Kenyan bank chief resigns over pension scandal

NAIROBI, Kenya -- The governor of Kenya's Central Bank resigned Tuesday in a widening scandal over the collapse of a private bank that held millions of dollars in public pension funds.

Nahashon Nyagah, 47, stepped down amid accusations that he failed to prevent the loss of $17.9 million that state-owned companies and institutions deposited in the Euro Bank, which collapsed last month.

The head of the Central Bank is the second high-ranking government official to resign over the scandal.

On Monday, John Munge, commissioner-general of the Kenya Revenue Authority and co-owner of Euro Bank, resigned his government post, saying the allegations made it difficult for him to lead the government's tax collection agency.

Pension funds from Kenya's largest hospital and other state-owned health institutions lost $12.6 million that was deposited in Euro Bank. The money was placed with the bank during the administration of former President Daniel arap Moi.

Nyagah was appointed by Moi and worked at the Central Bank for more than 20 years.

After 39 years of rule by Moi's Kenya African National Union Party, a new government, led by President Mwai Kibaki, took office on Dec. 30 and pledged to fight widespread corruption and revive the country's economy -- the region's largest.

Kibaki appointed Andrew Mullei, executive director of the International Center for Economic Growth, an international research organization, to replace Nyagah.