MPs want Kimunya, Ndung’u out over currency printing deal

De La Rue had received a down-payment of $25 million for printing the currency, which it used to service the CBK’s worn out currency notes.

The security printing firm said it suffered no losses from cancellation of the contract and promised not to institute legal proceedings against the state if the 10-year joint venture to exclusively print Kenya currency is agreed.

Prof Ndung’u is accused of failing to make any effort to resist Mr Kimunya’s orders to cancel a cheaper contract when the Treasury was not party to the contract.

“Prof Ndung’u did not make any effort to resist Mr Kimunya’s directive to cancel the contract. In so doing he failed to protect the bank’s independence and taxpayer’s interest,” the report says.

The committee concluded that Prof Ndung’u and Mr Kimunya are responsible for loss of the money and must be held accountable.

“Mr Kimunya and Prof. Ndung’u having been responsible for the loss of Sh1,830,909,616 acted contrary to provisions of Chapter 6 of the Constitution of Kenya, the Public Officer Ethics Act and the Public Procurement and Disposal Act and in that respect and for this reason, they are not fit to hold public office,” the committee concludes.

The MPs want Article 231 (3) of the Constitution brought into force to enable the Central Bank to competitively procure banknotes as and when required without direction or control by any person or body. The section secures independence for the bank.

“The delay in finalization of the joint venture should not be a reason for direct procurement of banknotes from De La Rue at a price that is not competitive,” the report says.

On the proposed Joint Venture, in which De La Rue has demanded a 10-year contract to print Kenya’s currency, the committee said several anomalies relating to the draft joint venture agreement must be correct before it proceeds.

“The joint venture should only proceed upon fulfilment of some conditions and must not tie CBK into signing a 10- year (exclusive) currency printing contract with De La Rue.”

Such a clause, the report says, would be in contravention of government procurement regulations and procedures and cannot guaranteed the bank a fair market price for currency printing.
The report also delves into issues of capacity, machines and technology in use at De La Rue’s Ruaraka plant saying the Nairobi plant lacks capacity to effectively and efficiently print huge volumes of banknotes with enhanced security features.

“This is why De La Rue preferred printing 1.71 billion pieces of banknotes in Malta and not Ruaraka,” the report says.

The committee has further recommended that the complex structure of De La Rue be addressed demanding that the web of companies claiming to be its subsidiaries must exit.

“One subsidiary of De La Rue International keeps changing its name from time to time.

The committee fears that the multiple change of name by the Ruaraka plant may have been intended to camouflage itself against liabilities. In future, the company’s creditors could lay claim to De La Rue’s assets to be born out of the joint venture, thereby putting the Government of Kenya’s investment at risk,” the report warns.