A ruling made by the late High Court judge Joseph Onguto has left the National Bank of Kenya’s (NBK) board in a cloud of uncertainties, making it vulnerable to possible litigation over its legality.
Before passing away on March 2, the judge had ruled that the national Social Security Fund (NSSF) did not have a board when it elected two individuals to serve on the bank’s board.
The Kenya Council of Employment and Migration Agencies and Evans Nyambega went to High Court arguing that the NSSF Board of Trustees was not constituted to elect the two individuals to serve on NBK’s board as non-executive directors.
“It follows that the nominations of persons to the board of directors of NBK could only be done by the NSSF Board of Trustees as duly constituted and not by the fund’s management or any other person for that matter,” the judge said.
“In doing so, purporting to nominate directors in absence of the board of trustees, the fund certainly transgressed. It usurped the powers of the board contrary to all acceptable principles of governance and contrary to the Act.”
Onguto further noted there was no evidence brought forward to prove that NSSF’s action was so urgent that they made the decision without a board. Therefore, NBK was saved the trouble of beginning the process of constituting a board afresh.
NSSF and the National Treasury have a major stake in NBK.
“I make no mandatory orders and will leave it to the duly constituted NSSF board to take appropriate corrective measures, if at all,” he said.
NBK has recently been facing a lot of challenges including fraudulent senior management staff and financial losses.