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The East African : February 3rd 2014
12 MD SACKING DECLARED ILLEGAL The EastAfrican NEWS FEBRUARY 1-7,2014 the State Corporations Act and the laws of Kenya, appointed Prof Wanjohi to be chairman of the company for a period of three years.” Meanwhile, sources inside the organisation intimate that there has been a general lethargy and lack of direction at the firm in the absence of a substantive MD since September 2012. “Production has slackened. The current interim leadership cannot provide a clear vision for the firm; where it is headed. This is a very complex and technical job that requires hands-on engineering experience,” said an employee who sought anonymity for fear of reprisals. The firm, which is housed at the former KR workshops, uses its existing capacity to produce machine parts and equipment. Among its products are brake blocks, gear teeth, discs, lathe machines, stone cutting machines and hydraulic presses. The slowdown in production Former NMC managing director George Onyango (left) shows the former head of the public service Francis Muthaura (centre) and Prof Nick Wanjohi steel parts produced at the complex. Mr Onyango was later fired by the board of NMC but a court has now declared the sacking illegal. Picture: File Court rules against Kibaki-appointed board of directors in steel firm suit Ve≥dict gives gove≥nment the chance to appoint new managing di≥ecto≥, boa≥d By WASHINGTON AKUMU The EastAfrican A court has declared the board of a company formed to spearhead Kenya’s industrialisation illegal, potentially ending a leadership crisis that has raged for over one year. In a ruling dated January 16, Industrial Court Judge James Rika ruled that the board of Numerical Machining Complex (NMC), which is chaired by Nick Wanjohi, a former powerful aide to former president Mwai Kibaki who also served as the retired leader’s private secretary, had been “unlawfully created.” “The legal notice appointing the chairman, and the one appointing the board members, are declared null and void, ab initio,” the judge said in the ruling, obtained by The EastAfrican. The ruling follows a petition filed by NMC’s former managing director George Onyango, who challenged its legality in court following his dismissal by the board in October 2012. Mr Onyango was also awarded damages for breach of contract. The board and other respondents obtained a 30-day stay on execution. With the ruling, the onus is now on Industrialisation Cabinet Secretary Adan Mohamed to provide direction regarding NMC’s leadership, which is likely to be keenly contested given its high profile and perceived integral role in the country’s Vision 2030 industrialisation drive. The steel manufacturing in- frastructure planned under the NMC is a flagship project of the blueprint, whose aim is to make Kenya a middle-income economy by the year 2030. While the ruling does not ex- pressly reinstate Mr Onyango, it opens the way for a process in which he could be a contender, given his history with the project and his earlier advocacy within government that saw it being embraced as a key component of Vision 2030. The former MD used to work as the workshops manager at Kenya Railways before he joined NMC. “To direct that the board is The current interim leadership cannot provide a clear vision for the firm.” NMC employee restrained from interfering with the petitioner’s role as MD would result in the court renewing the petitioner’s contract, or giving him the benefit of holding over. His recourse is in damages for violation of his fundamental rights and breach of the terms that governed the end of his contract. He also, is not barred from returning to the MD’s role, but only through the mode set out under the articles of association of the company,” said Judge Rika. Mr Onyango had signed a three-year contract that was to end on November 9, 2012, and had sought a renewal. The board sacked him on August 31, 2012. Questions sent to Mr Moham- ed had not been answered by the time we went to press. At issue in the case was the actual status of NMC. Unlike its parastatal peers, NMC is not subject to the State Corporations Act. It was incorporated in 1994 from the defunct Nyayo Motor Corporation, whose workshop PETITION UPHELD SUBMISSION: There was already an existing Board, constituted in accordance with the Articles of Association of the company. The president and the Industrialisation minister violated the Constitution by disregarding the rule of law. The result was that there was a standoff between the legally appointed board and the counterfeit appointed by the Executive. CONTRAVENTION: It is declared that the President of Kenya and the acting minister for Industrialisation contravened the articles of association of the Numerical Machining Complex Ltd, the State Corporations Act, and and equipment it inherited, as a private company; a 51:49 per cent partnership between Kenya Railways and the University of Nairobi. According to its memoran- dum and articles of association, the managing director of KR is meant to be the chair, deputised by the vice-chancellor of the University of Nairobi. The other directors are the PS in the Office of the President, and his counterparts from transport and communications, and science and technology, and the head of defence. The government is however allowed to appoint four directors. It is these legal strictures and an existing board, led by then the Constitution of Kenya by appointing Prof Nick Wanjohi as chairman to the board on November 18, 2011. UNLAWFUL: The board of the NMC is declared to have been unlawfully created. NULL AND VOID: The legal notice appointing the chairman and board members are declared null and void. COMPENSATION: The petitioner shall be compensated by the respondents for violation of his fundamental rights and for breach of his contract of employment by payment of coalesced damages assesssed at Ksh600,000 ($ 7,000). LEGAL COSTS: The respondents shall bear the costs of the petition. KR chairman Gen Jeremiah Kianga, that Mr Kibaki ignored when he named Prof Wanjohi to the post in 2011. This was followed in January 2012 by the naming of six more directors by the then minister for industrialisation, Amason Kingi, for a three-year term. The directors were Abdi Hassan, Joseph Janga, Andrew Mitei, Bernard Ngore, Sarah Mbwaya and Joyce Mulinge. In a grave indictment of the Kibaki administration, and a window into the general disregard for the law that marked his 10-year rule, the judge said: “The president, in violation of the memorandum and articles of association, and in breach of resulted in some clients like Sony Sugar cancelling their orders, while other orders were not serviced in time. Last year, NMC bought a number of machines and equipment in questionable circumstances at a cost of several million shillings, which led to Mr Mohamed writing to the board seeking an explanation. MD succession The Nick Wanjohi-led board, which the judge describes as “counterfeit,” first tapped Christine Mbando, who headed the human relations function at NMC, for the job of MD. She has since returned to human relations, and been replaced by Gordon Onjore. Mr Onjore was seconded by the Ministry of Industrialisation, from the Kenya Bureau of Standards, in October last year. NMC has thus had three MDs in 16 months. At the heart of the NMC crisis is lack of coherence on what the government wants to do with the company. While Vision 2030 envisages a role for it as the platform for a local steel industry in partnership with South Korean firm Posco, its privatisation has been a stop-go affair. The process, once it takes off, and the search for its next MD are likely to become major theatres for brokers and wheeler dealers from both sides of the Jubilee coalition. NMC boasts some prized as- sets, including a 1,200-acre piece of land in the industrial town of Athi River and a well-equipped foundry complex, which is arguably one of the best on the continent in terms of capacity. The Privatisation Commission is currently looking for a transaction adviser for the process. One of the firms keen on a partnership with NMC is American transnational General Electric, which seeks to use NMC’s facilities to manufacture locomotives. The firm’s executives visited the plant on Friday in the company of the Cabinet Secretary and top officials from the ministry. The result of the talks was not immediately known.
January 27th 2014
February 10th 2014