Governance fights lead to ungovernable behavior

[vc_row][vc_column width=”2/3″][vc_column_text]“Cabin crew, disarm doors and cross check,”said the Captain of Kenya Airways’ flight KQ444 that had flown from Nairobi, via Bujumbura and landed at Kigali International Airport last Tuesday. The time was 18:36 precisely. Exactly ten amazingly short minutes later I boarded the hotel’s shuttle to begin my ride to Serena Kigali. It had taken about 8 minutes to deplane, walk into a gleaming airport terminal where six immigration counters were fully manned by young, blue suited officers, get mildly grilled as to the purpose of my visit and walk through with my hand luggage straight out of the terminal. To the right of the immigration counters were two E-Gates, where Rwandese nationals could pass through with just their passports and no human intervention.

We drove out of the airport with the twinkling lights of the beautiful city laid out bare in front of the airport gates and straight into the busy but moving vehicular traffic. Having just arrived from the Ghost of Kidero’s Past,the clean streets were a stark reminder of how Nairobi continues to heave under the collective weight of uncollected garbage and unbanked cash collections. There had already been indications of the Rwandese obsession with health when we departed from Bujumbura about an hour before that. The crew had walked through the cabin of the plane releasing insecticide spray that the Rwandan health authorities required for any incoming air traffic to exterminate potentially harmful insects. Not so in Kenya, we welcome you and your frequent flying vermin.

I was in Kigali to attend a training program where the attendees were citizens of the East African Community member states. Tanzanian, Ugandan and Rwandese attendees brought my unceasing wonderment to a crashing halt as they bombarded the Kenyan attendees with questions about our prevailing political situation, particularly about a bold judiciary, an electoral commission in doldrums and two perennial protagonists that were both sure of victory come October 17th 2017. It was apt that the subject matter of the training – corporate governance- was being tested on a daily, if not hourly basis at the Independent Electoral and Boundaries Commission(IEBC) later in the week. As at the time of writing this piece, 5 out of 6 commissioners had issued a press statement disowning a memo allegedly written by the Chairman Wafula Chebukati censuring the Chief Executive Officer Ezra Chiloba on the handling of the elections.

It is curious that the commissioners did not draw any attention as to the veracity of the leaked memo, which the more sober social media pundits had begun to question. In fact they inadvertently affirmed its authenticity by declaring that they had neither discussed nor sanctioned the memo’s contents, which they only learnt about through the media. What the five commissioners clearly demonstrated was that they were only standing behind their leader long enough to throw him under a bus, which is any chairman’s worst nightmare.

Add to that the fact that there is a communication leak of a confidential memo makes for the script of a Kenyan edition of The Poltergeist. It is unfortunate that a governing body like the IEBC’s commissioners has resorted to lifting up its skirts to reveal the family jewels through the media. There can be no winners with media wars.A chairman’s job is fairly difficult and requires high levels of emotional intelligence, diplomatic speak and consensus building amongst the various internal and external stakeholders that a board has to deal with including its own members.
This could only have happened if some of the Commissioners felt that their Chairman was not building consensus and getting the collective view of the Commission as the governing entity before making critical decisions, especially if he is not an Executive Chairman. I doubt that it was the intention of the drafters of the constitution to give executive powers to the IEBC chair by dint of his being the returning officer for presidential elections as provided for in Article 138 (10) of the Constitution of Kenya.

Our constitutional commissions seem to have created a mongrel of a governance framework that creates a blurred line between oversight of the administrative roles played by secretariats and the execution of the mandate for the constitutional commissions which some commissioners actually undertake. The governance incongruence that this electoral crisis has surfaced at the IEBC, which is quite likely replicated at the nine other constitutional commissions, is one that requires some reflection and urgent clarification by lawmakers of the next parliament.
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Twitter: @carolmusyoka

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Corporate governance in Constitutional commissions

[vc_row][vc_column width=”2/3″][vc_column_text]As I was glued to my television last Wednesday following the election results that were trickling in, I was distracted by a niggling thought at the back of my mind. Since the Independent Electoral and Boundaries Commission (IEBC) became centre stage in the run up to, during and post the August 8th 2017 elections, the Commission Chairman, Wafula Chebukati, has largely been the media face and the voice of the institution. From a corporate governance perspective, it is usually the chief executive of an organization who addresses the public on operational matters related to the institution, as the chief executive is the head honcho of all administrative matters and the executive buck stops with him or her. The chairpersons and their board provide monitoring and oversight over management’s activities so that the accountability buck ends up with them.

