The directors who never leave: Questions over EADB governance

The East African Development Bank faces scrutiny over governance, board appointments and accountability. [Courtesy]

At the height of the controversial 2013 amendments to the East African Development Bank's (EADB) legal framework, former Attorney-General Githu Muigai was the country's chief legal adviser.

More than a decade later, his law firm's continuing relationship with the regional lender has emerged as a fresh issue in a parliamentary submission by former Cabinet Minister Raphael Tuju.

Muigai's firm, Mohammed Muigai LLP, is currently representing EADB in six active court cases. Tuju has questioned the firm's relationship with the bank and the possible implications of Muigai's position as Attorney-General when the controversial amendments were enacted.

Increasingly, the regional lender is facing scrutiny over its legal privileges, regulatory framework, governance structures and dealings involving Kenyan public funds.

Unlike commercial banks operating in Kenya, EADB does not fall under the Central Bank of Kenya's ordinary banking supervision framework.

Its operations are governed by a special treaty and Charter arrangement, which the bank says provides the basis for its autonomy.

But Parliament is now questioning who holds the institution accountable, how its financial activities are scrutinised and whether its legal protections leave sufficient room for oversight by Kenyan authorities.

The amendments were introduced through Section 30 of the Finance Act, 2013, and were subsequently challenged in court.

In March 2025, the High Court, in Nusu verus National Assembly and six others, declared the amendments illegal, null and void, finding that Parliament had failed to demonstrate compliance with constitutional requirements for public participation.

The court also declared sections 2(1) and 2(2) of the EADB Act unconstitutional, citing the absence of adequate checks and balances over the withdrawal of public funds from the Consolidated Fund to finance the bank.

The ruling went to the heart of how public money could be committed to a regional institution in which Kenya is a shareholder without adequate parliamentary oversight.

The High Court consequently ordered the National Treasury to disclose payments made from the Consolidated Fund to EADB since 2014 and directed an audit.

Tuju alleges that the amendments were pushed through Parliament under miscellaneous legislative procedures, raising questions about whether the process received adequate scrutiny and whether potential conflicts of interest were sufficiently addressed.

“The enactment is therefore tainted and should be interrogated in its entirety,” Tuju argues in his submission to the National Assembly's Departmental Committee on Finance and National Planning, dated September 2, 2026.

Tuju also challenges EADB's defence of its legal privileges and governance arrangements, arguing that the bank's international status cannot place it beyond Kenya's constitutional order.

Established in 1967, EADB, headquartered in Kampala, Uganda, is mandated to finance projects that promote economic growth and regional integration.

It is predominantly owned by Kenya, Uganda, Tanzania and Rwanda, which collectively hold 92 per cent of its shares.

Development finance institutions and other institutional investors, including commercial banks, hold the remaining 8 per cent.

Financial Standard sought responses from EADB and former Attorney-General Githu Muigai over the questions raised about the bank's legal framework and the 2013 amendments.

In a written response issued on Muigai's instructions, his firm stated that neither the senior counsel nor Mohammed Muigai LLP was instructed by EADB in 2013 or at any time during the process leading to the amendments.

The firm said its first engagement by the bank came in 2019, when it was instructed in proceedings to recognise, register and enforce in Kenya a judgment delivered by the High Court of Justice in England and Wales on June 19, 2019, against Dari Ltd and its directors and guarantors.

The firm subsequently filed an originating summons in the Kenyan High Court on January 3, 2020. Muigai's response says the instructions were expressly limited to that litigation.

It identifies a series of rulings in the bank's favour, including a Court of Appeal judgment delivered on April 20, 2023, dismissing an appeal by Dari Limited and its directors.

The firm also confirmed that it currently represents EADB in six matters before the Supreme Court, the Court of Appeal, the High Court and the East African Court of Justice.

They include Milimani High Court Constitutional Petition E206 of 2026, in which Tuju and Dari Limited are challenging aspects of the bank's legal framework.

Through his lawyers, Muigai also threatened legal action against The Standard over the proposed publication, disputing the allegations and cautioning the newspaper against publishing material he considers defamatory.

The legal relationship between the bank and Muigai's firm is unfolding against the backdrop of a long-running dispute between EADB and Tuju over a loan advanced to Dari Limited, a company associated with the former Cabinet minister.

EADB is pursuing repayment of the loan facility, while Tuju and his companies have challenged aspects of the bank's actions and the handling of properties used as security. The dispute is said to involve about Sh4.5 billion.

