Former and current top African Development Bank (AfDB) officials are hounding Vivienne Yeda out of her position as East African Development Bank (EADB) Director General.
Despite navigating the institution through impossible financial storms and turning it around from a near insolvency, Ms Yeda has had to spend the past 10 months fighting to keep her job and her reputation as a banker.
Ms Yeda’s arch nemesis appears to be former AfDB chief and director of cabinet Anne Kabagambe, who has immense influence in the continental bank and connections in Uganda President Yoweri Museveni’s State House.
Sources a AfDB say Kabagambe left AfDB unceremoniously after she was fired by the bank’s new president Akinwumi Adesina.
While most members of the EADB board are neutral on the war, our sources say that AfDB representative in the board Trevor de Kock is Kabagambe’s foot soldier. Also in Kabagambe’s corner is Rwandese Permanent Secretary for Finance and Economic Planning Caleb Rwamuganza.
Uganda’s Secretary of Treasury and Permanent Secretary for Finance, Planning and Economic Development Keith Muhakanazi is on Yeda’s side.
Although he has allowed motions against Yeda to be introduced in board meetings against procedure, Kenya’s Principal Secretary for Treasury Dr Kamau Thugge, who is the current chair of the EADB board, is playing his cards close to his chest.
A lawyer who started her career at one of Kenya’s oldest and most respected corporate law firms, Daly and Figgis, Yeda took the helm at EADB in January 2009.
In just 12 months, she pulled the bank from two straight years of losses to record a profit of US$1.85 million (Sh185 million). Six years down the line, the bank’s profitability had increased by a whopping 360 per cent to US$6.67 million (Sh667 million).
Contrary to the financial indicators, a group of faceless EADB staff allege that Yeda has mismanaged the bank and stifled its growth. In fact, the board called in top global auditing giant Ernst and Young in December 2016 to conduct a forensic audit on the bank to establish the veracity of the allegations, giving the anonymous staff a first round victory.
But correspondence seen between EADB staff and AfDB officials, as well as interviews with insiders and other sources familiar with the goings-on in the bank, reveals that the allegations are part of a well-choreographed drama whose planned climax is to have Yeda sacked by the board.
The epicentre of Ms Yeda’s woes has been traced to Abidjan, Ivory Coast, where a transition in top management was happening in AfDB head office in 2015.
Donald Kaberuka’s term as AfDB president had just ended, and in May, the bank’s annual meeting elected former Nigeria Minister for Agriculture Akinwumi Adesina as the incoming president.
Adesina’s term was to begin in September 2015. When he reported to work on the first day of that month, he stirred a storm in the bank’s senior management that would ripple across the continent – eventually affecting Anne Kabagambe.
The first act in office by the former Africa’s most loved agriculture minister was a shake-up of top management. On the same month, he announced that he had appointed Dr Sipho Moyo (pictured left) as the chief of staff and director of cabinet.
Just like in governments, the chief of staff and director of cabinet at AfDB is the highest-ranking member of staff and works as the president’s secretary. She keeps the president’s diary and has oversight on the bank’s operations on behalf of the president. He also keeps the records of the president’s meeting with his cabinet, which comprises of the various vice presidents.
By appointing Sipho to that position, Adesina gave a quit notice to Kaberuka’s head of staff, Kabagambe. She would have to look for another job or end up jobless.
Kabagambe’s rise to the position of Chief of Staff under Kaberuka is a mystery. Before Kaberuka became the president, she was a junior clerk in the bank pushing paper in as directed by her bosses. Her position was corporate officer.
In spite of her position, Kaberuka would appoint her as the Chief of Staff a position that put her above her former bosses.
Moyo on the other hand is a respected globally economist with a PhD from the prestigious Howard University of USA. Before she took over from Kabagambe, she was the Africa director for One Campaign, a global advocacy group that works to eliminate extreme poverty. Moyo has also worked for AfDB as the country manager for Tanzania. She also worked with the UN and the World Bank and is a council member in Global Agenda Council of the World Economic Forum.
