Kimunya pulls Kibaki into De La Rue money printing saga
Photo/Billy Mutai
Transport minister Amos Kimunya during questioning by the Public Select Committee on Finance on the De La Rue currency printing tender at Parliament Buildings in Nairobi on April 17, 2012.
The controversial currency printing deal, whose cancellation cost the taxpayer more than Sh2 billion, on Tuesday took a new turn after a parliamentary committee was told of President Kibaki’s involvement in the decision.
Former Finance minister Amos Kimunya said political and security risks forced the Treasury to cancel the currency printing contract with De La Rue and to buy a stake in the UK firm.
Mr Kimunya, now the Transport minister, told the Public Accounts Committee that Mr Kibaki supported cancellation of the off-shore printing contract because of the high risk exposure that would have left the Central Bank with 1.7 billion freshly printed notes to transport from Mombasa to Nairobi for safe keeping in an election year.
The minister said Mr Kibaki supported the cancellation of the contract after he was briefed on the challenges that the CBK faced in securing the large amount of new generation notes, the absence of a substantive governor and the risk of his government being accused of printing money to finance his re-election campaign.
“We would have exposed ourselves to allegations of printing money to rig elections through vote buying and there was already talk by politicians that Nairobi Securities Exchange was being used to launder election money,” Mr Kimunya said.
“We agreed that the delivery of the notes be rescheduled to January 2008 and it is on that basis that I wrote to CBK to stop De La Rue from supplying the currency.”
De La Rue’s three-year currency printing contract with the government lapsed before the January 2008 date and the UK firm warned of its looming exit from Kenya, forcing the government to enter into a joint ownership deal that is at the centre of the parliamentary investigation.
The minister said the decision to buy a stake in the firm was to have Kenyan currency printed locally and to secure 300 jobs.
Until then, De La Rue had been printing the notes in the Malta Islands and shipping them to Kenya, a deal the minister said left the CBK with a logistical nightmare of transporting and securing the new notes.
Mr Kimunya told the parliamentary committee that the decision to cancel De La Rue’s offshore currency printing contract was also informed by the Cabinet’s approval in 2006 of government plans to buy a 25 per cent stake in the UK firm.
“There was no need to have a parallel contract running hence the decision to cancel the deal to supply the 1.7 billion new generation notes,” he said.
Mr Kimunya, who presided over the Treasury from 2006 to 2008, said the then acting Central Bank of Kenya governor Jacinta Mwatela had exerted sustained pressure to have the currency printed without considering the logistical challenge of shipping in and storing the 1.7 billion new generation notes from Malta.
The minister maintained that the taxpayers risked incurring great loss had the printing contract been executed and that a sudden introduction of the new currency notes in the market would have required expensive mop up and storage of old generation notes.
“Banks would have been required to realign their ATMs to the new notes and the CBK would have been forced to immediately find storage for the new and old notes,” he said adding that the contract as designed would have required a redesign of the currency after three years because it gave De La Rue the patent rights over the notes.
Mr Kimunya said although he worked with Mrs Mwatela until he exited the Treasury in 2008, her insistence that the money be printed using her signature was untenable.
