PS reveals pressure to sway money printing deal in Kenya
Former acting Central Bank governor Jacinta Mwatela was blocked from printing new currency notes after interest groups exerted pressure for the cancellation of an existing contract with De La Rue.
Mrs Mwatela was barred from ordering the printing of new currency in view of a stock out on the grounds that her signature had not been authorised to appear on the notes.
She had been allowed by the Treasury and a Cabinet sub-committee to set in motion plans for the procurement, pending the authorisation.
“There was a lot of pressure on the Central Bank and even Treasury. I remember somebody calling me to say, Mr PS, are you aware of this contract for printing money?
I told him the right place for an inquiry would be the Central Bank,” Mr Kinyua told the Public Accounts Committee (PAC).
The authorisation — usually given by the President — did not come through and instead Prof Njuguna Ndung’u was appointed governor.
It was only then and after the director of currency, Lukas Ogolla, was replaced with a Mr Chege, PAC chairman Boni Khalwale said, that new bank notes started being printed.
“You withheld the signature to flag off the process of procurement and Mwatela could not proceed. Even after numerous reminders from CBK to you and the minister, you refused to reply thereby occasioning a stock out of currency until the Director of Currency, Mr Lukas Ogolla, was removed and replaced by a Mr Chege,” said Dr Khalwale.
His assertions appear to have been informed by testimony from Mrs Mwatela who requested the committee to hold its session in camera on Thursday. She had said her life would be in danger if she testified publicly on the De La Rue currency printing tender.
The committee alleged that key officials in government were lobbying to have the money printing tender awarded to a French firm instead of De La Rue.
“We have information that Mrs Mwatela was allegedly pressurised by former State House advisor, Stanley Murage, who questioned why the contract was awarded to De La Rue,” Dr Khalwale said.
The jostling only stopped after a meeting between the Central Bank, the Treasury and President Kibaki where the Head of State ordered that the contract be given to the winning bidder. Mr Kinyua admitted the meeting took place, but said the contract was held up for other reasons.
“In 2006, CBK was told to hold on because the bank made a presentation to the President to print new currency with new security features. They wanted new redesigned notes,” he said.
The committee said two weeks ago that the cancellation of the contracts and recourse to piecemeal arrangements with De La Rue for replacement of defaced notes has so far cost taxpayers more than Sh2.7 billion.
The committee now believes that a deliberate scheme was hatched to award the contract at a higher cost for influential persons to make a killing.
Former Finance minister Amos Kimunya is alleged to have written to CBK asking it to cancel the contract on the understanding that De La Rue would not pursue damages for the revocation.
Mr Kimunya is yet to appear before the committee.
The contract was cancelled after the government had paid De La Rue a deposit of $25 million for the supply of new currency.
The contract won by De La Rue in which currency was to be printed in and shipped from Malta would have been three times cheaper than under a previous 10-year (1991 to 2002) contract on which the short-term contracts continued to be based.
“As a result of the decision to resort to interim orders to replace dilapidated currency, the public lost over Sh2 billion,” the committee said, asking Mr Kinyua to take personal responsibility for the loss arising from a letter he wrote to CBK on May 22, 2006.
Mr Kinyua said the responsibility lay with the government, which in 2003 rescinded the renewal of the De La Rue contract signed the previous year during President Daniel arap Moi’s administration.
He said he could not be held responsible for Treasury’s actions in 2006 because he was then the permanent secretary in the Ministry of Planning.
“The Cabinet sub-committee on Finance deliberated on the issue of printing currency in an election year since the Malta currency was to be delivered in 2007 and decided to cancel the contract,” Mr Kinyua said.