Files on money printing deal destroyed

Files crucial to an investigation into a controversial money-printing deal between the government and a British money printing firm are missing.

The files on the agreement between the government and De La Rue were presented to Parliament as part of an inquest into the deal carried out two years ago.

But when a member of the Finance, Planning and Trade Committee went to get the records this week to support the inquiry by the Public Accounts Committee, he was told that the records “were destroyed”.

Mr Shakeel Shabbir, who sits on the Finance committee, disclosed the information to the Public Accounts Committee as the team poked holes in the multi-million-shilling venture the government wants to enter into with De La Rue to set up a holding company where the Central Bank will print new notes.

“The committee had found out that the machinery was second-hand, old and bought from Indonesia many years ago. The technology itself was analogue and therefore obsolete,” Mr Shabbir told the PAC in the presence of Finance permanent secretary Joseph Kinyua.

The MP insisted that because of the technology, the firm could not print notes that could be “accredited internationally”, as the security features were below par. Tanzania and Uganda, the MP added, had ditched De La Rue. He asked why Kenya was eager to get into business with the firm.

Mr Shabbir insisted that De La Rue’s pricing was high. He said Mr Kinyua had written to the Finance Committee and “offered a trip to London to meet De La Rue”.

“We did not take that trip, but why was the trip planned? What was it meant to achieve?” asked Mr Shabbir.

It was a tough Thursday evening for Mr Kinyua and Investment Secretary Esther Koimett as they tried to explain why the government thought a joint investment with the money printer was not only viable but also “strategic”.

Mr Kinyua told the PAC the trip offered to the Finance Committee was meant to take MPs to the headquarters of the British firm to see the technology used.

“It was not meant to lure you,” the PS said.

He added that part of the work, as far as money-printing is concerned, is done in Britain at De La Rue’s main plant, while another part of the job is done in Kenya.

PAC chairman Dr Boni Khalwale led his team, including Dr Julius Kones and Mr Charles Onyancha, in asking why the Treasury saw it fit to go into a joint venture when the Central Bank itself was not in a crisis.

“Who told you that these people needed a joint venture? The Central Bank did not advise you to go that route, and De La Rue did not propose it,” said Dr Khalwale.

A hard-pressed Mr Kinyua told the committee that the joint venture was the Treasury’s idea.

He said it was a result of “extensive research” that revealed that such a venture would be strategic for the country’s economic stability. The idea, he said, was then presented to the Cabinet, which made a decision to acquire a 25 per cent stake in De La Rue.

The impression Mr Kinyua created was that the government wanted a stake so that whenever it wanted to print money, the Central Bank would just order new notes and not have to worry about the cost or the logistics of delivery to its vaults, because it would be done in a partially government-owned facility.

Mr Onyancha wanted to know why it took four years from 2007 when former Head of Civil Service Francis Muthaura issued the directive to 2011 when De La Rue assets were evaluated. The need to conduct due diligence, he was told. He also said the figures did not add up.

Ms Koimett told the team how hard she and Mr Kinyua work for Kenyans, saying the PS arrived at the office at 4 am and called her at 5, and she leaves at 9 pm.

“It’s a miracle some of us have not been divorced,” she said.

Treasury officials said the government had wanted a 25 per cent stake, but the House team pushed for more. But when they went to De La Rue, the firm said it was not interested in the deal unless the government’s stake was capped at 40 per cent.

That done, the process began afresh.