Puzzle of parastatal director “without term limits”

The Kenya Petroleum Refineries Limited in Mombasa. 

Photo credit: Pool I Nation Media Group

A board member of the Kenya Petroleum Refineries Limited (KPRL) has served for 19 years in breach of a code of conduct for State Corporations, an audit has exposed, presenting a puzzle on the lengthy stay in office.

Auditor-General Nancy Gathungu said the “director with no term limit” has been on the board of the State agency since 2003—exceeding the maximum allowable limit of service more than three times.

“A review of the directors’ information and biodata revealed that one director was appointed on March 25, 2003, and is currently serving an 18th year contrary to Mwongozo guidelines, which limits terms of directors to two terms of six years. In addition, no letter of appointment for the director was provided for audit review” she said in the latest audit report of KPRL operations.

The Mwongozo Code of Conduct for State Corporations, decreed by President Uhuru Kenyatta, is targeted at ensuring sound corporate governance in all State agencies.

Article 1.5 of the Mwongozo sets term limits for board members of all State corporations expressly stating that “The tenure of a Board member shall not exceed a cumulative term of six years or two terms of three years each provided that upon the first implementation of this Code, the appointing authority may extend the term of not more than a third of the members of the Board in order to achieve continuity”

The Mwongozo also dictates that the renewal of a Board member’s tenure for a second term should be subject to a favorable evaluation.

A review of KPRL’s annual report for the fiscal year 2020 showed that the State corporation had six members.

They include Henry Gathara Karinga and Lillian Bokkeeye Mahiri-Zaja who were both appointed on February 6, 2017, and repointed on February 21, 2020, Hesbon Olum Gondi (appointed on April 6, 2003) and the corporation’s acting chief executive Joseph Bale Ndoti who was appointed on October 7, 2019.

Other board members included Joseph Wafula Wepukhulu(appointed on November 27, 2017) and Joseph Macharia Kariuki(appointed on May 10, 2017.

Ms Gathungu also raised an issue with the lack of evaluation of KPRL directors appointed for second terms.

“There was no document provided for audit review to confirm that one director who was appointed to the board for a second term was evaluated and awarded favorable score before the appointment for the second term. In the absence of a such evaluation, it was not possible to confirm what informed the appointment of the director to serve for the second term” she said.

The Auditor-General further took issue with the composition of the KPRL board noting that it lacked an expert in financial issues.

“The Mwongozo, a code of governance for State corporations outlines governance principles on the appointment of directors of State corporations. The principles require at least one board member to be a financial expert., with necessary qualifications and expertise in financial management or accounting and in addition, be a bona fide member of a profession compliant with the requirements of the profession’s membership” Ms Gathungu said.

“However, biodata of the existing company’s directors during the year under review, indicated that none of the board members possessed formal financial expertise as defined in the Mwongozo guidelines” she added.