Shilling debate put off as MPs clash

House debate on the rapid weakening of the shilling was interrupted several times amid claims that the Clerk’s office had doctored recommendations of a parliamentary committee.

Trade Minister Amos Kimunya interrupted Wajir West MP Adan Keynan, challenging his assertion that the Central Bank of Kenya allowed commercial banks to make millions in profit by trading in cheap money borrowed from the public. (READ: CBK on the spot over shilling decline)

The MPs were involved in heated exchanges as the chairman of the committee that inquired into matter, Mr Keynan, sought to introduce the motion.

Deputy Speaker Farah Maalim was forced to adjourn the motion after one of the committee members Martin Ogindo alerted him that some annexes were missing from the report circulated to MPs.

He told the Deputy Speaker that the missing pages made the report incomplete and they needed time to know how the omissions had been made.

Mr Keynan introduced the report that showed that commercial banks borrowed Sh600 billion from the Central Bank at 10 per cent and later lent it back to government at the rate of 26 per cent.

He said the report, “indirectly” sourced from the CBK, showed that while in 2010 banks borrowed Sh11 billion, they borrowed Sh600 billion last year.

“Because of the inaction of the CBK, a number of banks obtained free money and this I can show from this list from the CBK and which even the governor does not know that we got,” Mr Keynan said. (READ: How banks nearly led to shilling’s fall)

But Mr Kimunya demanded that Mr Keynan be asked to authenticate the document since it was not part of the report he sought to have debated.

After numerous interruptions, Gwassi MP John Mbadi demanded that Mr Kimunya declares his interest in the matter leading to heated debate on whether some MPs were out to protect CBK governor Njuguna Ndungu.

Mr Maalim postponed the debate and ordered that the National Assembly Clerk publishes and circulates fresh copies of the report, and fully bind the copies.

As Mr Keynan initiated debate, he was interrupted repeatedly and even taunted by Mr Kimunya and MPs Jamleck Kamau (Kigumo) and Maina Kamau (Kandara) who sought to make sure that the initiation of debate was not coherent.

But Mr Kimunya responded; “As the member for Kipipiri, my interest is that of getting to the truth.”

The MPs said the contest in Parliament as a “fight” between those who had stolen public funds and were keen to protect their loot, versus, the rest of the MPs “who had no opportunity” to steal.

With the accusations flying, Mr Kimunya, and MPs Wilfred Machage (Kuria) and Kabando wa Kabando (Mukurweini) said the House had to halt the debate until the question of missing annexes was fully addressed.

The Joint Government Whip, Mr Jakoyo Midiwo, said there were “crooks” within Parliament who were intent on laying their hands on the committee report and water it down. He blamed “crooks” for the missing annexes.

“We knew that if we didn’t protect it, the crooks would get hold of it. The information so missing is so fundamental that the report loses its merit,” said Mr Midiwo.

According to Mr Keynan, KCB opened its doors to cartels in the economy at the height of the run on the shilling in 2011. As a result, the cartels and some commercial banks had access to over Sh600 billion of “free money” which it used to make a profit of Sh29 billion, within three short months.

Mr Keynan quoted key documents that he received from CBK deputy governor, Mr Harun Sirima, showing that the banks had accessed Sh600 billion in 2011, against Sh11 billion in 2010, through the Discount Window –a CBK facility to allow banks to access quick money at short notice to shore up their money.

That huge leap, he said, was evidence that the problem of a depreciating shilling was “designed and executed by the regulator of the financial markets”.

Mr Keynan revealed that the money borrowed from the CBK Discount Window at an interest rate of less than 10 per cent (circa eight or nine per cent), was used to buy Treasury Bills, which, would then be repaid at a rate of 26 per cent.

This means, that banks accessed taxpayers’ money cheaply, used it to trade with the same taxpayer at a higher rate, and pocketed the difference without breaking a sweat. That’s how Sh29 billion was made.

“If this is not an economic crime, I do not know what an economic crime is,” Mr Keynan told the National Assembly.

Mr Maalim, was forced to postpone the debate and order that the Office of the Clerk of the National Assembly, publish and circulate fresh copies of the report, and fully bind those copies.

“There were certain lapses and this report is not complete,” said Mr Maalim as he ruled on the report.

Assistant minister Muriithi Ndiritu and Mr Njoroge Baiya (Githunguri) had sought to stop the debate saying that the CBK ought to be independent. They had obviously overlooked the oversight role of Parliament.

“How can anyone justify Sh600 billion of taxpayers’ money being given to private commercial banks to do business with?” posed Mr Keynan.

He said the only condition under which such large sums could be given to banks, given that it is almost sixty times the amount accessed in 2011, is if the banks were under financial duress of insolvent proportions and need to be put under receivership.

Otherwise, he said, this was “free money”, given to banks to engage in arbitrage and make profits. That scheme, Mr Keynan said, was hatched and executed within the walls of the Central Bank. He warned MPs not to stifle debate just because of regional, tribal or personality cult tendencies.

“I want to see those who will say the interest rate of 32 per cent is justifiable,” said Mr Keynan as he warned MPs that Kenyans had suffered under the exploitation by banks over the high interest rates.