The Kenya Kwanza government faces a fresh hurdle after the High Court temporarily stopped its plans to implement new guidelines for the management of parastatals.
President William Ruto on May 25 issued an Executive Order on guidelines for the management of state corporations.
The revised guidelines provided salary bands and allowances for CEOs, board members, vice chancellors, chancellors and members of university councils.
They provided a new standard for the governance and ethical behaviour of board members and staff of state corporations.
From the order, the Salaries and Remuneration Commission and the State Corporations Advisory Committee will be key players in determining the terms and conditions for state corporations.
But the Law Society of Kenya in a case filed in a Milimani law court argued that the President under the current constitutional dispensation, does not have the power to develop or issue any guidelines on management of state corporations without the authority and approval of the Public Service Commission.
They told Justice Lawrence Mugambi the President has violated various articles of the Constitution by conferring constitutional functions of PSC to the State Corporations Advisory Committee.
“He has abused the sovereignty of the people by arrogating to himself powers not given in the Constitution of Kenya and acting in disregard of the supremacy of the Constitution of Kenya,” they said.
In urging the courts to intervene, LSK said the looming consequence of not suspending the Executive Order and the guidelines is that all state corporations and public universities will be moved to the office of the President. They further said the terms and conditions of service will be determined and reviewed contrary to the dictates of the Constitution and the Public Service Commission Act.
“The guidelines have also taken over the regulation of the human resource functions in the public service within state corporations and public universities from the Public Service Commission and placed them on SCAC,” they argued.
The LSK said this ought to be reversed because the mandate of the State Corporations Advisory Committee only extends to enforcement of governance issues within state corporations and not the regulation of human resources within state corporations and public universities
The guidelines are anchored on Section 5(3) of the State Corporations Act to determine terms and conditions of service for members and staff of state corporations.
But according to the court documents, that section of the laws was found to be in conflict with Article 234 of the Constitution in the case of Manyara Muchui Anthony vs Communications Authority of Kenya and three others.
Article 234 spells out the functions of the PSC. It gives it the power to establish and abolish offices in the public service and appoint people to occupy the offices.
In the Manyara Muchui Antony case, the court held that terms and conditions of service as well as human resource are the preserve of the Public Service Commission and the human resource functions of state corporations fall squarely within the Public Service Commission’s constitutional remit.
“Therefore, section 5 (3) cannot be relied upon in the development of the said guidelines,” LSK said.
The LSK termed the guidelines "unconstitutional", saying there was no lawful public participation and no parliamentary approval as required by the law.
The respondents were faulted for failing to advise the President on the unconstitutionality of Section 5(3) of the State Corporations Act and failing to conduct meaningful public participation and stakeholder engagement on terms and conditions of service for board members and staff of state corporations.
Justice Mugambi in certifying the matter as urgent, suspended President Ruto's Executive Order on guidelines for the management of state corporations.
He directed the necessary documents be served to the respondents and parties to appear for hearing on June 24.