How Kenya Re board ousted and replaced CEO in ‘two minutes’
Monday May 22 2023
On March 28, the Kenya Reinsurance Corporation board had a very short meeting. In two minutes, the board had settled on a chief executive replacing Jadiah Mwarania.
The board, according to court documents, picked Hillary Maina Wachinga as the new CEO, drafted the appointment letter, sent him the letter for perusal and executed all these processes within two minutes.
The process was last week cleared by the court, ending a vicious courtroom battle on the succession at the firm, and a 12-year service for Mr Mwarania.
Read: Kenya Re picks insider to replace Jadiah Mwarania as MD
At the heart of the battle was the interpretation of an ambiguous previous court order that Mr Mwarania obtained to fight his ouster at the firm.
The Employment and Labour Relations Court judge Nelson Abuodha said no one was to be blamed because the court order, blocking Mr Mwarania’s replacement as the CEO, was ambiguous.
The judge said Kenya Re’s board of directors was within its right to interpret the directions of the court the way it did.
“Their immediate action of appointing the interest party’s managing director may have been sharp but only took advantage of the ambiguity,” the judge said.
Mr Mwarania, a University of Nairobi finance graduate, had sued the State corporation for unfair dismissal, for which he had sought Sh82.4 million in compensation.
But what puzzled Mr Mwarania’s lawyer Judith Guserwa the most was how the board concluded its deliberations at 2.25pm and the new MD executed the letter of appointment at 2.27pm.
“Considering the manner in which common course of natural events, human conduct and public business is conducted, the sequence of events alleged to have happened on 28th March 2023 were fictitious and were made and designed to defeat this application,” she said.
She further pointed out that the letterhead on which the appointment was made, former Treasury Cabinet Secretary Ukur Yatani is described as the CS, yet Njuguna Ndung’u replaced him months earlier.
“The contemnors herein clearly devised a plan to defeat the court order of 23rd February 2023,” she submitted.
The former CEO rushed to court and obtained a court order, stopping his planned replacement on February 23.
The order lapsed after 14 days and was allegedly extended on March 13 for another 14 days, according to the board while Mr Mwarania said it was to last until the next hearing date, on April 19.
The board said the court order lapsed on the midnight of March 27 and it met the following day, deliberated on the appointment and took a position.
Catherine Kimura, the chairperson of the board, said they had interviewed six candidates and forwarded the top three names to the CS who directed them to pick the highest ranking.
She told the court that because the order had lapsed, and since there was nothing stopping them from completing the process, they made the appointment.
She said the board was served with the court order on the evening of March 28, when it had already made the appointment.
Dr Kimura wondered why Mr Mwarania was seeking an extension of the orders on March 28, if it was to last until the next hearing date.
Mr Mwarania went back to court and sought Dr Kimura and the company secretary Charles Kariuki to be held in contempt of court for disobeying the order. He said the process was rushed to defeat the court case.
Read: Kenya Re picks new board chair
He said the board was duly served with the court orders on February 23 and the court extended it on March 13, 2023 up to April 19, the date set for the hearing by all parties.
Justice Abuodha, however, declined to hold the officials in contempt of court, because of the confusion.
The judge noted that the lack of clarity prompted Ms Guserwa to move to court on March 28, for an extension of the order.
“From the foregoing observations, the court takes the view that there was apparent confusion or ambiguity on the face, the directions given by Hon. Justice (Dr) Gakeri on 13th March, 2023. The directions yield both interpretations given to it by the contesting parties,” the judge said.
Justice Abuodha said he fully appreciates and understands the “brain games” lawyers for both parties displayed in interpreting the directions given by Justice Gakeri.
Mr Mwarania challenged his replacement, arguing that the Board had in August 2021 resolved to extend his contract, apparently because of his excellent performance.
The decision, he said, was approved the following month and he was to serve for another five years.
But in May last year, acting on instructions of the Head of Public Service Joseph Kinyua, the board limited the extension of the contract to one year and directed the board to recruit a new managing director.
Mr Mwarania challenged the decision, saying it was done without affording him the right to a fair hearing. He has moved to the Court of Appeal to challenge the decision.
This is the second time Mr Mwarania is challenging the termination of his contract after winning a similar case in 2018.