On the nightmare that was on Friday July 13, the Director of
Public Prosecutions (DPP) switched off the lights of the management
suite of offices over at the Kenya Power
by ordering the arrest of 11 senior managers for having been involved in economic crimes.
A
press statement was issued the following morning by a chairman, who
remained nameless, assuring stakeholders that all was well and the
lights continued to shine brightly over at the management suite in Stima
Plaza. Eventually the board got it together and by late that afternoon,
the Energy and Petroleum Cabinet Secretary had stepped into the
whirlpool to announce that an interim leadership team had been
identified and appointed.
It is what happened between
the lukewarm statement issued by the nameless chairman and the eventual
appointment of the acting CEO that warrants corporate governance
attention. To begin with, the leadership team which included the
substantive managing director and 10 senior managers was upended. This
means that the Kenya Power board needed to urgently establish continuity
of leadership and a strong perception of stability. If the human
resource committee of the board had been executing its mandate as
reported in the company’s June 2017 annual report, then it should have
developed the succession plan for senior staff.
At the
very minimum there should have been at least one potential successor to
each general manager’s role as well as the role of the managing
director. The aim is not to fill Noah’s succession Ark per se. The
objective of a well-functioning succession plan is to identify which
candidate is “ready now” and which other candidates are ready in the
next three years. The latter candidates would have a professional growth
plan that identifies what areas of growth are required to move them to
“ready now” status, be it further training or career exposure through
challenging assignments.
A good board would always ensure that the succession plan is
well documented and is an annual and active agenda item in the human
resource committee’s work plan.
The nightmare on
Kolobot Street that was the DPP’s action is a strong wake up call to
boards of public and private sector organisations in Kenya. Who would
keep the lights burning if half your management team left today and do
you have the framework to identify the candidates?
In
case you missed it, Kenya Power is a limited liability company listed on
the Nairobi Securities Exchange. Their most recent published annual
report for June 2017 is a handsomely crafted document, with a lot of
graphics and information about the organisation including their
corporate governance framework which is guided by, amongst others, the
Companies Act 2015, the Capital Markets Act and the State Corporate
Guidelines.
The report states that as at June 30, 2017,
the government owned 50.086 per cent of the company. Which means that
49.914 per cent is owned by other shareholders. The press conference
that was called late in the afternoon to announce the appointment of the
acting leadership team was revealing.
The chairman of
the board (whose face and name were now revealed as Mahboub Mohammed, a
former civil servant) invited Energy PS Joseph Njoroge to invite CS
Charles Keter to make the announcement of the management changes.
Government
protocol was clearly in play here which was slightly incongruent with
the message that was necessary at this stage. Who was in charge? The
government or the board? Who had driven the selection of the new
management team earlier that day and who would be overseeing the
critical transition process that would now ensue?
The
subsequent written statement issued to media houses announced that the
Kenya Power board had appointed a number of people to act in an interim
capacity for three months. But the physical press conference showed who
was really in charge. As the government moves towards privatising more
parastatals and potentially listing them on the stock exchange, there
has to be some introspection about what the rules of engagement are when
it comes to demonstrating true governance independence. Whether a
majority owned government entity is strategic or not, for as long as it
is a publicly listed company the board must not only be seen to be in
charge but must be in charge. That is a key tenet of publicly listed
companies.
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