Khalwale targets Kimunya, again

August 1, 2012 3:06 pm
Ikolomani MP and Chairman of the PAC Dr Boni Khalwale/ FILE

, NAIROBI, Kenya Aug 1- The Parliamentary Accounts Committee (PAC) says Transport Minister Amos Kimunya and Central Bank Governor Njuguna Ndung’u are not fit to hold office over the loss of Sh1.8 billion over the procurement of money-printing services.

This is among the recommendation in a report submitted to Parliament by PAC Chairman Boni Khalwale which also called on the duo to be investigated by the Ethnics and Anti-Corruption Commission for the loss.

“As per the analysis of evidence, observations and conclusions under Chapter 5 of this report, the Committee was satisfied that the former Minister for Finance, Hon. Amos Kimunya and the incumbent Governor of Central Bank of Kenya, Professor Ndung’u were responsible for the loss of Sh1,830,909,616.00” reads part of the report which was made public on Wednesday.

“The Ethics and Anti-Corruption Commission should investigate them with a view to taking appropriate legal action against them and recovering lost funds,” the MPs noted in their report.

The Committee report says the duo should not continue serving in government as their actions are contrary to the Chapter Six of the Constituion which is on Leadership and Integrity. They also cited the Public Officers Ethics Act

Article 226(1)(5) of the new constitution stipulates that if the holder of a public office, including a political office, directs or approves the use of public funds contrary to law or instructions, the person is liable for any loss arising from that use and shall make good the loss, whether the person remains the holder of the office or not’.

The Committee also found out that De La Rue was overcharging the government because when the money-printing contract was put to competitive bidding, the firm bid lower.

The report claims that Kimunya, then the Finance Minister cancelled a long-term contract worth Sh3.8 billion for 1.71 billion pieces of banknotes, and decided to go for four short-term contracts that cost the taxpayer Sh5.6 billion for 1.49 billion pieces of banknotes.

Though De La Rue got the deal on May 4, 2006 for printing new generation banknotes – smaller in size and with advanced security features – Kimunya cancelled the contract in November 2007, saying that the government wanted to go into a joint venture with De La Rue.

The Khalwale-led Committee said that the procurement procedures as contained in the Public Procurement Act were not followed.

“Kimunya directed the Central Bank to cancel a cheap contract even when his Ministry was not party to the contract and all the reasons he gave for the cancellation of the contract were found by the Committee to have been invalid,” the PAC report noted.

“Prof Ndung’u, on the other hand, did not make any effort to resist the directive from Kimunya to cancel the contract. In so doing, he failed to protect the Bank’s independence and taxpayers’ interest. This was even notwithstanding the fact that since the Procurement and Disposal Act of 2005 came into force, Treasury had no business directing Central Bank of Kenya on procurement issues.”

The Committee which keeps watch on government spending said Kimunya misled the PAC during hearings by arguing the contract did not factor in the purchase of corporate security features of the new generation currency notes.

PAC also clarified that the Treasury was not party to the controversial contract for the supply of Sh1.7 billion pieces of bank notes by De La Rue to CBK.

The Committee however argued that as the government department responsible for the joint venture negotiations, Treasury failed to perform sufficient due diligence before agreeing on the stake acquisition and thus was exposing the taxpayers to a loss it knew or ought to have known.

“The machines and technology used at the Ruaraka plant are analogue when modern technology is digital,” said the report.

This is the second time that Kimunya, previously censured by the House for his role in the secret sale of the Grand Regency Hotel to Libyan investors, is again on the chopping board in the House.


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