Kimunya used Kibaki’s name in De La Rue deal

Cabinet minister Amos Kimunya invoked President Kibaki’s name when he pushed the Central Bank to cancel the controversial money-printing contract that had been awarded to international money-printing firm, De La Rue.

However, the President reportedly denied that he told Mr Kimunya, the then Finance Minister, to stop the launch of new generation currency in 2007, because it was an election year.

The details of the President’s denial and the political intrigues are contained in the evidence adduced before Parliament’s Public Accounts Committee, which wants Mr Kimunya (now the Transport minister) and the Central Bank governor, Prof Njuguna Ndung’u, barred from ever holding public office.

Former acting governor of the Central Bank, Ms Jacinta Mwatela, told the committee that she met the President in January 2007. She raised the issue of launching the new generation banknotes, which was expected later that year, saying that she had been advised to delay it, because the President had reservations about it.

“The President, however, denied having ever told Mr Kimunya to tell the [Central] Bank not to launch new generation banknotes in an election year. In his wording, the President said ‘hapana sikusema”,” the PAC report, now in Parliament, says.

Not only did the minister reportedly use that excuse to cancel the tender, but he also said that the Cabinet, having approved a joint-venture between the Treasury and De La Rue, had gone ahead and pushed for the cancellation of the contract.

Two confidential letters from the Cabinet to the Attorney-General’s Office and the Treasury, pushing for the joint venture between De la Rue and the government, did not mention the contract. This made the committee suspicious, that perhaps, Mr Kimunya had “kept the Cabinet in the dark” regarding the pending money-printing contract.

“The Committee was not persuaded by Mr Kimunya’s evidence that the contract for printing 1.71 billion pieces of banknotes between Central Bank of Kenya and De La Rue was cancelled following a Cabinet decision as he did not produce any documentary evidence to the effect,” the committee says in its report.

Mr Kimunya is said to have deliberately blocked Ms Mwatela from executing the contract despite the fact that she was the acting governor. The minister waited until Prof Ndung’u was appointed, and then prevailed upon him to cancel the contract, and quickly ensure that the Central Bank got into a joint venture with De La Rue, including a 10-year guarantee for business.

“The Central Bank was strongly opposed to Treasury and De La Rue’s joint venture agreement under which the Bank would be tied by Treasury to signing a 10-year banknote printing contract with De La Rue International Ltd. This would contravene government procurement regulations and procedures as the Bank would not be guaranteed a fair market price during the ten years,” the PAC noted in its report.

“... the Bank was not part and parcel of the negotiations for the joint venture since the Central Bank of Kenya Act prohibits it from taking part in investments. In the circumstances therefore, the governor would not sign a contract tying the Bank to a ten-year currency printing contract with De La Rue Company.”

The committee notes in its report that when Prof Ndung’u was appointed, he was hesitant when it came to ensuring that the money-printing contract, which had already been awarded and a down payment made, was activated. Yet, the only item pending was the governor’s signature.

Mr Kimunya also told the committee that the Central Bank of Kenya did not have sufficient strong rooms and vaults to store 1.71 billion pieces of banknotes. He said that the money, which was being printed in Malta, would be shipped to the Port of Mombasa, all at once, and that it would have been difficult to get it to the Central Bank outlets in Nairobi, Mombasa, Eldoret and Kisumu.

Prof Ndung’u agreed that the volume of the cargo would occupy five times the space available, even if the Central Bank went ahead to lease more space at the Times Tower — the headquarters of the Kenya Revenue Authority.

According to De La Rue, 1.71 billion pieces of banknotes would occupy close to 85 40-foot containers.

But Ms Mwatela, who sat in the tender committee, which drew up the contract, said the money would be delivered in tranches. That would then explain why the Central Bank agreed on a delivery schedule for the money.

The committee got the delivery schedule on the signed contract which staggered deliveries between March, 2007 and December, 2009.

“The Committee further observed that since delivery of the banknotes was staggered, it was reasonably expected that when new deliveries are made, earlier deliveries would have already found their way into the market to replace the undesirable ones thereby giving space for storage,” the MPs noted in their report.

“The Committee made a finding that printing of the 1.71 billion pieces of banknotes in Malta would have taken more than a year and it would not have been prudent for De La Rue to pile up ready banknotes for a very long time before shipping them in one consignment.”

De La Rue, according to the contract, had the duty to deliver the money to Central Bank in Nairobi from their plant in Malta.