Crisis in Nakuru as vicious boardroom wars jolt water firm

Nakuru Water and Sanitation Service Company (Nawassco) staffs takes back some of the funitures that had been removed from their offices by the auctioneers on 16-10-2014 which led to temporarily disruption of opperation for the better part of the day due to a debt of Sh14million PHOTO:BONIFACE THUKU

Nakuru; Kenya: More than a million residents of Nakuru face an imminent water shortage following a vicious boardroom battle over the control of the Nakuru Water and Sanitation Services Company (Nawassco).

At the centre of the storm is a Sh14 million court award to Geoffrey Makana Asanyo— who was reinstated as director — and a claim he has made to attach Nawassco’s property after it failed to pay him damages for wrongful dismissal.

The debt arose from the cost of a petition at the Nakuru Industrial Court that reinstated Asanyo as a board director in May.

The County Government of Nakuru, which holds majority shares in the water company, has been caught in the middle of the crisis that is threatening to cripple water services in Nakuru town and its environs.

Last week, the Industrial Court issued an order directing the Nakuru OCPD to provide Saddabri Auctioneers with police protection as they attach Nawasco’s property.

The court’s Deputy Registrar, SPM Maroro Nyakundi, granted Asanyo the orders to attach the property two days after previous orders temporarily stopping the attachment lapsed on October 11.

Halted auction

The orders listed the Rift Valley Water Services Board, its Managing Director Josphat Mutai, the County Government of Nakuru and Governor Kinuthia Mbugua as respondents.

And although the court temporarily stopped the auction of the property attached to the water company, the boardroom battle that started in February seems far from over.

Asanyo, a former Nakuru Kanu branch chairman, is determined to recover the money awarded to him by the court, even as an appeal to review the amount downwards is pending.

The respondents in the petition, among them Nawassco, Nakuru County and Mbugua, were on September 11 ordered by Senior Principal Magistrate Felix Kombo to jointly deposit 10 per cent of the amount (Sh1.5 million) as security. Kombo had then extended the postponement for payment for 30 days, pending the appeal for the review of the Sh14 million suit cost, which lapsed on October 11. Asanyo’s lawyer Kipkoech Ng’etich now says the respondents have been asked to meet the cost of the suit but are taking the court in circles. Ng’etich, who had filed a bill of Sh34 million before it was reviewed to Sh14million, argued that Asanyo’s petition was not ordinary but constitutional. Until his ouster, Asanyo represented the local business community in the board.

Problems surrounding the water company started in February when the county government attempted to streamline its management in line with a legal notice issued by the Water Services Regulatory Board.

To effect the new changes, the county government called for an extra-ordinary general meeting at a Naivasha hotel on February 19 attended by Governor Mbugua.

Efficient board

During the meeting, it was resolved that the company’s Memorandum and Articles of Association be amended to reflect the new constitutional order. This technically locked out Asanyo and five other directors appointed by the defunct Municipal Council of Nakuru from the board.

This was designed to pave the way for a lean and efficient board, Senior Counsel Tom Ojienda, who represented the county government and the Rift Valley Water Services Board, told the court.

Minutes of the meeting show that the law was amended to replace the positions held by appointees of the defunct local authorities with those of the county government.

“The new clause on subscribers’ names, description and shareholding was amended to include the County Government of Nakuru, which holds 4,996 shares, the Governor, county executive for finance, county executive for environment and water and county secretary,” Ojienda said.

Regulation 69 of the company’s Article of Association was also amended to provide that unless otherwise determined by the company in a general meeting, the number of directors, exclusive of alternate directors, shall be nine.

These were to include the managing director, one representative from the local community, one from a professional body, one representative from the residents’ or community welfare association and one representing a women’s organisation.

Before the 2010 Constitution was promulgated, the Municipal Council of Nakuru was the majority shareholder in Nawassco with 4,997 shares. The other shareholders were the mayor, the town clerk and the treasurer, each holding one share.

Unconstitutional removal

“In compliance with the new regulation, after amending the Memorandum and Articles of Association, it was registered at the Registrar of Companies on March 3, rectifying decision of the extra-ordinary meeting,” said County Secretary Joseph Motari.

But as soon as the company declared the six positions of the directors vacant on March 5 and called for fresh applicants, Asanyo moved to the Industrial Court to challenge the decision. Asanyo asked the court to declare the decision and the process of advertising and filling of position of the six directors illegal and in contravention of Articles 41 and 47 of the Constitution.

He told the court that his term as the director of the water company was to end in December 2015 unless otherwise and maintained he was holding the position legitimately.

Justice Byram Ongaya then reinstated Asanyo who had been ousted alongside board chairman Ibrahim Mohamed Osman, Joyce Akongo Odour, Stephen Muiruri, Wilson Mungai and G.K Mungania. The judge ruled that the removal of Asanyo and five other directors who represented other stakeholders at the board was unconstitutional.

“The court has found that there was no decision by the relevant organs of the water company to remove Asanyo as director, to create a vacancy or to abolish the office of directorship he held,” read the ruling.

It was this declaration by the court that led to a flurry of activities that culminated in the current stalemate.
Asanyo and the other ousted members returned to the office and removed the Managing Director, Mr John Cheruiyot, and took over the management of the company. They convened a board meeting on June 13 in which Cheruiyot was replaced with Engineer James Nga’ng’a on acting capacity. That meeting proceeded to change signatories in the company’s bank accounts.