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JORAM: Why NBK must do more to restore public confidence

2 months ago, 12 July 19:00

By: Meshack Joram

On April 4, 2018, the Capital Markets Authority (CMA) announced that it had taken administrative action against board members and former senior managers of the National Bank of Kenya (NBK) believed to have been involved in financial impropriety at the lender in 2015.

As a fully compliant tax payer and member of the National Social Security Fund(NSSF) which holds a stake in NBK, I welcome the action by the CMA.I went to the bank’s website to get their perspective on the issues highlighted by the CMA. It was heartening to see the Board of Directors of NBK move towards integrated reporting with the release of the first such report with the National Bank 2016 Integrated Report and Financial statements for the period January 1, 2016 – December 31, 2016.

It showed the Board was embracing more transparency.The King IV Report on Corporate Governance, 2016 says, “Integrated reporting is the culmination of a series of leadership responsibilities executed by the Board of Directors.

The board steers and sets the direction of the organisation, approves policy and planning, oversees and monitors management and then finally, provides for accountability on organisational performance through reporting and disclosure.

The 2014 and 2015 Annual Reports of National Bank made no mention of changes at board and c-suite level.

Further, against KPIs for which the NBK Board of Directors, through their Board Audit Committee, Board Credit Committee and Board Risk Committee monitors management on quality of financial reporting, quality of credit risk, and overall bank wide risk management and compliance framework, respectively, I would like to see 1) targets; 2) what was achieved and 3) changes from 2016 to 2017.

I would also appreciate a concise brief on fraudulent activities. Fraud metrics such as gross loss, recoveries, net loss, fraud appetite, frustrated fraud, and any cases reported to the Bank Fraud Investigations Department; each metric with Kenya shilling amount and number of cases.

At the very least; number of fraud cases reported; number of employees dismissed because of fraud and number of unsuccessful fraud attempts.

Why you may ask, am I being so picky? In their announcement, the Authority mentioned the remedial measures that the Board of Directors of the National Bank of Kenya had taken including, “review of the NBK Risk Management and Credit Policies, escalation of noted fraudulent activities to the Banking Fraud Investigation Unit, dismissing implicated members of senior management, engaging a new Head of Internal Audit at the Bank and increasing the capacity of the NBK Board Audit Committee.”

In the case of the NBK, coming after such troubles, it is even more urgent that the Board communicates to its stakeholders what it is doing to ensure such events never happen under their watch.

Meshack Joram, CEO, Institute of Directors Kenya.


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@BusinessDaily

JORAM: Why NBK must do more to restore public confidence

2 months ago, 12 July 19:00

By: Meshack Joram

On April 4, 2018, the Capital Markets Authority (CMA) announced that it had taken administrative action against board members and former senior managers of the National Bank of Kenya (NBK) believed to have been involved in financial impropriety at the lender in 2015.

As a fully compliant tax payer and member of the National Social Security Fund(NSSF) which holds a stake in NBK, I welcome the action by the CMA.I went to the bank’s website to get their perspective on the issues highlighted by the CMA. It was heartening to see the Board of Directors of NBK move towards integrated reporting with the release of the first such report with the National Bank 2016 Integrated Report and Financial statements for the period January 1, 2016 – December 31, 2016.

It showed the Board was embracing more transparency.The King IV Report on Corporate Governance, 2016 says, “Integrated reporting is the culmination of a series of leadership responsibilities executed by the Board of Directors.

The board steers and sets the direction of the organisation, approves policy and planning, oversees and monitors management and then finally, provides for accountability on organisational performance through reporting and disclosure.

The 2014 and 2015 Annual Reports of National Bank made no mention of changes at board and c-suite level.

Further, against KPIs for which the NBK Board of Directors, through their Board Audit Committee, Board Credit Committee and Board Risk Committee monitors management on quality of financial reporting, quality of credit risk, and overall bank wide risk management and compliance framework, respectively, I would like to see 1) targets; 2) what was achieved and 3) changes from 2016 to 2017.

I would also appreciate a concise brief on fraudulent activities. Fraud metrics such as gross loss, recoveries, net loss, fraud appetite, frustrated fraud, and any cases reported to the Bank Fraud Investigations Department; each metric with Kenya shilling amount and number of cases.

At the very least; number of fraud cases reported; number of employees dismissed because of fraud and number of unsuccessful fraud attempts.

Why you may ask, am I being so picky? In their announcement, the Authority mentioned the remedial measures that the Board of Directors of the National Bank of Kenya had taken including, “review of the NBK Risk Management and Credit Policies, escalation of noted fraudulent activities to the Banking Fraud Investigation Unit, dismissing implicated members of senior management, engaging a new Head of Internal Audit at the Bank and increasing the capacity of the NBK Board Audit Committee.”

In the case of the NBK, coming after such troubles, it is even more urgent that the Board communicates to its stakeholders what it is doing to ensure such events never happen under their watch.

Meshack Joram, CEO, Institute of Directors Kenya.


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