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{
    "id": 319528,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/319528/?format=api",
    "text_counter": 316,
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    "content": "Section 12 is basically catering for a situation where, if there is a vacancy in the chair, by whatever reason, including the chair not turning up on that day, who will chair a meeting of the board. These two are very fundamental amendments that we need to create, with our without allaying the process; that one, to me, is the crux of the matter. Riding on the back of these two amendments which were necessary to supplement what was already done is the amendment that was proposed, again, through in put by the Central Bank in terms of: Is it not time to amend Section 13 of the Central Bank of Kenya Act to further clarify the functions of the Governor of the Central Bank of Kenya? This is so that there is no conflict of interest between the Governor as the CEO and the Chairman as the Chair of the Board. All these amendments, if you look at them within the framework of what is existing within Section 13 is actually to state what the Governor and the Chairman are supposed to do. This is to ensure that there are no two bulls in the same kraal fighting over who is in charge. The amendment should have ordinarily been a very straight forward matter basically clarifying that this was left out in the initial amendment and all that. An issue has been raised concerning corporate governance. Members will recall that the CBK issued prudential guidelines to all the banks. It basically told them how banks will be managed in the future. There used to be Executive Chairmen in the banks. I believe hon. Erastus Mureithi was one of them or worked under one of them. We had the Executive Chair of commercial banks and so on. It became very clear that for proper governance, we needed to delink the Chair of the Board from the Chief Executive. Instructions were held that there must be an independent chair, independent directors, executive directors, independent directors and even owners have a restriction as to how much you can own in a bank. If you own so much in a bank you can also not be part of the management. These are all part of good governance issues that have been created. What happened is that the CBK was very good in prescribing that for all the banks to follow. They would penalize any bank that did not follow that. However, the CBK was the first one not to follow its own guidelines and it continued with the system where the Governor was also the Chair and the Chief Executive. We lost out in the good practice that was being forced on all the other banks within the industry, but not being practiced by the regulator. All other regulators, say, the Capital Markets Authority (CMA), the Insurance Regulatory Authority (IRA), the Retirement Benefits Authority (RBA), have exactly the same governance structure where you have an independent chairman and an independent Chief Executive. The CBK is a regulator for the financial sector in addition to its role in terms of monetary policy. It is clear that monetary policy is the work of the Governor plus the Monetary Policy Committee. That is very clear whether you talk of Kenya, UK, or other places. However, in terms of the issues on the functions of the Board, the administrative functions of the CBK, that is a Board issue. And now those things have been sorted within the law and I would urge hon. Members to look at it from this point of view that, indeed, the House was right and nobody should regret that, perhaps, the House made a decision without full information. The House was right in terms of delinking the functions of the Board and the functions of the Governor and in terms of who chairs the Board, the Monetary Policy Committee and so on. The only missing link, which I believe we want to cure through"
}