According to the documents and correspondence we have seen and interviews with EADB insiders, the quit notice to Kabagambe catalysed the management wrangles at EADB, pitting the bank’s senior staff against Yeda.
So what does the transition in AfDB have to do with EADB?
The answer lies in EADB shareholding. AfDB is the biggest institutional shareholder at EADB with a 15 per cent stake. Other big shareholders are four East Africa Community member states – Kenya, Uganda, Tanzania and Rwanda.
AfDB also has one seat in the EADB board owing to its shareholding. In other words, Kabagambe saw the EADB director general’s position as her potential soft landing once the job at AfDB was over.
When Adesina appointed Sipho, a flurry of emails started flying between Kabagambe and the AfDB representative at the EADB board, de Kock, who is a South African. Kabagambe also exchanged volumes of emails with other AfDB officials in Uganda where EADB has its headquarters. The exchanges on official AfDB staff emails started in September and went on until end of October when she left the bank, shifting her communication with the two banks’ officials to her personal email accounts.
The contents of emails were on various aspects of Yeda’s work at the bank, or the state of EADB.
In one of the emails, a plan to assess EADB operations and performance was mooted. The assessment was to be conducted by AfDB in the Uganda country office and was to look at the EADB risk profile, the balance sheet and human resource capacity.
According to the plan, the assessment was to be done at about the time that Yeda’s contract as director general was coming up for review.
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The assessment report would then be tabled at the EADB board and would serve to be used to mobilise other board members to sack Yeda.
Among those who were involved in the scheme were de Kock, AfDB Uganda country manager Jerry Mutonga and Juliet Byaruhanga, who works at AfDB Uganda country office. Incidentally, apart from de Kock, the other AfDB officials involved in the scheme were Ugandan.
Kabagambe is a Rwandese who was born and brought up in Uganda.
But there was a problem. No one in the group planning the assessment knew when Yeda’s contract was up for review. Through guesswork, the group agreed to have the assessment conducted in 2016, when the bank would have released its financial results for the 2015 financial year.
In March, AfDB Uganda country office wrote to Yeda informing her of their intention to conduct an assessment. Unaware of the scheme that had been hatched, the director general welcomed the assessment, hoping that it would help the bank improve its performance.
Towards the end of April, AfDB officials went to EADB and spent three days poring through bank computers, documents and talking to staff.
Leading the assessment was Ghanaian Daniel Ansah, AfDB’s manager, Portfolio Management Division but the report of the exercise was signed by Samuel Mivedor, another portfolio manager.
Curiously, after AfDB did its assessment they did not seek responses from Yeda as is customary practice.
Insiders say that contrary to the norm, AfDB officials chose to sidestep her and hand the assessment report to the EADB head of internal audit, Aguma Mpairwe.
“She was kept in the dark about the report and only saw it when it was tabled in a board meeting in June 2015,” said one source who requested anonymity.
From Mpairwe, the report would be shared with Rwandese and Ugandan senior staff including head of risk Jean Marie Gacadanga, head of human resource Gloria Tumwiine, EADB Uganda country manager Duncan Mwesigye can and head of finance Valentine Ojangole.
Yeda’s private secretary Victoria Kalibala also received the report from Mpairwe but she was advised to keep it out of her boss’ sight.
Unknown to Yeda also was the fact that Ojangole and Mpairwe had also written a good section of the AfDB report with a clear objective of fixing their boss.
Instructively, Mpairwe’s uncle Kenneth Kakuru who is a Court of Appeal Judge through his Eden International School is one of the EADB loan defaulters. The judge borrowed UGSh600 million (KSh60 million) from the bank in 2004 to fund the school project.
With the prodding and guidance from Kabagambe, this group would coalesce into the camp in management opposed to Yeda and would milk the AfDB report in their long-drawn campaign to have their boss thrown out of the bank.
