De La Rue team queries report on Sh1.8bn loss

• The UK company said the alleged loss was the difference between the cost of producing new generation money and that of printing the old notes, which had fewer security features.
• De La Rue, however, welcomed the Parliamentary Accounts Committee (PAC) backing of the proposed joint venture in which the government is to spend Sh655 million to acquire a 40 per cent stake in the firm.
• De la Rue said biennial reviews embedded in its long-term contracts with CBK ensured the contracts were not far off prevailing market conditions.

Currency printer De La Rue has dismissed a parliamentary committee’s finding that Kenya lost Sh1.8 billion through stop-gap money printing orders with the firm.

The UK company said the alleged loss was the difference between the cost of producing new generation money and that of printing the old notes, which had fewer security features.

“This is mythical loss. It never actually happened,” said Douglas Denham, the firm’s commercial legal director.

De La Rue, however, welcomed the Parliamentary Accounts Committee (PAC) backing of the proposed joint venture in which the government is to spend Sh655 million to acquire a 40 per cent stake in the firm.

“The long-term agreement of ten years to print currency for Central Bank of Kenya is a pre-condition. We are yet to negotiate terms of the long term agreement with CBK,” said Denham.

He reiterated that the company would divest from printing currency to security printing, including that of cheques.

“Closure of the currency printing will result to job losses,” he added.

However, De la Rue said biennial reviews embedded in its long-term contracts with CBK ensured the contracts were not far off prevailing market conditions.

“Previous long-term agreements between De La Rue and CBK have contained provisions for biannual review of banknote prices in light of prevailing market prices and technological advancements,” said Stephen Prior, the company’s area sales director Africa Prior said.

The UK security printer accused the committee of deliberately ignoring the Ruaraka factory’s contribution of Sh1.25 billion to the economy through taxes, wages and local purchases.

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De La Rue said documents it had presented to the committee in May to back this were not appended in the PAC report.

De La Rue said PAC had erred by comparing pricing for new generational bank notes and that of current generational notes.

“The cost of printing two bank notes is very different. For instance, it cost Euro’s 100 to print 1,000 banknotes while it costs less to print the Kenya Shilling yet Euros have foils unlike the Shilling. The composition of the notes makes the price difference,” Mr Denham added.

The officials said there was no loss arising from the cancellation of the tender to supply 1.71 billion banknotes from Malta because the Central Bank of Kenya would have paid more for shipment, security and storage of the consignment.

“This logistical issue was not foreseen in the tender agreements,” Mr Denham said.