Blow to CBK as board nullifies new currency tender award

The Central Bank of Kenya (CBK) has suffered a major blow after its award of currency printing tender to a British firm was nullified due to wrongful application of the law.

CBK was found to have violated the law by applying a 15 per cent margin preference meant for local firms to favour De La Rue International Limited, which is registered in the UK.

The CBK was found to have relied on a written request to have some of the printing done in Nairobi to apply the law wrongly in picking De La Rue.

The Public Procurement Administrative Review Board (PPARB) has consequently ordered the CBK to re-evaluate the restricted tender for printing and supply of new design Kenya currency banknotes: Tender Reference No CBK/37/2017-2018.

“A declaration be and is hereby issued that De La Rue International Ltd was unlawfully awarded tender for printing and supply of new currency and that the application of 15 percent preference margin in its favour was unlawful and the award is therefore annulled,” PPARB chairman Paul Gicheru read on Monday.

Gicheru added; “CBK is directed to undertake afresh evaluation of all tenders submitted to it by all the four bidders who participated in the process within 14 days.”

The board’s decision was in a case by Swedish firm Crane AB that was the least evaluated in price which accused CBK of flouting the law and lack of transparency in awarding the lucrative deal to De La Rue International Ltd.

Crane AB, through lawyer James Gitau Singh told the board that De La Rue International limited is distinct from its affiliates De La Rue Kenya EPZ ltd and De La Rue Currency and Security Print ltd which are registered in Kenya.

Although the CBK defended the deal, saying De La Rue International ltd had sought to sub-contract part of the contract to its local affiliate of De La Rue Kenya, the board ruled that preference margin rule only applies to firms locally registered or owned.

Signs that CBK was headed to a major loss, were evident when the board ruled against it in four grounds of preliminary objection that its lawyer Ochieng' Oduol.

The CBK wanted the case thrown out on technicalities which include that Crane AB made the application out of time, as the case was filed outside the 14 day period and that the board did not have jurisdiction to determine the matter.

The bank also wanted the case dismissed on grounds that Crane AB did not deposit an equivalent of 10 percent of the value of the tender.

However Gicheru ruled that CBK failed to probably serve a notice of award to Crane AB and thus were not bound by the 14 day notice while the rule requiring 10 percent deposit for the appeal to proceed is not applicable since the regulations on that law have not been promulgated.

The CBK though lawyer Oduor has indicated that it will appeal the case in the high court and has since applied to be supplied with certified proceedings and the ruling to enable the process.

In December last year, activist Okiya Omtatah moved to the high court and successfully obtained temporary orders to stop the award until the case he has filed is heard and terminated. The matter is scheduled for hearing on January 17th.

In a battle to break about a five-decade monopoly over currency printing in Kenya, Omtatah wants British currency printing firm De La Rue banned from fresh tendering for printing new notes if the current tender is struck off. The British firm has printed currency in Kenya since independence. It however lost the tender between 1966 and 1985 to Bradbury & Wilkinson of the UK, which it later acquired.

Kenya which is in almost two and a half year breach of the August 2015 deadline to roll out the new currency notes as stipulated in the new Constitution had hoped to get the new currencies between April and June next year, but this cases now mean the county has to await a little bit more to see the image of Jomo Kenyatta off our money.

The Central Bank Governor Dr Patrick Njoroge said treasury has planned to issue the currency in the second quarter of 2018 at a recent press briefing.