• About
  • Advertise
  • Privacy & Policy
  • Contact
Kenyan Business Feed
  • Home
  • African
  • News
    • Agribusiness
    • Courts
    • Hospitality
    • Manufacturing
  • Education
  • Health
  • Reports & Analysis
  • World Business
No Result
View All Result
  • Home
  • African
  • News
    • Agribusiness
    • Courts
    • Hospitality
    • Manufacturing
  • Education
  • Health
  • Reports & Analysis
  • World Business
No Result
View All Result
Kenyan Business Feed
No Result
View All Result
Home News

MUSYOKA: State agencies should plug corporate governance gaps

Kenyan Business Feed by Kenyan Business Feed
Share on FacebookShare on Twitter

[ad_1]

Table of Contents

Toggle
        • Ideas & Debate
  • State agencies should plug corporate governance gaps
Ideas & Debate

State agencies should plug corporate governance gaps

Sunday, May 19, 2019 21:00


By CAROL MUSYOKA

rogue CEO
A board can go rogue. A CEO can go rogue. FILE PHOTO | NMG 

John asked his wife, “Where do you want to go for our anniversary?” She said, “Somewhere I have never been!” He told her, “How about the kitchen?”

And then the fight started.

The 2011 court case titled “Republic versus the Attorney General and two others ex-parte Consumers Federation of Kenya (COFEK)” brought to fore the volatility of power dynamics in the triangular axis between the board of a parastatal, the chief executive officer (CEO) and the parent ministry. In that case, the Director-General of the Communications Commission of Kenya or CCK (now renamed to the Communications Authority) was appointed to his office for a three-year term with effect from July 2008 to expire in July 2011.

Following two and a half years of the ubiquitous board and management two-step tango, the end of the director-general’s term loomed. In December 2010, an appropriate six months before the expiry of the employment contract, he wrote to the chairman asking for renewal of his appointment for a further term. However, the board was not trying to get back on the dance floor with the gentleman and in March 2011, the chairman of the board wrote to the parent ministry, specifically to the Minister of Information and Communication, to advise against the director-general’s renewal of contract.

And then the fight started.

In a gazette notice dated July 20, 2011, the minister reappointed the director-general against the wishes of the board. COFEK, in keeping with its public interest mandate, went ahead to challenge the appointment in the above-mentioned suit with a key question for determination being whether the minister’s action was abuse of power.

A key point of departure between public and private sector governance is that depending on the instrument that was used to create the parastatal – an act of parliament, legal notice or company incorporation – the appointment of directors is often the sole preserve of the line minister, while the appointment of the chairperson, in some instruments, is left to the President.

Due to drafting oversight on the part of legislative drafters, the appointment of the CEO of some parastatals is left to the minister yet the board is the entity charged with oversight and responsibility over the institution’s financial and operational mandates. As the CEO of a parastatal is the accounting officer for the finances and operations of the institution, it is beyond governance comprehension how anybody other than the board of that institution – who have fiduciary responsibilities drawn from their oversight role – can be responsible for the appointment and removal of that officer.

The court in the CCK case reviewed the relevant administrative framework that guides the governance of parastatals including a circular issued by the Head of Public Service, dated November 23, 2010, where the board was made the appointing authority in the appointment of the chief executive officer of a state corporation.

The court also looked at the State Corporations (Performance Contracting) Regulations 2004, which also gave the board of a state corporation the responsibility of recruiting all staff including the chief executive officer.

The court then concluded that the minister was required to exercise administrative power reasonably, rationally and within the confines of the law. Thus the power to appoint a director-general should follow a decision of the board and only in exceptional circumstances should the minister go against the decision of the board and share his reasons in writing. In such a situation, the minister still has to refer the issue back to the board for a decision and, in the current circumstances, he had failed to do so. The minister was therefore found to have acted unreasonably and therefore unlawfully.

From a governance perspective, it is imperative to note that the unholy trinity is susceptible to the vagaries of human frailities.

