Auditor-General Nancy Gathungu has questioned the legality of the appointment of the chairman of the Agricultural Finance Corporation (AFC), John Mruttu, saying he was chosen by the wrong authority and is, therefore, holding office irregularly.
In her audit report for AFC for the financial year ended June 2025 Ms Gathungu said Mruttu, a former governor of Taita Taveta County, was appointed chairperson of the State corporation by Cabinet Secretary for Agriculture and Livestock Development instead of the President as required under the State Corporations Act.
According to the report, Mr Mruttu was appointed to a three-year term effective November 18, 2022, through Gazette Notice No. 14235 issued by the Agriculture CS.
Ms Gathungu said the appointment was made "in contravention of Section 6(1)(a) of the State Corporations Act", which provides that unless the law establishing a State corporation states otherwise, the board shall consist of a non-executive chairperson appointed by the President.
She further cited the Mwongozo Code of Governance for State Corporations (2015), which states that chairpersons of all State corporations shall be appointed by the President.
The findings have revived debate over how chairpersons of State corporations should be appointed in Kenya.
The State Corporations Act and the Mwongozo Code generally vest the power to appoint chairpersons in the President. However, some State corporations are established under sector-specific laws that contain separate provisions governing board appointments.
AFC has rejected the Auditor-General's findings, arguing that Mruttu's appointment was lawful and undertaken in accordance with the Agricultural Finance Corporation Act, the legislation that established the lender.
"The Corporation respectfully notes that the observation arises from an interpretation of the applicable statutory framework governing AFC and not from any act of non-compliance by the Corporation or its management," AFC said in its response.
The corporation argues that Section 4(3) of the AFC Act expressly provides that the chairperson shall be appointed by the Cabinet Secretary responsible for Agriculture in consultation with the Cabinet Secretary responsible for the National Treasury.
AFC further notes that Section 6(1) of the State Corporations Act recognises that where a State corporation is established under a written law containing specific provisions on board composition and appointments, those provisions take precedence.
"It is important to emphasize that the issue raised by the Auditor-General does not concern misconduct, impropriety or procedural irregularity on the part of the Corporation. Rather, it relates to differing interpretations of statutory provisions governing appointments within State corporations," AFC said.
The corporation added that the matter has since been clarified through engagement with oversight institutions and legal interpretation of the applicable laws. It also noted that AFC now falls under the Government-Owned Enterprises (GOE) Act, which has streamlined the appointment of chairpersons and board members across State corporations.
Mr Mruttu is a veteran politician who served as the first Governor of Taita Taveta County between 2013 and 2017. He lost his re-election bid in 2017 to Granton Samboja. Before entering elective politics, he held senior positions in the public and private sectors and has remained active in regional development and agricultural initiatives.
Established in 1963, AFC is a State-owned development finance institution mandated to provide credit to farmers, agribusinesses and agricultural value chain players.
The lender plays a critical role in financing food production, mechanisation, irrigation and livestock development, making it one of the government's key vehicles for supporting Kenya's agricultural sector.
