Why Oigara left how he left

Beyond the top banker’s stellar performance at KCB, the closet was always full of skeletons

By NLM Writer

It may be too early to find out which of these skeletons consumed him, or if he just opted to take an early retirement some seven months before his contract expired.

The announcement came as a surprise. While everyone expected Joshua Oigara to leave his C-suite office at KCB this year, he had some months to go on the extension to his contract that the board had sanctioned.

Yet, in May the board abruptly announced that he would be exiting to be replaced by Paul Russo, who until May 25 was the managing director of the National Bank of Kenya.

Was Oigara pushed out and by whom, or was it just an innocent decision by himself and the KCB board to effect a change at the helm of East Africa’s leading retail, SME and corporate bank? 

In the more than nine years Oigara was at the helm of KCB Group, there is no denying that he turned the bank around. During his time as CEO, profit before tax increased from Sh20.1 billion in 2013 to Sh47 billion in 2021, total income more than doubled from Sh47 billion in 2013 to Sh109 billion in 2021, while shareholder equity tripled from Sh63 billion in 2013 to Sh171.7 billion in 2021.

Several other parameters such as market share, earnings per share, customer deposits, branch expansion and agency banking all point to a corporation that is doing well. 

But Oigara still ended up exiting seven months early. This stellar performance was often tempered with claims of scandals: unhealthy ties with a politically exposed person, the National Youth Service saga and claims that the bank facilitated South Sudan officials to launder money from its systems.

In September 2020, a video clip and a letter emerged that claimed that a politically influential member of the bank’s board who has since resigned and Oigara allegedly helped a politician to launder some Sh2 billion in a year. Specifically, Oigara was accused of short-circuiting the rules to favour the politician. With the changing political environment in the country, there has been speculation that certain people uncomfortable with Oigara’s perceived closeness to this politician may have sealed his fate. This is very plausible but unproven.

Along with that were also claims that Oigara was paying himself irregular and inflated bonuses. However, the Central Bank’s directorate of bank supervision in an audit report dismissed the allegations.

While the above remain mere claims the National Youth Service scandal was not. 

KCB was among the five top commercial banks that entered a deferred prosecution agreement with the Office of the Director of Public Prosecutions (ODPP) to save their CEOs from being prosecuted.

In total, they paid Sh385 million in lieu of criminal prosecution for facilitating the NYS scam after they received about Sh3.5 billion believed to have been stolen from the State agency.

Before the agreement with ODPP, the Central Bank had also fined the banks, with KCB paying a fine of Sh149.5 million for handling Sh639 million from the NYS suspects.

As well as facilitating the illegal cash movements from NYS, KCB under Oigara was also mentioned in 2016 The Sentry report ‘War Crimes Shouldn’t Pay’ for facilitating money laundering by senior officials of the government of South Sudan.

“Foreign companies have made direct payments to the personal bank accounts of high-ranking South Sudanese generals. Documents reviewed by The Sentry show $3.03 million moving through Gen. Reuben Riak’s personal bank account at Kenya Commercial Bank between 2012 and 2016. Those documents further indicate that Gen. Jok Riak also received large financial transfers totalling at least $367,000 to his personal bank account at KCB from February to December 2014 alone—sums that dwarf his annual government salary of about $35,000. These financial transfers apparently included $308,524.10 from Dalbit International, a Kenyan multinational corporation operating in South Sudan,” the report stated.

KCB then denied the allegations of facilitating money laundering against it with Oigara saying the bank “deploys global standards applicable to anti-money laundering guidelines and know-your-customer requirements provided by the regulators in all the countries of our operations.”

A 2021 report, ‘Kenya Illicit Finance Risks and Assessment’, also by The Sentry, again says that “Kenya is a destination country for illicit South Sudanese funds, which have been moved into Kenya using Kenyan corporate structures, luxury properties, and banks.”

Four Kenyan banks have a presence in South Sudan: KCB, Equity, Co-operative and Stanbic.

Then there is the link with Weston Hotel. KCB has supported Deputy President William Ruto in opposing a bid by the Kenya Civil Aviation Authority (KCAA). The bank took the step to safeguard its interests over a Sh1.2 billion loan it advanced to Mr Ruto’s hotel in 2015 when Oigara was the CEO.

The bank has argued that cancelling the title of the land Weston Hotel sits on would prejudice it as it will likely lose the monies Weston has been repaying. The case is pending in court. 

However, with the changes in the political environment, such associations, however innocent they may be could be read differently.

Oigara took over as CEO of KCB in January 2013. He became one of the youngest corporate bosses. He joined KCB in November 2011 where he previously served as Chief Financial Officer and Member of the Board of Directors. By the time he was leaving, he was one of the best remunerated CEOs in the country with a pay of up to Sh22 million a month in salary, bonuses and allowances. (