The Attorney-General Kihara Kariuki has defended the appointment of James Ndegwa as the chairman of Capital Markets Authority (CMA) in a court case filed by activist Okiya Omtatah. Omtatah was seeking Ndegwa’s removal over alleged conflict of interest.
Omtatah argued that Mr Ndegwa’s position at the regulatory agency is in conflict with his family’s diverse interest in regulated businesses including banking, fund management and publicly-traded firms.
Besides Mr Ndegwa, Omtatah also wants CMA’s other board members, including John Birech, Freshia Waweru, George Moibi, Thomas Kibua, Christine Okoth and Peter Mungai to be removed.
In the case before the Employment and Labour Relations Court, the office of the Attorney General Kihara Kariuki said that the President handpicked the CMA board members to ensure there was no vacuum at the agency.
He noted that in considering temporary and remedial appointments, the Head of State does not take into account competitive recruitment and can handpick people to State corporations so long as it is not unconstitutional.
Through a Kenya Gazette notice published on March 28, 2018, Mr Kenyatta reappointed Mr Ndegwa as chairperson of the capital markets regulator for a period of three years.
According to Mr Omtatah, the CMA chairman has a conflict of interest to the “extent that he is a public official who regulates his private businesses”.
Since Mr Ndegwa’s appointment in April 2015, businesses in which his family has an interest have initiated or completed several mergers and acquisitions that were approved by the regulator.
The Ndegwas own a stake of about 12 percent in the merged company, having previously held shares in both NIC and CBA.
The family in 2018 also backed Delaware-based conglomerate Seaboard’s failed bid to delist Unga Group from the NSE.
The Ndegwas own a controlling 50.9 percent stake in the miller but this was not enough to push Seaboard to the 75 percent threshold as some minority investors refused to sell to the multinational at the Sh40 per share offer price.
Mr Ndegwa, whose term was extended by President Uhuru Kenyatta in March 2018, has previously said that he avoids conflict of interest by not participating in CMA deliberations involving companies in which he has an interest.
In his suit papers, Mr Omtatah has accused the President and Treasury Secretary of handpicking the board members as opposed to subjecting them to a transparent, competitive and merit-based process.
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