The Central Bank of Kenya is staring at a management crisis following sharp differences between board chairman Mohammed Nyaoga and governor Patrick Njoroge. At the heart of their differences are policies the governor is implementing to streamline operations at the bank which the chairman is opposed to fearing they are eroding his powers and also placing the governor’s cronies in strategic positions to influence policy direction.
Patrick Njoroge
Insiders add that those allied to the governor are blaming the chair for misadvising Uhuru Kenyatta, a move that has seen the bank operate for a long time without two deputy governors contrary to the constitution. The CBK law stipulates there shall be a governor and two deputy governors, all of whom are recruited through a transparent and competitive process and approved by parliament before being appointed by the president. The governor and deputy governors serve for a four-year term and are eligible for a further appointment of one additional term. Currently, CBK has only one deputy governor Sheilla M’Mbijjiwe who clocked the retirement age of 60 years in 2018. She is still in office and can be challenged legally forcing her removal. How Nyaoga, an acclaimed legal mind has dismissed CBK legal department on the said legality has left many questioning. In fact, it is said that the legal department at CBK has been rendered moribund by Nyaoga who dismisses them as junior lawyers with him as senior counsel.
Mohammed Nyaoga
There are also legal concerns that the board comprises eight members instead of the 11 members as stipulated in the constitution, with fingers being pointed at the chairman for failing to advise the government to fill up the positions. The CBK legal department has raised a red flag on the matter in many of their briefs but surprisingly, the reports are never acted on. The CBK Act requires the board to be constituted of 11 members, including the chairperson, the governor, the principal secretary to the Treasury or his representative and eight other non-executive directors. The laws further require that the president appoint directors at different times to avoid the expiry dates of serving executives from coinciding. Also fuelling the crisis is the fact that the terms of directors Rachel Dzombo and Samson Cherutich will be ending on December 4, 2020, while those of Ravi Ruparel, Nelius Kariuki and Charity Kisotu will be expiring on November 3, 2020, but so far, no word from the president on the way forward.
Sheila Mmbijjiwe
There are also concerns that most of the senior managers are serving in acting capacities. The governor, sources said, wants the managers confirmed or the posts advertised but the chairman is opposed to the proposal. The CBK senior managers serving on acting capacity include Mwenda M’Marete, director, banking and payment services department, Terry Ng’ang’a, director, human resources, Moses Ngotho, director, finance department and Matilda Onyango, director, internal audit and risk department. Insiders add that the differences between Nyaoga and Njoroge have spilled over to the board, with directors siding in Nyaoga camp, a move that is interfering with the board that is expected to provide oversight of the bank’s functions by formulating policies and reviewing performance. The directors see Nyaoga as a political appointee and likely to influence their reappointment, unlike the governor. Sources say Nyaoga who was among lawyers conferred the rank of senior counsel by Uhuru on July 20, 2020, has been dropping the name of the president to scare away board members opposed to his modus operandi.
Rachel Dzombo
Nyaoga, Njoroge and Sheilla M’Mbijjewe were all appointed on June 19 2015 for four years which expired on June 18, 2018. Nyaoga was later reappointed CBK board chairman on June 18, 2019. On his part, Njoroge was also reappointed for a second term last year though Nyaoga had led a clandestine campaign to block his appointment. The only saving grace for the governor was that he has become the face of CBK locally and internationally, and hence dropping him would have sent alarm bells ringing across the financial sector. For Nyaoga, there are claims that he is serving the interests of banks he has shares like Ecobank Kenya where his proxy is Yesse Oenga, a non-executive director. He is said to be frustrating local banks with an aim to have them collapse more so, those with roots in Gusiiland. According to sources, Nyaoga was against Kenya Commercial Bank taking over the National Bank of Kenya. He was pushing Competition Authority of Kenya to stop the bid on grounds of staff sacking which he blamed KCB executive director Joshua Oigara.
