PAC calls for resignations over banknote procurement

10 August 2012

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12 August 2012 | Kamalpreet Badasha

The Kenyan Public Accounts Committee (PAC) has called for the resignation of transport minister Amos Kimunya following a report into the procurement of new banknotes.

The MPs have also called for the departure of the governor of the Central Bank of Kenya, Njuguna Ndung’u, for “failing to protect the bank and taxpayers’ interest”. The PAC report said neither man was fit to hold public office, having cost taxpayers more than Kshs1.8 billion (US$21 million) when they terminated a deal.

The report investigated currency printing contracts made between the Central Bank of Kenya and commercial printer De La Rue.

It found there was no competitive tendering process in 2002 following the expiration of a 10-year contract between De La Rue and the Central Bank of Kenya. Instead a further 10-year contract was agreed. But the then minister of finance David Mwiraria cancelled this contract in 2003 and called for a competitive process.

De La Rue won the contract for printing banknotes following a competition in May 2006. This contract was worth Kshs3.8 billion (US$45.2 million), but was subsequently cancelled by Kimunya. He gave multiple reasons to the committee as to why he terminated the deal, saying it was “disastrous”, and that officials at the Central Bank were “incompetent and not up to the task” of negotiating the contract. But the MPs dismissed these reasons as invalid.

Since October, four interim orders for banknotes were made costing around Kshs5.6 billion (US$66.6. million), which when compared with the value of the original contract cost taxpayers an extra Kshs1.8 billion ($US21.8 million).

The PAC also said Kimunya had breached the Public Procurement Disposal Act which prevents ministers from instructing the central bank on purchasing issues.

The report recommended the Ethics and Anti-Corruption Commission investigate both Kimunya and Ndung’u with a view to taking legal action against the two men and trying to recover the money lost as a result of their actions.

De La Rue said it was with some regret that it it was necessary to respond publicly to the report but that it contained certain errors and some omissions. In particular, it said, it has delivered value to Kenyan taxpayers. "In the last 5 years De La Rue has contributed over 5 billion shillings to the Kenyan economy delivering a total benefit of over 35 billion shillings since 1992."

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