But the architects of the Constitution of Kenya 2010 had an alternative governance framework when they designed the ten constitutional commissions of which the IEBC is one. From a corporate governance perspective, it is difficult to align the IEBC with what other statutory corporate entities like parastatals have, namely a board of directors headed by a chair and a chief executive officer who is often the secretary to the board. In the IEBC case, the organization is legally designed to have a chairperson and 8 members. These 9 persons are assisted in their work by a secretariat that is supposed to perform the day-to-day administrative functions of the organization.

Using a standard corporate governance lens – which I recognize is fallacious in light of the intentions of the constitution’s architects – the chairperson and his commissioners seem to have executive roles rather than oversight roles. The assumption is that they will take on the roles on a full time basis, but the Constitution takes into account that some of its constitutional commissions may not warrant full time work as Article 250 (5) provides that a member of a commission may serve on a part time basis. Since the IEBC commissioners take on full time jobs for the six years they are in office, it bears noting then that it becomes difficult to separate the executive from the oversight and they are therefore fully answerable for the acts and commissions of the institution as executives, without a further protective layer of a “board” above them. It also provides for a unique working framework as they take on executive roles working side by side with a Chief Executive who oversees the administration as well. Section 10(7)(e) (iii) of the Independent Electoral Boundaries Commission Act, 2011 provides one of the roles of the Chief Executive as facilitating, coordinating and ensuring the execution of the Commission’s mandate.It’s therefore quite curious to see how the Chief Executive can hold a Commissioner to account for failing to execute the mandate that I am assuming they have assigned themselves as full time commissioners.

The architects of the Kenyan constitution recognized the unique position of liability that it was putting the constitutional commissioners in and provided in Article 250(9) that a member of a commission, or the holder of an independent office, is not liable for anything done in good faith in the performance of a function of office. This is further entrenched in the IEBC Act in Section 15 which provides the same protection from personal liability for commissioners and officers for acts done in good faith.

Back to last week: watching Chairman Wabukati’s performance during the media briefings at Bomas and his almost utter relief at handing over the microphone to the CEO Ezra Chiloba to answer “operational questions”, it was quite apparent that the unique governance framework that constitutional commissions exist in create a “political” face of the institution, and an “administrative” face. The Chairperson is the political face, the one who takes one or several hits for the team in the face of public scrutiny and who existentially provides cover to the administrative team to buckle down and do the work as the bullets fly above them. However, Chiloba’s calm disposition and obvious knowledge of the operational matters, which may be as a result of having been in office longer, shone a bright light on the unique governance structure of this constitutional commission.At best, the chairperson should have let the chief executive receive all the potshots during the main media slugfests, and then step in to do the clean up and bandaging once the hard questions had been parried.

[email protected]: @carolmusyoka[/vc_column_text][/vc_column][vc_column width=”1/3″][/vc_column][/vc_row]

Kenya Airways needs another shot in the arm

What do Britam, Kenya Tourism Federation, Independent Electoral and Boundaries Commission, Strathmore Business School, MTN Business Kenya, Kenya Commercial Bank and British American Tobacco Kenya Limited all have in common? Absolutely nothing. Except that senior executives from these organizations were present in Kigali last month, more precisely on May 26th for various business reasons that were not only mutually exclusive, but it is quite likely that many of these executives never crossed each other’s paths. But they crossed my path. The serendipitous points of confluence were the Kigali airport and at the Serena Kigali where many of us were staying. Most of the executives had come in using the Pride of Africa, Kenya Airways, which is the lifeblood of business travel in the East, Central and Southern Africa region. A tiny fraction had used Rwandair, the national carrier for that beautiful nation state nestled in the bosom of the East African Community.