Mwenda Marete
To achieve the bid that failed, Nyaoga initiated moves by then several NBK directors and staff to engage CAK. Weekly Citizen has information that Nyaoga even pushed to have his fellow Kisii man Oigara contract at KCB ended. Before he was appointed the chairman, Nyaoga was managing partner at Mohammed Muigai Advocates and previously served as director, Capital Markets Authority, chairman of International Commission of Jurist and chairman of Eco Bank Kenya. He was appointed to the CBK board at a time a former partner at Mohammed Muigai Advocates, Githu Muigai, served as Attorney General. Prof Muigai is a non-executive director at Eco Bank. Under the influence of Prof Muigai, Nyaoga was also appointed chairman of the Commission of Inquiry into the suspension of the county government of Makueni. Also fueling the crisis is the issue of the deputy governor, M’Mbijjewe, who in 2018 attained the mandatory retirement age of 60 years which paved the way for her exit from public office.
Ravi Ruparel
But M’Mbijjewe, a UK trained accountant who has been deputy governor since August 4, 2015, is still occupying the position after her term was extended though civil servants are mandated by law to exit office after attaining the age of 60 years. M’Mbijjewe was born on March 6, 1958, according to the national assembly’s Hansard and holds a Bachelor’s degree in Accounts from Kingston University in England. It was also during her tenure that three banks, Dubai, Imperial and Chase, collapsed in a row prompting concerns among savers as to whether their hard-earned cash was safe. As regards the board, in 2016, Uhuru appointed Kariuki, Kisotu, Cherutich, Rachel Dzombo, and Ravi Ruparel for a four-year term, leaving three slots vacant which remain vacant to date. The last time Nyaoga was in the news was when ODM leader Raila Odinga named him a “person of interest” in the Eurobond saga as he held the post of CBK chair when the issue arose. Raila insisted that Nyaoga benefitted from the Sh140 billion Eurobonds Fund that went missing but the chair denied being involved in Eurobond transactions, threatening to take legal action against the ODM leader to clear his name.
Matilda Onyango
Recently, Nyaoga dismissed reports of a turf war between the Board and the governor in the economic policy organ. He told the House committee on finance that despite changes that give the board some of the governor’s wide influence on the economy, he intended to harness a professional relationship with the management arm of monetary policy. But insiders saw the hand of Nyaoga in Egypt’s largest private lender Commercial International Bank’s purchase of a controlling stake in Mayfair Bank. Under Nyaoga, the CBK announced it had given the green-light to CIB to acquire a 51pc stake in the tier III lender effective May 1, saying the deal would diversify and add resilience to the Kenyan banking sector. Mayfair joined other banks that have been acquired in the last seven years which include Fina Bank, Giro Commercial, Oriental Commercial, Fidelity, Chase Bank, Imperial Bank, National Bank of Kenya and Transnational Bank. There are concerns that some of the banks are offering board members CBK shares so as to be given the green-light to sell controlling stakes. Trans National Bank associated with retired President Daniel Moi was acquired by Nigeria’s Access Bank, which has a presence in seven African countries including Rwanda.
Samuel Cherutich
Nyaoga is said to be used by powerful individuals who fear the governor to push goals at CBK. Further to endear himself to the Kenyatta family, Nyaoga despite questions being raised in certain circles overshadowed the governor in the merger of Commercial Bank oF Africa and National Industrial Commercial Bank into NCBA. The bank is owned by Kenyattas and Ndegwas. The bank recently closed 14 branches spread across the country renting many jobless. According to sources, Nyaoga using his network in the corridors of power has frustrated Kalenjins landing top slots at CBK on grounds they are sympathetic to deputy president William Ruto. The way pro-Ruto perceived allies are being marked at Kenya Revenue Authority is what is being experienced at CBK. Weekly Citizen has information that one man being used by Nyaoga to engage wars in the local banking industry is Humphrey Muturi, who seats on the Eco Bank board of directors.
Moses Ngotho
To show that Muturi is powerful, he is also on top bank management in the position of head of Commercial Banking Kenya and East Africa community. Muigai is also a director. Muturi is dreaded at Eco Bank and was lobbying to replace Oigara at KCB. In fact, he is the de facto CEO, according to sources. According to CBK Sources, despite Eco Bank being linked to various banking malpractices, no one posted to investigate dares to write a negative report. Thanks to the bank association with Nyaoga. Eco Bank has roots in Nigeria, a country associated with money laundering worldwide. Robert Kola the head of transaction services is always seen in Muturi’s office as it is with Alex Kibaara, head internal controls Kenya. Those in the banking industry question why a manager Muturi seats on directorship board together with Eco Bank MD Sheikh Travally who is also the regional director.
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