Armed with the report, Gacadanga and Ojangole went to Kigali and booked an urgent meeting with Rwamuganza, the Rwandese permanent secretary of finance. In the meeting, they took the PS through the report creating the impression that the bank was in so much trouble.
Rwamuganza would later be reward Ojangole with a job at the Rwanda Development Bank for delivering for informing him about the supposedly worsening state of the bank. Ojangole is currently the Chief Finance Officer at the Rwandese bank.
The report was aimed at galvanising the top managers towards a coup that would depose Yeda from her position.
The group had been promised plum positions if they pushed through the coup against Yeda.
Gloria would have become the head of corporate affairs while Jean Marie would have become director of risk.
Mpairwe was to be promoted to the position of director of audit while Juliet was to take over as the new head of operations.
Had the plan gone through as planned, Mwesigye would have become the acting Director General awaiting Kabagambe appointment as Director General to be approved the East African heads of states.
It is not difficult to understand why the managers lurched on the plan by Kabagambe. Most of the them have a bone to grind with Yeda’s style of management.
Insiders we talked to said she follows the straight and narrow path in business, an approach that rubbed senior managers the wrong way.
“For example, she would not let anybody approve the procurement of anything in the organisation. Everything has to go through her desk, denying other managers a chance to harvest kickbacks. The managers understand that she is trying to prevent a spike in costs but they feel there is a better way of doing so without denying them an opportunity to make a quick buck,” said another source.
Yeda’s personality also played into her enemies’ hands. Those who know her say she does not have time for social interaction and only maintains a very small group of friends in Uganda.
This aloofness is not unique to Yeda. In fact, many lawyers who have practiced in big law firms such as Kaplan and Stratton, Anjarwallah and Khana or Daly and Figgis maintain the same kind of lifestyle where they have little or no social interactions.
They either spend their evenings in their offices poring through legal documents or carry with them mountains of documents to finish off the work at home. According to multiple sources, Yeda falls in the latter category.
She continues the lifestyle of carrying documents home to finish up what could not be done when she was sitting behind her director general’s desk – and in the process failing to connect informally with her staff and bank stakeholders.
“Yeda works in compartments. She does not mix her social life with her working life. She is the kind of person who does not socialise with her staff outside working hours. She gets to work, spends the day working on her desk behind closed doors and then heads home after work. Because she knows she can be easily set up, she prefers to keep the relationship with the bank clients above board and formal,” said our source.
Kenyans and Tanzanians and lower cadre Ugandans working at the bank were deliberately kept in the dark about the scheme against Yeda because it was not clear whether they would support the plan.
The real offensive against the director general started in June, a few days before the EADB board was scheduled to meet at Serena Hotel in Kampala.
The senior managers who had seen the report wrote a long letter whose contents were published in a Ugandan newspaper, where they accused Yeda of running down the bank through mismanagement.
Red Pepper, which is considered a tabloid in Uganda, was the first to publish the letter. However, we have established that having Red Pepper publish the contents of the letter first was part of a carefully planned communication strategy.
In the strategy, Red Pepper’s story – published four days to the bank’s board meeting – was planned to be the excuse for the two Uganda mainstream newspapers, Daily Vision and Daily Monitor, to publish a deeper story on the day of the meeting.
In the group’s calculations, the story would have created a communication crisis that would have forced the board to suspend Yeda. The thinking in the group was that if the story appeared in Daily Vision, which is owned by the Uganda government, it would have aroused Museveni’s attention; while appearing in Daily Monitor would have roped in Daily Nation of Kenya and The Citizen of Tanzania which are published by the same company, Nation Media Group.
Editors and reporters in the two newspapers had already “been talked to nicely” and provided with the AfDB assessment report.
But a strongly-worded response through the two newspapers by Muhakanizi to the Red Pepper story – where he dismissed the group’s allegations – put the ‘fear of God’ in the editors who had been roped in on the media strategy, and the stories were abandoned.
