PAC summons Kimunya, Ndung’u over De La Rue saga
By Alex Ndegwa Transport Minister Amos Kimunya will on Tuesday face a parliamentary probe team to answer claims he facilitated shadowy deals on currency printing through which taxpayers lost an estimated Sh3 billion. Kimunya, a former Finance minister, will be questioned alongside Central Bank Governor Prof Njuguna Ndung’u over the controversial cancellation in 2007 of a competitive new generation currency contract, even after the Government incurred huge costs to prepare the international tender. Members of Parliament’s Public Accounts Committee will ask Kimunya, who was Finance Minister between February 2006 and July 2008, toSh2.7 billion in the multiple interim orders entered by CBK and British security printing firm, De La Rue, through single sourcing. Evidence before the committee further suggests preparations for the international competitive tender, floated in 2006, may have cost the Treasury Sh300 million, including expenses to host a high profile delegation of African consultants. This would raise the net loss from the costly "stop gap" contracts, which Ndung’u has defended as meant to save 260 jobs at De La Rue, to Sh3 billion. In 2003 the National Rainbow Coalition (Narc) Government had invited senior officials of Central Banks from several African countries, including Malawi, Zambia, Uganda and Tanzania, to help develop an instrument to guide the international tendering. At the time, the new regime had cancelled a contract single-sourced by the Kanu regime months to the 2002 elections, saying it was rash to commit the country to an expensive long-term deal. substantive head President Kibaki’s administration then set off on the path to the first competitively procured currency contract. But since there was no legislation in place to guide the process, the Government invited Central Bank experts from other countries to help lay the groundwork. Eventually, De La Rue won the international tender in 2006 by quoting prices that were three times cheaper than what the firm had been charging the Government before. But curiously, the Government dithered to execute the new contract, which was eventually cancelled in unclear circumstances by Kimunya in November 2007. Kimunya directed that procurement continued under the old expensive 2002 deal. Then acting CBK Governor Mrs Jacinta Mwatela was ignored when she advocated implementation of the new contract. Mwatela, who has since testified before PAC in secret citing fears for her life, was opposed to the short-term contracts arguing they favoured De La Rue. The former CBK deputy Governor had stressed the urgency to sign the new contract warning the bank was faced with a "stock-out" of new currency. PAC has heard Mwatela was told she had no authority to sign the contract as acting Governor. But further legal opinion, the committee was told, stated the acting Governor could sign in the absence of a substantive head. However, things took a dramatic turn when at a meeting to consider the deal, a Mr Chege, who had replaced Mr Lucas Oduor as the director of currency at CBK, pulled out a letter reportedly indicating Kimunya had cancelled the tender. It is expected PAC will ask Kimunya to explain why the cheaper three-year contract with Ruaraka-based British currency printing firm, De La Rue, was frozen. In a letter to Ndung’u while he was still new at CBK Governor’s office, Kimunya explained that since joint venture talks for the Government to acquire a stake in De La Rue were underway, the new generation currency contract had been overtaken by events. Kimunya added that pending completion of the joint venture transaction, and given that the discussions would include negotiation of a long-term currency contract, CBK should print currency banknotes under existing arrangements with De La Rue. MPs will also question Ndung’u, who had by then been appointed Governor, on why he accepted an illegal cancellation of the tender yet he holds an independent office. At previous hearing Khalwale told Ndung’u that Mwatela was edged out of CBK because she opposed the deal. "They removed Mwatela and put you there and you have been playing ball," Khalwale charged. interim orders "You are wrong," Ndung’u replied, explaining that the role of CBK Governor is spelt out in law, and the holder is independent. PAC is probing why Treasury abandoned the contract offering competitive prices for the printing of notes for exploitative interim orders. The MPs also wish to establish the whereabouts of $25 million (Sh2.08 billion under the current exchange rate) deposited by CBK for the cancelled contract for new generation notes, which was not refunded. Officials say the funds have been used to offset the cost of interim orders. The committee has questioned what motivated the Government and De La Rue to agree to the curious cancellation of a contract without any party incurring liabilities. "The conclusion is that some people who were putting pressure wanted the currency printing to go on expensively so that they could partake of the mark up," Dr Khalwale told the Treasury PS Joseph Kinyua and Investment Secretary Esther Koimett at a hearing last Thursday. The cancelled 2006 contract had a quotation of £31.5 million for the production of 1.7 billion pieces, which meant CBK would have paid on average £18.42 pounds (Sh2, 394) per 1,000 pieces. inflated prices Instead, CBK was forced to resort to short-term contracts that have cost £28.62 (Sh3, 720) per 1,000 pieces, translating to Sh1, 326 more per every 1,000 pieces of new currencies. CBK has spent close to Sh10 billion between June 2003 and July, last year, to print 2.6 billion pieces of currency notes. PAC is probing claims that cancellation by Narc of the 10-year contract, which would have run until December, this year, facilitated a scheme to siphon public funds through interim orders at inflated prices. >From 2003 to date, CBK has issued six interim orders at the inflated prices. The committee heard that intrigues preceded the cancellation of the 2006 contract, including allegations that a former State House operative had "put pressure" for a French firm to be awarded the tender. This allegedly happened during a meeting in State House at which President Kibaki was briefed over the outcome of the international open tender by a delegation led by then Finance Minister David Mwiraria. Also allegedly present at the State House meeting were Mr Murage, Treasury PS Joseph Kinyua and Mwatela. At the meeting Mwiraria, who had revoked the 2003 Kanu deal and facilitated the international tendering, is alleged to have asked the Governor to explain why the deal had not gone to the French firm, the committee has heard. The committee has heard that Murage pressed for the cancellation of the contract with De La Rue. But Mwatela reportedly stood her ground. In his testimony, Kinyua, however, clarified that at the State House meeting, he did not think the State House operative "put pressure", but merely stated "his view point". The PS added that the President had settled the matter, saying: "If someone else had won the bid then that was it." told them off Mr Kinyua rejected claims of a scheme to plunder public resources, but conceded he could not know if some individuals privy to the deal may have had ulterior motives. "There may have been pressure because I recall there was somebody who had called the Treasury inquiring about the tender, but I told them off," Kinyua told PAC. Kimunya will be questioned on the contents of a letter he wrote on December 14, 2007, suggesting De La Rue had agreed to the termination of the contract and undertaken not to claim damages. -- You received this message because you are subscribed to the Google Groups "South Sudan Info - The Kob" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/SouthSudanKob?hl=en.
