Kimunya taken to task over De La Rue

By Moses Njagih

Transport Minister Amos Kimunya was at pains to defend his decision to cancel a currency printing contract with De La Rue, occasioning taxpayers a loss of close to Sh3 billion.

Kimunya found himself contradicting other witnesses who have appeared before the Public Accounts Committee (PAC), including the Central Bank of Kenya (CBK) Governor Njuguna Ndungfu, who admitted that taxpayers had incurred huge losses due to the cancellation of the contract

He was pushed hard to defend his position that, on the contrary, the country saved money in the long run, with committee members challenging him to table his tabulation that the deal was profitable.

Kimunya strongly fought off accusations by the committee chairman Bonny Khalwale that his cancellation of the contract amounted to micro-managing the Central Bank of Kenya (CBK), terming the allegations as "dead wrong".

At one time, tempers flared as Khalwale accused Kimunya of trying to dictate to the committee the terms and lines of his questioning, while the latter accused the Ikolomani MP of bringing irrelevant issues to his questioning.

On De La Rue, the minister was challenged as to why his position was contrasting that of other witnesses who have appeared before the committee, notably Prof Ndungfu who admitted that the cancellation of the contract had incurred losses close to Sh3 billion.

But the Kipipiri MP stood his ground, arguing that while on the face of the contract the Government would have appeared to save money, in the long run it would have paid dearly if it had accepted the offer.

suspicious agenda

Kimunya did not only contradict the evidence of other witnesses, but also denounced the decision taken by the Narc government at the time when he was minister to cancel an earlier contract that had been signed between De La Rue and the former Kanu government in 2002, on fears that it was rushed through with a suspicious agenda.

Kimunya further trashed the contract between the CBK and De La Rue that was agreed on later, terming it a disaster and not well thought out.

The contract, which was three times cheaper than the original deal, was to print currency for three years from a De La Rue plant in Malta, as doing so at the Ruaraka-based plant was more expensive.

He said CBK was "pennywise and pound-foolish" to agree to the contract, only driven by the least cost of production factor and ignoring other long-term implications.

"If you look at the convoluted manner that this contract was done by CBK, you would appreciate that it was a disaster and one that was not done in the best interest of the country," said Kimunya.

another contract

To substantiate his claim, Kimunya said the contract for printing 1.71 billion pieces of currency would have been done outside the country at a cost of Sh4.2 billion for a period of three years.

He argued that after this time, when the contract would have expired, the country would be required to enter into another contract, which would have seen the Government spend a similar amount.

Kimunya argued that Kenya would have spent Sh8.4 billion in six years through the cancelled contract, yet it has now spent only Sh4.8 billion in five years to print a similar number of currency pieces.

The minister said it would have been irresponsible for the Government to agree to a contract to print currency every three years, changing designs every time a new contract was procured.

But committee member Dr Nuh Abdi contradicted Kimunya, saying it was not necessarily true the country would have been forced to print new currencies after the expiry of the contract.

Defending his position that the contract was disastrous, Kimunya said it had been taken without consultations with other key players, such as banks, who would have been forced to configure their ATMs to suit the new currencies.

Kimunya said CBK had not factored in its plans how the bulky cargo of currencies, which were to be printed in the De La Ruefs plant in Malta was to be transported from Mombasa port and stored.

"When I raised these issues with CBK, I was informed that they intended to transport the bulk through railway then take over Times Towers from Kenya Revenue Authority (KRA) for storage of the currency, and also get other go-downs in Kisumu, Eldoret and other towns for the purpose. That would have been a great security risk," he said.

Kimunya said the Government was also keen on protecting the bad signal that would have been sent to international investors by shifting its currency printing abroad, a move he maintained would have resulted in the closure of the local plant.

Kimunya also denied allegations that former CBK acting Governor Mrs Jacinta Mwatela was shoved out of office, as she was an obstacle to alleged "fishy deals", claiming she was the one who issued interim orders for new contracts after the cancellation of the disastrous contract.

The minister revealed he objected to the confirmation of Mwatela as the Governor, even after she, together with her husband had lobbied President Kibaki for the position, because he felt that it would not have been procedural to replace former Governor Andrew Mullei, who had only been suspended after being arraigned in court. "Mwatela and her husband proceeded to State House to lobby for that position, upon which I received communication from former comptroller Ipu (Hyslop) with the advice from the President that we confirm her, but I thought it was not right since Mullei was only suspended," he told the committee.

He said it was then that Mwatela turned against him as he considered him to be the stumbling block to her confirmation, even after President Kibaki had given his nod.

He dismissed claims by Mwatela that they had a strained working relationship.

"If it was as serious as it has been portrayed, I would have had her sacked for other matters that I would not want to disclose to the committee," said Kimunya.

Kimunya said it was after De La Rue informed him of their intention to close down the Ruaraka plant that they agreed to have a joint venture with the British security printing firm, with the Government enjoying a 25 per cent ownership of the local firm, as has happened in other countries.

"In approving the decision for a joint venture, the Cabinet thought it would bring the cost of printing currency down as Government would be represented in the board that makes decisions," argued Kimunya.