State House seeks direct control over the hiring of CEOs of all state corporations, including universities, handing President William Ruto more powers over the civil service.
The Public Service Commission has strongly opposed these guidelines, joining the Law Society of Kenya that has already gone to court to have the directive quashed.
In the guidelines, a copy of which the Star has obtained, the President’s office would decide on who becomes CEO.
“The board shall select the best three candidates – with a 70 per cent score, who will be recommended to the Cabinet Secretary for approval – with the concurrence of the Executive Office of the President, prior to appointment,” the guidelines read.
This would also apply to the recruitment of university vice chancellors.
It is feared the move could entrench the culture of a political reward system whereby politically favoured candidates would be chosen.
Currently, CEOs of parastatals are recruited competitively by the boards of those state corporations.
The move comes at a time of growing concerns that big state jobs are being used for political rewards.
In 2020, a three-judge bench ruled that even the appointment of chairpersons and members of state corporations must be competitive.
At the time, the High Court declared unconstitutional hundreds of parastatal appointments that had been made by then-President Uhuru Kenyatta.
However, despite the court ruling, there has never been advertisement for vacancies on the boards of state corporations.
Most boards are led by failed politicians.
The Public Service Commission, however, has protested implementation of the rules, citing violation of the Constitution.
It argues the guidelines are silent on the PSC Act, PSC Regulations, and functions and powers of the commission.
PSC chairman Anthony Muchiri said in a protest letter to State House the PSC is the only body mandated to appoint, remove, transfer, and second state corporation staffers.
He said the State Corporations Advisory Committee lost its powers over parastatals after promulgation of the 2010 Constitution.
In the guidelines, SCAC would review organisational structure, staff grading and establishment career guidelines, human resources policy and a procedures manual for parastatals.
“These powers cannot therefore be continued to be exercised by SCAC. This has also been the finding of the courts in a number of decisions,” Muchiri said.
Last Thursday, a court temporarily stopped the implementation of the rules until a suit filed by LSK challenging their validity is heard and determined.
CEOs under the new terms would serve for a single term of three years and must score above 70 per cent performance rating to be rehired for a further term.
Where a serving CEO is keen on being reappointed, he or she would be required to indicate interest by writing to the board at least six months before expiry of their term.
“The cumulative average performance of the CEO for the period of service shall be the determinant for recommendation either renewal or termination of service, in case of performance rating below 70 per cent,” the guidelines read.
CEOs whose contracts are not being renewed would be required to take a three-month terminal leave “to pave the way for the recruitment of a new CEO.”
“For the avoidance of doubt, the position of CEO shall be declared vacant only when the board of directors has no intention to renew the appointment of the incumbent for a further term.”
In the event of a vacancy by criminal prosecution, the board would be required to instigate disciplinary measures against the affected officer.
For acting CEOs, the board shall be required to appoint a different officer for each successive six-month period.
In the rules, there shall be no administrative transfers of staff across state corporations "as each agency is a body corporate with distinct status."
State corporations are clustered into executive agencies, state-owned enterprises, regulatory agencies, national referral hospitals, public universities, and research institutions.
Under the new terms, chairpersons would now be paid a maximum of Sh130,000 – a Sh50,000 raise, should the state defeat the court challenge.
Presently, most state agencies pay chairpersons Sh80,000 as a monthly allowance, called honoraria in the governance parlance.
President Ruto further seeks to increase sitting allowances for board chairpersons and members to Sh30,000 per sitting.
The government recently ordered all state agencies to implement the guidelines, occasioning standard rates of allowances across the board.
“Corporations paying above the approved maximum ceiling are required to comply from the effective date of these guidelines,” Head of Public Service Felix Koskei said.
“Current serving board membership shall retain their current rates on a personal to holder basis, subject to the current tenure,” the guidelines read.
According to the rules, which President Ruto directed would commence on May 24, all members of a board would be entitled to a Sh5,000 telephone allowance.
Chairpersons would be paid Sh7,000 in telephone allowance per month, in a blow to some, such as those in Kenya Power who currently get as much as Sh20,000.
The government is also setting a standard rate for lunch allowances – at Sh2,000.
Directors would also be entitled to medical insurance of as much as Sh3 million inpatient cover per year, Sh200,000 for outpatient, and Sh200,000 for last expense.
The guidelines also provide that chancellors of public universities would be entitled to the monthly honorarium and daily subsistence allowance at SRC rates.
Parastatal board members would also be issued with a laptop or tablet “to effectively discharge their role and move towards an e-board”.
“The board members may be entitled to one device during their tenure,” the regulations read.
In yet another boost, board members (including the chairperson), would be paid accommodation allowance at the rate applicable to a principal secretary – Sh22, 000 per day.
Presently, most agencies pay a Sh18, 200 accommodation allowance for board chairpersons on duty outside their normal workstation.
The rules introduce stringent controls on director fees. Fees payable to directors who are public officers would be remitted to the National Treasury.
The guidelines further set tough rules on transport for board members and staff. It states that transport should be the most economical and cost-effective.
Parastatal staff, as per the guidelines, are barred from using group transportation unless public transport is not practicable.
Even so, in cases where air transport is the most economical means but a member opts to drive, they would be reimbursed at air ticket rates.
Those who give incorrect addresses and have travel costs exceeding Sh35,000 per sitting would lose their jobs as directors.
The government is also providing that board members travelling by air locally shall use economy class, and business class for foreign trips.