Danger of anti-corruption at Kenya Power
- As corporate scandals multiply, a business manager today will face many supervisory responsibilities while also dealing with issues of personal risk and liability.
- In today’s world, boards of directors are forced to be more engaged and vigilant because the way they conduct business has fiduciary responsibility implications.
This is my take on the ongoing orchestrated attacks against the directors of the electricity company, Kenya Power, who are accused of breaking the rules of good corporate governance by crossing the lines between functions and roles. boards of directors, namely those of the management.
Broader questions regarding the state of corporate governance of parastatals in Kenya are at stake here. I will begin with brief comments on the theory of corporate governance.
In traditional textbook theory, the roles and duties of boards and management are said to be distinctly different. The theory is that boards work best when they focus on high-level policy decisions and implementation is left to management.
Yet when you follow the modern and contemporary practice of corporate governance, you will notice that when boards of directors see negative results today, especially on issues that raise big financial stakes, it is a red flag to become more intrinsically involved in day-to-day problems.
As corporate scandals multiply, a business manager today will face many supervisory responsibilities while also dealing with issues of personal risk and liability.
In today’s world, boards of directors are forced to be more engaged and vigilant because the way they conduct business has fiduciary responsibility implications.
If, as a director, you are appointed to the board of a corrupt state-owned company like Kenya Power and thus an environment that demands additional transparency and accountability, you must be prepared to go well beyond basic compliance. You have to be prepared to get your hands dirty and give real strategic advice.
In my opinion, it is ironic to persecute the Kenya Power board of directors for their interference and micro-management of purchasing when what they are doing falls within their core responsibility of overseeing the finances of the company – when everything it’s like trying to get the business back on track and reduce its risk profile.
Enough theory. What exactly is the background to the controversy surrounding Kenya Power’s board of directors? Two processes are undermining the status quo of electricity today.
The first concerns the activities of the Kenya Power board of directors. Second, the work of the Presidential Task Force on Renegotiating Power Purchase Agreements, chaired by prominent investment banker John Ngumi.
In my opinion, the Kenya Power board is trying to disrupt the corrupt and old networks that have captured the utility by turning its supply chain into a veritable source of inexhaustible largesse.
Indeed, corruption in Kenya Power’s supply chain had been pointed out by the Auditor General as one of the biblical cornerstones that push the company further into insolvency.
The second biblical cornerstone around Kenya Power’s neck that was also pointed out in the Auditor General’s latest report is the heavy capacity charge paid to independent power producers.
This explains the intrigues behind the current assault on the Kenya Power board. This is a case where the hunter is hunted.
Yesterday, the board appeared before Parliament’s Energy Committee to be questioned about allegations of interference in the work of the company’s purchasing department and attending too many meetings of the board of directors.
On Tuesday, it was the turn of the Kenya Electricity and Workers Union general secretary, Ernest Nadome, to attack the board and threaten to call a strike if the board was not removed from office.
Tackling entrenched bureaucratic corruption is a task fraught with dangers as you have to contend with a nested system of agents sharing not only rewards but also risks and whose activities are coordinated across a wide range, including monitoring agencies and unions. These are agents who are adept at freezing criticism.