While most Kenyans are deep regurgitating the fallacy that is our political realm, old money is silently humming assiduously under the watchful eye of the grey haired owners of Kenya.

Sample this:

The profile of the average Kenyan board member is typically a 60-year-old-plus male with close ties to the former first two families or their governments and probably serves on more than one board. (Kenya’s capital markets guidelines permit people to hold seats on up to five boards at the same time.)

However, this position is at odds with Capital Markets Authority (CMA) guidelines that advise against boardrooms that do not represent a company’s broader shareholder structure, gender representation or national outlook, but critics argue that lack of enforcement has rendered the regulation ineffective.

Some of the prominent names that sit on the boards of more than three companies include Richard Kemoli, Andrew Ndegwa, Jeremiah Kiereini and Francis Okello and Akif Butt (who represents business magnate Naushad Merali who is reducing his boardroom presence).

Others are Wilfred Kiboro, Evanson Mwaniki and Titus Naikuni, who are getting a larger stake of boardroom roles after spending decades in the executive suites.

Seventy-five-year-old Kemoli sits on the board of Bamburi Cement, EABL, Kakuzi, Unga Limited and CMC Motors.

Mr Kiereini, 81, has roles in CMC Motors, EABL, Unga Ltd and CFC Stanbic and, like Mr Kemoli, holds directorship in several listed companies.

The 42-year-old Ndegwa is the son of former Central Bank Governor Duncan Ndegwa and sits on the board of Unga Ltd, NIC Bank and EABL as well as a string of other private firms owned by his father like Insurance Company of East Africa and First Chartered Securities.

Besides owning vast shares on their own, Mr Kemoli, Mr Ndegwa (Duncan) and Mr Kiereini have deep connections with the two former first families and are believed to hold shares in trust of Moi and Kenyatta.

It’s important to note that the trio has board roles in almost the same companies, which stems from their association in two investments vehicles — ALICO and Heri Limited — which were formed by senior politicians and civil servants during the Moi and Kenyatta administrations. Their interests span real estate, financial services and manufacturing where their families and business associates have board roles.

But this old-boy network has locked women from Kenya’s boardroom as they occupy only 38 out of the 418 seats on the boards of the 45 companies and half of these companies have an all-male board.

“It’s hardly a secret in Kenya that to serve on a board, you’ve got to have the right background and have the powerful network of allies to help you get there,” says Ashif Kassam, the managing partner at HLB Ashvir, a consulting firm.

“It is nearly the same boardroom boys listening to their own voices in one firm after the other, limiting the flow of fresh ideas flowing into the boards.”

As a result, the voice of minority investors has remained muted in corporate Kenya contrary to Capital Markets Authority guidelines that seek to “provide a mechanism for representation of the minority shareholders without undermining the collective responsibility of directors.”

Partial article copied from the Nairobi Law Monthly

Corporate governance experts say Kenya should adopt the United States model where non-executive directorship positions are filled from formal advertisement, applications or rigorous interviews.

Corporate Kenya has preferred top tap independent or non-executive directors who are friends or business associates of some executives or directors on the understanding that they would not upset the status quo or conflict the views of the majority shareholders or representatives on the board.

“Boards fear disruptions. As a result, unity is valued more than diversity,” says Mr Mungai Ngaruiya, a former director of Access Kenya, who quit the internet firm in May following differences with the Somen family — which had a combined stake of 26 per cent in December 2008 with the other top 10 shareholders having stakes of between 2.27 and 1.28 per cent.

KenGen managing director Eddy Njoroge and Ngugi Kiuna also quit the firm after two separate audits found lapses in the procurement of the inland cable.

The Somen family appointed three more directors, Titus Naikuni (CEO of Kenya Airways), commercial lawyer Paras Shah (a partner at Hamilton Harrison and Mathews) and David Ndonye, a former partner at Deloitte in what was seen as an attempt to stop polarisation in the board.

Deloitte are Access Kenya’s accountants while Mr Shah is known to enjoy close ties with the Somens and his firm Hamilton Harrison and Mathews are AccessKenya’s lawyers — underlining the strength of the old-boy networks in board appointments.

Michael Somen, a former chairman and director at Access Kenya, also worked at the law firm for 39 years.

The stronghold of families in some listed companies like Olympia, Eveready, Scangroup, Diamond Trust Bank, Nation Media Group, Sameer and TPS Serena is becoming a big corporate governance issue. http://www.nairobilawmon...ontent.asp?contentId=29

This world is run by Wazee....Even when you have the young guys running the show as the executives, at the end of the day the Wazees sit at the boardroom and run the show from the background...

There was a thread recently be muganda showing how Kenyan boards are composed of these wazees. Sad but this has always been the norm as the majority shareholders will not want to have dissenting members on the board. You can imagine having a board member who will always be challenging the majority shareholder's ideas.

Sometime last year, I heard that Paul Kinuthia of Interconsumer Products Ltd was forming a board to run the company and that he was headhunting specific people to sit in 'his' board! Would be interesting to know who he finally chose!