Corporate Scandals: an Analysis of the Legal Framework of Corporate Governance in Kenya

Abstract

The study has examined the legal framework of corporate governance in Kenya. It has highlighted the corporate scandals that have brought down big companies, in the United Kingdom, Maxwell, Polly Peck, Barrings, in the United States, Enron, WorldCom and Tyco International that led to the above-mentioned countries to come up with corporate governance practices that are appropriate. Kenya’s entities have had a history of poor governance system with about 70% of the scandals attributed to weak corporate governance practices, lack of internal controls, and weaknesses in regulatory and supervisory systems. The study analyses the laws and corporate governance codes of best practice that have been adopted in Kenya and whether they comply with international standards while at the same time addressing Kenya’s specificities and reform needs. Lastly, the study based on the findings of the analysis of the situation in Kenya offers recommendations for reform on the laws governing corporate governance in Kenya and suggest ways of promoting good corporate governance practices.