Junet.

Prof. Njuguna was then allowed to respond to the issues raised by Committee members where he sought to defend himself.

He responded: “We want to stop at the first point of mentioning what it is, we don’t want to go further and see what has happened. The case of the procurement (of Sh1.2b) I fought it in to the Court of Appeal and there was a judgment. 

"The case of Grand Regency, the statement is that I was adversely mentioned; I was an agent of government and this was a government-to-government sale and that I was the one to negotiate and to receive the payment which was received by the government.

"For your information, the end result was that it gained Sh3.114b that was actually used in Lamu to grade the port. The idea in government then, was that such recovery from corruption proceeds should be used in fixed investments that would give Kenyans perpetual benefits and that’s how it was located there".

National Treasury & Planning CS nominee Prof Njuguna Ndungu answers questions by Commiitte on Appointments chaired by National Assembly Speaker Moses Wetangula at County Hall, Nairobi. October 18th,2022. [Elvis Ogina, Standard]

Prof Ndung'u further stated that the commission of enquiry that was formed by President Kibaki found that the sale was appropriately done.

“The whole issue was how was it appropriately done? According to that commission, it valued the hotel at Sh1.8b, the CBK valued it at Sh2.2b, and CBK sold it at Sh2.8b. The difference between Sh2.8b and Sh3.114b is because of the retained earnings during the operations. In a sense, it was value for money and that was what the commission was supposed to establish,” said Njuguna.

The economist who is worth slightly short of a billion shillings did not stop there.

“With all due respect, I’ve been a victim of abuse of the criminal justice system. The whole idea was to get Njuguna Ndung’u out of the Central Bank of Kenya. I would like to invite people to read the judgment and report by the commission of enquiry into the sale of The Grand Regency. It is something that we have to rethink and correct from the beginning,” said Prof Njuguna.

Kimani Ichung’wah sought to find out the verdict of the integrity issues raised against Njuguna.

“It was very clear that CEOs are not involved in procurement. Their role is only to appoint the procurement committee. That matter went all the way to the Court of Appeal and they showed that the problem was with the committee of the Central Bank of Kenya and I was vindicated.

On the grand regency issue, the government position was that the proceeds would be invested. My role was very clear as an agent that I had no role in procurement,” said Njuguna.

If approved by Parliament, Njuguna Ndung’u will take over from Ukur Yatani.