In the meantime, the group wrote a similar letter to the EADB board Chairman Dr Kamau Thugge, raising the same allegations and warning the board that it would be responsible if they did not act fast.
During the board meeting, which had been planned before the AfDB assessment was undertaken, the allegations cropped but this time they had mutated to include claims of threats on the “lives of whistleblowers.”
It was Rwamuganza, the Rwandese permanent secretary, who introduced the matter although it had not been listed in the board meeting’s agenda circulated several weeks earlier by Yeda.
But she had her way and the group of pre-selected managers excluding Kenyans and Tanzanians were invited to provide evidence on their claims and repeated the same allegations as the faceless group had made in Red Pepper and blogs.
Paradoxically, the management style that set up Yeda’s staff against her is responsible for the successful turnaround of the bank’s fortunes.
At the time of her appointment, the bank was facing a bleak future after posting depressing financial results for a decade.
So uncertain was the bank’s future that many top managers exited to avoid been rendered jobless in case the East Africa Community heads of state decided to dissolve it.
A look at the financial results over the last 10 years shows the bank plunged into loss-making in 1998 and stayed in that position for the next 10 years.
In 2007, the bank reported a US$8.85 million (Sh885 million) loss, just 12 months after it had reported a US$4.6 million profit. The bank lost another US$8.78 million (Sh878 million) the following year.
It is at this lowest point in the bank’s history that Yeda took over as the director general, in the process shouldering the task of breathing new life into the institution.
Turning the EADB around would not be easy, but to her advantage she knew her way around the bank and could easily locate the nuts and bolts that had gone loose. She had worked at the bank as the director of legal affairs before she left in 2006 to work as the AfDB country manager in Zambia.
To put the bank on the recovery path, she embarked on a multi-pronged strategy that involved cleaning the bank’s loan book, cutting down funding and operation costs and increasing interest income.
EADB financial statements show these were the key areas that had dragged down the bank in the two years of loss-making. In 2007, for example, the previous management’s failure to collect repayments pushed up the stock of non-performing loans or 30 percent of the bank’s loan book, forcing the bank to increase loan loss provisions by US$20.9 million (Sh2.09 billion).
In the same year, staff costs had increased by 20 per cent from US$5.2 million (Sh520 million) to US$6.6 million (Sh660 million) while, curiously, interest expense was on the rise. In the meantime, interest income for the year grew at a snail’s pace of three per cent.
The pattern was repeated in 2008; the only difference being the fact that interest income fell by six per cent. Loan loss provisions had increased by US$13.5 million (Sh1.35 billion) while staff costs rose by 15 per cent.
With Yeda as the director general, collections of loans improved such that the loan loss provisions dropped to US$3.6 million (Sh360 million) while interest expense and staff costs dropped by 45.4 per cent and seven per cent respectively, effectively turning around the bank in her first year.
EADB announced a US$1.851 million (Sh185 million) profit for 2009.
For six years, Yeda has kept her finger on the leakage holes, pushing down funding and staff costs while increasing collection and eventually cleaning up the bad loans. The results is that profitability has grown by 360 per cent during the period, earning the bank a positive international credit rating.
Here is what Moody’s, the independent international credit rating agency, said in 2015 when it upgraded EADB’s rating to Baa3 from Ba1 the previous year:
“On June 19, 2015, we upgraded the East African Development Bank’s (EADB) rating to Baa3 from Ba1 with a stable outlook reflecting the significant improvement in the bank’s capital buffers over the last few years, due to a material increase in paid-in capital from its shareholders; and marked progress in recent years in strengthening governance and risk-management policies and capabilities, which have resulted in a sharp decline in non-performing loans. The bank also benefits from a very strong liquidity position compared to similarly rated multilateral development banks, supported by its access to diversified and stable sources of funding.”
Baa3 rating means that lending to the organisation carries a medium credit risk while Ba1 means the credit risk is substantial.
Credits: Money and Markets