On September 25, the Supreme Court lifted earlier recusal orders involving four of its judges, clearing the way for them to resume handling the case, which had been stalled for nearly two years.

In its submissions to Parliament, EADB has defended the legal framework established under its founding Treaty and Charter, arguing that the proposed amendments would restore provisions affected by litigation and align Kenya's domestic law with the bank's regional legal framework.

The bank maintains that it is a development finance institution operating under a distinct legal regime, rather than an ordinary deposit-taking commercial bank.

Tuju, however, has challenged the adequacy of the proposed changes, arguing that they leave fundamental questions about the bank's regulatory oversight, governance and immunity unresolved.

He maintains that the bank's international status cannot place it beyond Kenya's Constitution or the principles of public accountability and transparency.

Tuju also turns his attention to the composition of EADB's board, particularly its private-sector representatives, whose tenure and financial dealings he says warrant scrutiny.

EADB’s governance structure is headed by a Governing Council comprising the finance ministers of its four member States and below it sits the board comprising senior government finance officials from the four countries, four private-sector representatives from each member State, the director general and a representative of the African Development Bank.

Under its Charter, directors serve three-year terms but are eligible for reappointment, a provision that raises questions about prolonged tenure and boardroom accountability.

Francis Karuiru, whom the bank lists as its director representing Kenya's private sector, was first appointed in 2008 and has remained in the position for approximately 18 years.

Tuju questions the length of the appointment, the transparency of the selection process and whether the director's professional background is suited to supervising a development bank.

More significantly, he alleges that Karuiru borrowed $200,000 (Sh26 million) from EADB while serving as a director.

Financial Standard sought clarification from EADB on the alleged loan, but the bank neither confirmed nor denied its existence, citing customer confidentiality.

Another director whose tenure has attracted attention is Khadija I. Simba, EADB's Tanzanian private-sector representative, who has featured in the bank's published records since at least 2008.

The 80-year-old businesswoman is married to Iddi Simba, a former EADB director-general who headed the regional lender between 1968 and 1978.

Mahesh Kotecha, an American financial markets specialist of Ugandan origin and former senior executive at Standard & Poor’s (S&P), has served on EADB’s International Advisory Panel since its establishment in 1981.

Kotecha, who previously headed S&P’s international public-sector credit ratings department, now runs Structured Credit International Corporation, a financial advisory firm.

His decades-long association with EADB raises questions about the panel’s independence, potential conflicts of interest and whether adequate safeguards exist, given his continued involvement in the credit-rating and capital-markets advisory industry.

EADB confirmed that it has four private-sector directors, with one representing each member State. Their appointments, the bank said, are forwarded by the respective member States.

EADB’s own published records show that all four private-sector representatives remain in office, with Rwanda’s Faustin Mbundu having served since 2008 and Uganda’s James Tumusiime since 2015.

However, the bank did not provide the individual appointment dates, terms of service, renewal histories or selection criteria requested by Financial Standard.

The bank also declined to disclose whether its policies governing related-party transactions and conflicts of interest had been followed, or what safeguards apply where a director may have a financial relationship with the institution.

Tuju's broader argument is that the bank's governance structure gives long-serving private-sector representatives an enduring role, even as government representatives change with political and administrative appointments.

He describes the private-sector directors as the bank's institutional memory and alleges that some have become borrowers while others are connected to law firms receiving substantial fees from EADB.

Tuju has also questioned the presence of commercial banking institutions among EADB's shareholders. These include NCBA Bank Kenya Ltd, Nordea Bank of Sweden, Standard Chartered Bank and Barclays Bank Plc of London.

Although these commercial banks collectively hold less than one per cent of the bank's paid-up capital, Tuju argues that their presence raises questions about the lender's ownership structure, regulatory safeguards and accountability.

He questions why an institution engaged in lending activities in Kenya should operate outside the ordinary Banking Act framework and why its oversight should not fall under the Central Bank of Kenya.

The former lawmaker further argues that the absence of ordinary banking supervision, combined with the legal immunities enjoyed by EADB, could leave room for misconduct to go unchecked.

He also raises questions about criminal proceedings involving the bank's officials at Milimani Magistrates' Court, in a case he identifies as E42 of 2025.

Tuju alleges that the officials have invoked diplomatic immunity under the EADB legal framework as a defence.

The regional lender declined to discuss the criminal proceedings, saying the matter is pending before the court and should not be subject to speculation.