There is massive trading of goods and services occurring across the five East African Community members. Pivotal to that business is the travel that the business owners and their managers have to undertake to make that business happen or monitor its performance. Pivotal to that travel is Kenya Airways like the critical aorta in the East African cardiovascular system. It hit me, after saying hello so many times, that I was starting to think I was at a diluted version of the Kenyan Company of the Year Awards. Kenyans are doing business aggressively in the region and any problems facing Kenya Airways are problems that will have far reaching impact on business in the region. Board meetings will be missed, conferences will be delayed, workshops will be remiss without key trainers, performance appraisals postponed just if the airline had one daily hiccup.

So it was with the deepest regret that I told my workshop organizers in April that they had to book me on Rwandair for the May workshop that took me to Kigali. I am proudly Kenyan and fiercely loyal to Kenya Airways, so much so that I take deep umbrage whenever the airline is trashed in any gathering. The golden handcuffs called frequent flyer miles also don’t allow much in the form of adulterous predilections with competitors. You are penalized heavily via ego bruising downgrades by the Flying Blue program, of which Kenya Airways is a member, for not maintaining a rigorous flight schedule annually. I was in the tiny fraction that flew the competition simply because the anecdotal evidence of missed and delayed regional flights by our national pride were starting to take their toll on the brand’s promise of reliability. I ended up being vindicated for my decision as my colleague who chose to fly the airline did indeed have his morning flight to Kigali cancelled. It is also noteworthy that Kenya Airways is the only decently reliable airline flying to Tanzania and Uganda respectively directly from Nairobi. It therefore has a captive market well sewn up in this region.

The airline has monumental goodwill and plays an undeniably enormous role in flying the country’s flag high. As one of only four African national carriers that are of global significance (the other three being South African Airways, Ethiopian Airways and Egypt Air) Kenya Airways’ financial problems are Kenya’s problems. They merit scrutiny and concern in equal measure, if for no other reason than we cannot, as a proud nation, permit this symbol of nationalism to fly into headwinds as my media colleagues like to infer.

In November 2012, I raised an eyebrow in this column regarding the motive for the rights issue that Kenya Airways had undertaken 6 months earlier:

“The timing of the rights issue in April this year was ostensibly to raise the equity for the airline and improve its debt to equity ratios for the further leveraging the airline needs to undertake to grow its fleet for its future expansion. However, looking at the airlines’ statement in changes in equity, if the rights issue had not happened when it did, Kshs 6.2 billion would have been wiped out from the equity arising from the operating losses as well as losses from the cash flow hedges that have caught the airline on the wrong side of the very necessary derivative bet for a few years now.”

Looking at the Half Year 2014 results released by the airline, the total comprehensive loss of Kes 13.2 bn pretty much almost halved their equity to the position of Kes 15 bn from a starting position of Kes 28.2 bn at the beginning of the financial year in April 2014. Cash was down to Kes 4.5 bn at half year as well from Kes 11.2bn at the beginning of the period. The airline is burning through cash at a high rate driven by high loan and interest repayments and basic operational expenses like salaries while grappling with labor relations that are a key cause of the delayed flights across the region.

The recently announced Treasury cash bailout of Kes 4.2 billion will be swallowed within the airline’s operational bowels without the pleasure of a satisfactory burp. That will also be putting an Elastoplast over a gaping wound that needs the kind of suturing provided by a massive capital injection that will be very apparent when they release their full year results for the period ending March 2015. Some feverish calls will have to be made or are probably being made to the key shareholders GoK and KLM to pony up certainly much more than the Kes 4.2 bn that has been put in Treasury budget estimates.

If GoK can consider injecting capital into a moribund, badly mismanaged train smash of a sugar miller like Mumias, it goes without saying that an injection into the national carrier is not only inevitable, but it is imperative. If it doesn’t happen the unimaginable impact will extend beyond Kenya Airways stakeholders: It will impact how business is done in the East African region as a whole.

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Twitter: @carolmusyoka