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Opinion & Analysis

De La Rue: Wisdom of disclosure in policy

On August 18, 2016 the Treasury signed a joint venture agreement with the UK’s De La Rue subsidiary in Kenya.

The inking of the deal which was given a go-ahead by the Cabinet on July 28, 2016 effectively shutting out Parliament from interrogating the same effectively grants the government a 40 per cent investment stake in the printer.

This will see the government pay the UK firm Sh658 million. The government is expected to earn dividends from the revenue generated from the regional and local printing contracts.

Concerns have been raised that there are questions around the decision to exclude Parliament from the oversight.

Treasury Cabinet Secretary Henry Rotich has, however, indicated that the fundamental issues previously raised by the Public Accounts Committee especially on the long-term contract and raising the stake to 40 per cent had been addressed.

He is quoted stating that the deal had separated the investment aspect from contracting by ensuring that the deal had no exclusivity clauses, hence the printing firm will be subjected to competitive bidding for any arising contracts by the Kenya government.

The firm has for decades printed Kenya’s bank notes without going through the strictures of competitive bidding and it remains to be seen how the Kenya government is going to subject a firm it has substantial stake and fiscal interest to competitive bidding with other firms it has never contracted with and has no interest of whatever nature in.

Article 10 of the Constitution requires that when making or implementing public policy decisions the State Officers, State Organs, Public Officers and all persons shall take into consideration democracy, participation of the people, inclusiveness, transparency and accountability among other national values and principles.

Article 232 (1)(d) states that people shall be involved in policy making. Article 201(a), (d) and (e) respectively further states that there shall be openness and accountability, including public participation in financial matters, public money shall be used in a prudent and responsible way and that financial management shall be responsible with clear fiscal reporting. Article 232(i)(f) states that the public is entitled to transparency, timely and accurate information.

Also, the objective of the Public Finance Management Act, 2012 Act is to ensure that public finances are managed in accordance with the principles set out in the Constitution (Articles 225 and 226); and that public officers who are given the responsibility to manage the finances managing those finances through the Parliament in the instance of national government.

Going by Section 6, the Act prevails over any Act in matters to do with raising of revenue and importantly making of expenditures.

Under Section 7(d) the National Assembly Budget Committee has a responsibility to among others monitor adherence by the national government and its entities, Parliament and the judiciary to the principles of public finance as set out in the Constitution and to the fiscal responsibility principles of the Act. Section 15(1) provides that the National Treasury shall manage the national government public finances in accordance with the Constitution and fiscal responsibility principles.

Section 196(1)(3) and (4) outlaws public officer’s expenditure of public money, entering into any obligation that has financial implications or entering into any transaction that binds or may bind the national government entity to any future obligation otherwise than authorised by the Constitution or an Act of Parliament.

Section 197(i)(h) makes it a financial misconduct offence for any officer to incur expenditure or make a commitment on behalf of the government or government entity without lawful authority.

Further the objective of the Public Procurement and Disposal Act, 2015 Act is to give effect to Article 227 of the Constitution; to provide procedures for efficient public procurement by public entities.

Whereas the disclosure so far done by the National Treasury is appreciated, the prevailing public opinion is that there is a need for further and full disclosure.

It has always been said that the devil is always in the detail. This may be the same with the De La Rue deal. As such and more so due to the fact that the deal has not been interrogated.

It’s only by doing so that the transaction will be able to be seen to be above board, secure the required public confidence and legitimacy and be felt to have met the strict transparency and accountability provisions, principles and values stipulated by the Constitution and other sections of the law.

The author is an Advocate of the High Court of Kenya. Email: [email protected]

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