alexa Govt green-lights acquisition of De La Rue - Daily Nation

Govt green-lights acquisition of De La Rue

Monday September 2 2019

De la Rue

The new Kenyan bank notes in circulation are displayed on June 28, 2019 in Nairobi. De la Rue has a contract with the Central Bank of Kenya to print the new series of banknotes. PHOTO | SIMON MAINA | AFP 

WALTER MENYA
By WALTER MENYA
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The government has approved the intended acquisition of British security printer De La Rue’s Kenya business by American firm HID Corporation Ltd.

In a gazette notice, Competition Authority of Kenya Director-General Wang’ombe Kariuki said the government “has authorised the proposed transaction as set out herein on condition that existing contracts the target (De La Rue Kenya Ltd) has with the government are honoured”.

One such agreement with the government is the £85 million (Sh11 billion) three-year contract with the Central Bank of Kenya to print its new series of banknotes.

The deal was signed in October 2018 after the Court of Appeal on October reversed a High Court decision to quash De La Rue’s winning of the tender.

Besides banknotes, the company prints chequebooks and passports, debit and credit cards for a number of banks and security documents for financial institutions.

STRATEGIC GROWTH

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In the deal, HID Corporation Ltd, whose headquarters is in Austin, Texas, will take up 100 per cent of the De La Rue Kenya Ltd issued share capital.

In June, De La Rue announced on its website that it had agreed the sale of its International Identity Solutions business (‘International ID’) to HID Corporation Ltd (‘HID Global’) — an ASSA ABLOY Group company — for a cash consideration of £42 million (Sh5.3 billion) on a cash-free, debt-free basis, payable upon completion”.

“After assessing all options, we believe that exiting the end-to-end identity solutions market is the right one for the Group and will deliver the most value to shareholders,” De La Rue’s chief executive Martin Sutherland said back in June.

“Focusing on the identity-related security features and components is in line with our strategy to transform De La Rue to an asset light and more technology-led business. This transaction strengthens our balance sheet and allows us to focus on the other strategic growth areas of security features, polymer and PA & T.”

GRAFT PROBE

The government took a 40 per cent stake in the multinational’s local subsidiary (De La Rue Kenya EPZ Ltd) in 2018, paying £5 million (Sh654 million).

It is not clear if the American firm would also be taking up the government’s stake in the Kenyan unit of the security printer.

The acquisition comes at a time the company is being investigated by the UK’s Serious Fraud Office over corruption in South Sudan.

There are reports that De La Rue, which also prints South Sudan currency, bribed the Bank of South Sudan and senior Juba administration officials so as to have its contract renewed despite the fact that American firm Crane Currency had also been awarded the same contract.

De La Rue’s Media and PR head Sinead Keller told the Nation that the company could not discuss details of the investigation, “and therefore we are not able to answer your questions as listed below”.

“However we can provide you with a formal response from De La Rue in regard to the investigation, which is as follows: ‘We are cooperating with the Serious Fraud Office in its investigation. At this early stage, it would not be appropriate to comment any further. De La Rue has zero-tolerance for any form of attempted bribery or corruption, and we have an anti-corruption programme in place which is designed to ensure that we and our business partners act lawfully and ethically’,” she said.

BUSINESS ETHICS

The company said it takes its obligations to prevent bribery and corruption by its staff and partners seriously.

“Internally and with partners, our code of business principles sets the policy and standards for our staff and partners with a clear zero tolerance of any bribery/corruption,” De La Rue said.

De La Rue makes about a third of the world’s banknotes and has employed more than 2,500 people.

It secured the deal to design and print South Sudan’s inaugural banknotes in 2011 when the country became independent.

Before the five-year contract expired, it was controversially renewed.

The Bank of South Sudan governor who took office after the contract had been renewed attempted to have it cancelled; he is the one who awarded Crane Currency the contract.

The governor was dismissed months later.