Tuju also questions EADB's legal expenditure, directors' allowances and tenure, alleging that more than Sh400 million was paid to four law firms and that directors' sitting allowances were equivalent to Sh390,000 per day.

Questions have also emerged over former EADB Director-General Vivienne Yeda Apopo’s 16-year tenure, which ended in 2024, and her simultaneous leadership of Kenya Power, which was involved in the controversial Lake Turkana Wind Power project financed partly by EADB.

Her dual roles attracted parliamentary scrutiny in 2022 over potential conflicts of interest, particularly as Kenya Power faced questions over billions of shillings paid to the wind farm for electricity it could not transmit to the national grid.

The controversy took another turn when Germany’s Standard Chartered Bank’s Frankfurt branch rejected a Sh785 million refund from Lake Turkana Wind Power, citing inadequate information on the ultimate beneficiary and a lack of supporting documentation required under anti-money-laundering controls.

The money was eventually received by the National Treasury in March 2022. At the time, the Central Bank of Kenya’s board was chaired by Mohammed Nyaoga, a senior partner at Mohammed Muigai Advocates, where former AG Githu Muigai is also a senior partner. Nyaoga remained CBK chairman until June 2023

Financial Standard sought comment from Yeda but had not received a response by the time of publication.

EADB confirmed that Yeda served as Director-General between 2008 and 2024. It noted that, following her retirement, the bank had completed a leadership transition culminating in the appointment of Anne Juuko.

On allegations of financial impropriety, the bank said it was not aware of any such impropriety associated with the period under Yeda's leadership.

It asked that any specific concerns regarding parliamentary summonses or financial impropriety be stated concisely rather than through innuendo.

In its report to the Kenyan Parliament, tabled on August 25, 2026, EADB presents a different account of its legal framework and performance.

It describes itself as a regional development finance institution operating autonomously while collaborating with other institutions to promote regional integration.

The bank argues that its Treaty and Charter establish its governance and operating framework, and that the domestic legislation of each member state is intended to reflect provisions agreed through its Governing Council.

EADB says the 2026 Amendment Bill restores provisions nullified by the High Court and aligns Kenya's legislation with the Charter. It warns that additional amendments outside the proposed Bill could create inconsistencies between Kenya's law and the framework agreed by member states.

On regulation, EADB says it regulates itself under its Charter, which requires the appointment of an external auditor by the Governing Council. Its report identifies KPMG as its current external auditor, following previous audits by PwC.

The bank's financial disclosures also provide a picture of Kenya's investment and exposure.

EADB puts Kenya's subscribed capital commitment at $414.963 million (Sh54 billion).

Of this amount, $69.1605 million (Sh89.7 billion) is paid-up share capital, while $345.8025 million is callable capital.

The bank says Kenya is up to date with its capital subscription obligations and has no outstanding financial obligations to it.

It says the last payment by Kenya was made on June 8, 2015, when $777,546.22 (Sh101 million) was received to complete the agreed capital increase plan.

The bank also says member States have chosen to reinvest profits rather than receive cash dividends.

According to its report, Kenya received 1,323 additional shares valued at $17.86 million (Sh2.3 billion) through reinvested profits in 2024 and 2025.

Tuju's submission, however, alleges that Kenyan taxpayers have received no dividends or return on investment for 15 years.

EADB reports a profit of $16.93 million Sh2.21 billion) in 2025, up from $11.20 million (Sh1.4 billion) in 2024. It says total assets rose to $520.22 million (Sh67.6 billion), while loan disbursements increased from $38.23 million (Sh4.94 billion) in 2024 to $91.59 million (Sh1.2 billion) in 2025.

The bank's net loan exposure increased from $128.52 million in 2024 to $194.83 million (Sh25.28 billion) in 2025. Its reported non-performing loan ratio fell to 0.51 per cent in 2025.

For Kenya, EADB lists gross loan exposure of $86.97 million across 18 projects as at June 30, 2026. The portfolio covers housing, health, agriculture, education, energy, financial institutions, information and communications technology, and printing.

Housing accounts for the largest disclosed exposure, at about $60.96 million, followed by health at $12.22 million (Sh1.58 billion) and financial institutions at $5.31 million (Sh690 million).

The central concern for Tuju is whether the bank's legal privileges and governance arrangements could limit the ability of Kenyan institutions to scrutinise its operations and enforce accountability.

The bigger question now facing Parliament is whether the proposed amendments will provide sufficient safeguards over an institution that handles public capital, lends within Kenya and operates under a legal framework that the courts have already found wanting.