The procurement watchdog on Wednesday kicked off closed door-hearing of a landmark case challenging the award of a multibillion shilling tender for printing new look currency to British firm De La Rue International last year.
Swedish firm Crane AB, through lawyer James Gitau Singh accuses Central Bank of Kenya (CBK) of breaching the Constitution and lacking transparency in awarding the deal to De La Rue International under the guise of 15 per cent margin preference for having local shareholding.
The company further argues the award will burden Kenyan taxpayers with higher costs against best practice.
The UK firm has had a stranglehold on the business except for the period between 1966 and 1985 when notes were printed by UK firm Bradbury Wilkinson, later acquired by De La Rue.
“The procuring entity (CBK) failed to give all tenderers an open and transparent opportunity at winning the award, thus compromising the integrity, fairness, transparency and accountability of the process in violation of the stated objectives of the Public Procurement and Disposal Act 2005 as enumerated in Section 2 of the said Act and Article 227 of the Constitution of Kenya,” argues Crane AB in a petition before the Public Procurement Administrative Review Board.
The Swedish firm, world’s largest privately owned banknote paper-maker, claims the CBK, represented by lawyer Ochieng Oduol, abused the principle of preferred margin to unfairly undercut competition in favour of De La Rue, ensuring the firm had the lowest evaluated price despite not having any local nexus.
“By ensuring (De La Rue International Ltd) was awarded the tender despite not being the most competitive bid, the procuring entity acted in contravention of the Constitution and such an award cannot be upheld,” it argues. The production of new currency notes that do not bear the images of former presidents was supposed to start after passage of the 2010 Constitution.
The planned replacement will cost Sh18 billion, according to CBK governor Patrick Njoroge.
The case, which CBK sought to be heard in camera citing national security, is an acid test for the bank, which has never successfully floated competitive international tender since it was established in 1966.
In June 2014, the CBK sought a short list of currency printers through a tender that was to see De La Rue lose its exclusive cash printing rights.
It failed because it did not attract bids.