MPs put minister on the spot over De La Rue purchase
The government is in talks to buy a 40 per cent stake in De La Rue, the company which prints the Kenyan currency. Acting Finance minister Njeru Githae was on Monday put to task by Parliament over why the government invested in the currency printing despite its technology being obsolete. Photo/FILE
Acting Finance minister Njeru Githae was on Monday put to task by Parliament over why the government invested in currency printing firm De La Rue despite its technology being obsolete.
MPs said other money printing plants worldwide enjoyed “a comparative advantage and low-cost structure” arising from efficient equipment than those installed 20 years ago at a factory based at Ruaraka in Nairobi.
“We are going to look at the issue of technology and to ensure that Kenya gets value for its money,” Mr Githae assured, adding that the plant still prints high quality currencies for other governments including replacement of defaced and dilapidated currencies for the Central Bank.
The Public Accounts Committee (PAC) chaired by Ikolomani MP Dr Boni Khalwale was questioning Mr Githae, Investment Secretary Esther Koimet and Treasury Permanent Secretary Joseph Kinyua over the proposed purchase of 40 per cent of the firm by the government.
The MPs said the government could procure printing services from other international firms at cheaper rates.
They also questioned why the government was spending 5 million pounds in a company whose equity and liabilities stood at 8.7 million pounds as at 2011, arguing that the 40 per cent stake should have cost pound sterling 3.5 million.
“Who is pocketing the balance 25 per cent? asked Dr Khalwale as Ms Koimet revealed that a government valuer had found out that De La Rue is valued at Sh2.2 billion.
Mr Githae had been ordered to appear before the committee yesterday to shed light on the proposed joint venture and the cancellation of three contracts with De La Rue by Central Bank after paying $25 million had been paid for printing new generation bank notes.
The Cabinet in its sitting on May 29, 2007 approved a joint venture in currency printing between the government and De La Rue Currency and Security Printing Kenya Limited, with De La Rue International (UK) retaining 75 per cent ownership and the government 25 per cent shareholding in the company.
This was latter reviewed upwards by the Cabinet sub committee on Finance Trade and Planning chaired by Prime Minister Raila Odinga and presented to the Cabinet which gave its approval in September 2011.
“Negotiations have been completed. The government will own 40 per cent while De La Rue holds 60 per cent stake. A new company will be formed into which De La Rue will vest all operating assets of De La Rue (Kenya) Ltd plus 2 million pound sterling in equity to fund the initial working capital,” Githae added.
The new company – De La Rue EPZ Kenya Limited – will be managed by De La Rue under the chairmanship of the government.
Key conditions include a grant of an Export Processing Operators Licence to the new company under the Export Processing Zones Act.
Mr Githae said that the down payment of $25 million paid to De La Rue for printing new generation notes was not returned because it would finance the replacement of old, defaced or dilapidated notes on a short term basis.
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