A board can go rogue. A CEO can go rogue. A cabinet secretary can go rogue. In the above example, if the board had gone rogue and was trying to remove an effective CEO while the minister was trying to correct such wrong, then a travesty was committed and a precedent set.

However, if the minister was rogue and in cahoots with the CEO, then justice was served. Whether there are enough checks and balances to ensure that the wrongs of one of the three are corrected is a matter of jurisprudential application.

It is noteworthy, though, that a court will only be limited to the procedural application of the appointments, rather than any underlying governance rot that an institution may be enduring. Such rot is invariably a matter for shareholders to handle.

[ad_2]

Source link


Kenyan Business Feed is the top Kenyan Business Blog. We share news from Kenya and across the region. To contact us with any alert, please email us to [email protected]
Kenyan Business Feed

Kenyan Business Feed

Recommended.

Free ways to learn the basics of coding

Free ways to learn the basics of coding

September 18, 2019

Kenya headed for stable growth, shows study

May 20, 2019

Subscribe.

Trending.

Kenya and Uganda launch regional tourism partnership blending coast, safari, and adventure experiences under one East African brand.

Kenya and Uganda Forge Joint Tourism Strategy Targeting 1.4 Million Intra-African Visitors

October 28, 2025
Co-operative Bank of Kenya wins the 2025 Global SME Finance “Product Innovation of the Year (Africa)” award for its full-spectrum MSME financing strategy, including Ksh 77 billion in digital credit via M-Coop Cash, innovative stock financing solutions, and gender-focused credit guarantees that empower over 235,000 small businesses nationwide.

Co-op Bank Wins Africa Product Innovation Award for Innovative Approach to MSME Financing

October 23, 2025
Safaricom honours Raila Odinga’s role in advancing technology, Vision 2030, and democratic reforms as business leaders reflect on his enduring impact.

Safaricom Pays Tribute to Raila Odinga’s Enduring National Legacy

October 23, 2025
Kenya has been ranked the world’s friendliest country in the 2025 Condé Nast Traveller Readers’ Choice Awards, earning a 98.46 score and surpassing Barbados and Mexico.

Kenya Ranked World’s Friendliest Country in 2025 Condé Nast Traveller Awards

October 28, 2025
Over 1,000 women gain access to comprehensive fistula treatment, counselling, and rehabilitation services through the M-PESA Foundation’s integrated medical camp in Migori.

M-PESA Foundation Provides Fistula Surgery and Reintegration Services in Migori

October 23, 2025
Kenyan Business Feed

We focus on news, analysis, and reports about Kenyan business, covering sectors like agriculture, finance, tourism, and technology.

Categories

  • African
  • Agribusiness
  • Courts
  • Education
  • Health
  • Hospitality
  • Manufacturing
  • NetWorths
  • News
  • Reports & Analysis
  • World Business

Popular News

  • First look at the prison where El Chapo may live for the rest of his life

    First look at the prison where El Chapo may live for the rest of his life

    2157 shares
    Share 1040 Tweet 466
  • Sameer Africa CEO Sacked

    1804 shares
    Share 750 Tweet 439

Recent News

Tourism CS Rebecca Miano joins First Lady Rachel Ruto in Nakuru for the Third Edition of the First Lady’s Mazingira Awards (FLAMA), celebrating over 2,400 youth-led projects that promote environmental conservation and innovation across Kenya.

Tourism CS Rebecca Miano and First Lady Rachel Ruto Honour Young Environmental Champions at FLAMA 2025

October 28, 2025
Kenya and Uganda launch regional tourism partnership blending coast, safari, and adventure experiences under one East African brand.

Kenya and Uganda Forge Joint Tourism Strategy Targeting 1.4 Million Intra-African Visitors

October 28, 2025
  • Home
  • African
  • News
  • Education
  • Health
  • Reports & Analysis
  • World Business

© 2025 KBF

No Result
View All Result
  • Home
  • African
  • News
    • Agribusiness
    • Courts
    • Hospitality
    • Manufacturing
  • Education
  • Health
  • Reports & Analysis
  • World Business

© 2025 KBF