PAC grills Ndung'u over money printing contracts

By Alex Ndegwa

Central Bank of Kenya has been accused of dodgy deals involving money printing short-term contracts, costing taxpayers nearly three times a cancelled tender, claim MPs.

CBK Governor Njuguna Ndung’u was questioned on the cost effectiveness of multiple interim orders with De La Rue, which replaced the cancellation in 2003 of a 10-year contract.

Parliament’s Public Accounts Committee (PAC) is probing claims that the cancellation of the contract, which would have run until December, this year, facilitated a scheme to siphon public funds through interim orders at inflated prices.

On Wednesday, Ndung’u could not provide the committee with itemised costs in the cancelled tender to enable a comparison with the cost incurred in the short term contracts for 1.7 billion pieces.

PAC chairman Boni Khalwale said while the Narc Government revoked the tender in January 2003 citing genuine reservations, subsequent actions by Treasury officials suggested it wasn’t in public interest.

"On the face of it, the cancellation appears to be in good faith but officials had seen a cash cow they could utilise for ten years," Khalwale alleged.

bidding queried

The PAC also questioned the massive reduction in contract sums from $139.5 million to $51.5 million with respect to De La Rue, and $148 million to $76.3 million by a competitor, during re-tendering.

"How could firms that bid for the same quantity of currency suddenly cut their quotations by a third? One would expect the figures to be even higher given the time lapse," said Bura MP Abdi Nuh.

The MPs were also not satisfied with reasons given for two firms that had bid much lower than De La Rue in the initial tender to fail to re-tender. One of the firms reportedly opted out while the other was disqualified on technical grounds.

A subsequent international tender, which MPs contend would have allowed the Government to procure new currencies at cheaper rates, was cancelled and in its place the short term contracts continued.

Ndung’u explained the interim orders were a "stop gap measure" to satisfy currency requirements.

The governor, however, could not explain how much the long-term contract would have cost the exchequer had it been allowed to run. Khalwale directed the CBK officials to appear this morning with a complete tabulation of unit price comparisons for the tenders.