Activist Okiya Omtatah has filed a petition in the High Court seeking to oust the Capital Markets Authority (CMA) board over irregular and unconstitutional appointments that entail conflict of interest.
In the suit seen by this writer, Omtatah accuses the executive of handpicking and appointing the CMA chairman Mr James Maina Ndegwa without subjecting him to a fair, open, competitive, merit based, and inclusive recruitment process.
He also accuses James Maina Ndegwa of bearing conflict of interest while assuming office, for being a market player in the industry he regulates.
“As Chairperson, he is a conflicted person to the extent that he is a public official who regulates his private businesses. Hence, as a beneficiary of the impugned appointment,” argues Omtatah.
Read: How James Ndegwa Has Been Cartelling Money Markets Through CMA
Ndegwa is the Chairman of First Chartered Securities (FCS). FCS owns ICEA Lion, which owns ICEA Lion Asset Managers, which manages the ICEA Money Market Fund, which is regulated by the CMA.
ICEA Lion recently acquired Stanlib, hence, Stanlib Money Market Fund is also under ICEA lion. Stanlib Money Market Fund is regulated by CMA. FCS and it’s afflictions own a 12 percent stake in NCBA, which is listed in the Nairobi Securities Exchange. Hence, NCBA is also regulated by CMA.
NCBA also runs NCBA money market fund, which is also regulated by CMA.
Ndegwa was re-appointed to be the Chairperson of the Board of Capital Markets Authority, for a period of three years with effect from the April 18, 2018.
Read: CMA Warns Kenyans Against Initial Coins Offering (ICO) ‘Pre-sale’
“Initially, H. E. the President handpicked and appointed him to the public office without subjecting him to a transparent, competitive, inclusive, and merit based recruitment process open to public participation,” argues Omtatah.
During his reign, CMA has enacted and enforced policies which are very friendly to banks and are very unfriendly to competing non-bank players, including ensuring that banks are the only ones who are trustees and banks control the business funding market making it very difficult for businesses to get loans at reasonable prices.
This is in contravention of article 75(1)(b) of the Constitution that requires state officers to avoid compromising any public or official interest in favour of a personal interest.
Read: CMA Chairman James Ndegwa Accused of Conflict of Interest in Market Regulation
Others targeted in the suit include John Kipkosgei Birech, Freshia Mugo Waweru, George Mose Moibi, Thomas Nzioki Kibua, Christine Okoth and Peter Mungai, who are said to be beneficiaries of a flawed appointment process by the then Cabinet Secretary for Treasury Henry Rotich.
He (Omtatah) argues that the six were not appointed through a transparent, competitive, inclusive,
and merit based recruitment process open to public participation.
“The impugned appointments of the Chairperson and the independent members of the CMA Board are untenable under the law and this Court is enjoined to intervene and quash them to enforce the rule of law,” prays Omtatah.
Asked for a comment, a CMA senior manager who declined to be named said that, “It is actually true that our core business was to protect and advance the interest of the banking sector. Those of us who are professionals look forward to a more professional and independent Capital Markets Authority, what has happened recently was very unfortunate… how do you write letters to industry players on Christmas Eve and ask them to comply by New Years? It’s madness. They are making all of us look really bad”
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