Former CBK governor summoned over De La Rue

May 3, 2012
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Public Accounts Committee Chairman, Boni Khalwale

, NAIROBI, Kenya, May 3- Parliament’s Public Accounts Committee (PAC) has demanded that former Central Bank of Kenya (CBK) Governor Andrew Mulei appear before the Committee.

The former Governor failed to honor a parliamentary committee invitation for a second time prompting the PAC to forcefully summon him.

“We are now directing that official legal summons be issued to Dr Mulei so that he comes before this Committee now as a must,” PAC Chairman Boni Khalwale asserted.

Mulei is expected to shed light on the controversial money-printing contracts with UK printing firm De La Rue.

Efforts by PAC members to reach Mulei by phone proved futile even after the former governor confirmed his attendance the first time.

Meanwhile, a De La Rue team that testified before the PAC on Thursday has now acknowledged that without the 10 year guaranteed printing contract from the CBK the proposed Joint Venture (JV), in which the government is seeking a 40 percent stake in the money-printing firm, will fall.

“As the joint venture agreement is currently constituted if there is no long term agreement with the Central Bank and the Joint Venture then the Joint Venture agreement will not proceed to completion,” De La Rue Director of Market Development Mark Crickett said.

Ikolomani MP Khalwale referred to the ten year currency printing deal between the CBK and De La Rue as a restrictive clause in the JV, which indicated a possible divestment by the money-printing firm should government reject the agreement.

“From the perspective of De La Rue we are interested in partnering with governments around the world. We have very little incentive to continue to produce bank notes in Kenya if we are not producing the bank notes for Kenya, particularly when there are other places that are more interested in entering that kind of partnership,” Crickett said.

De La Rue was announced as the preferred bidder for the new generation banknotes in late 2005 based on overseas production, with the contract signed on 4th May 2006 and subsequently cancelled on 14th December 2007.

After the cancellation the new generation contract was converted to some interim orders of the old generation notes, which was followed by a proposal by government to enter into a JV with De La Rue.

Following finalization of the JV, neither government nor De La rue will be obligated to inject additional capital in the business; neither will the money-printing firm be allowed to make a capital call to its shareholders even with a majority stake, as provided in the JV agreement between the two parties.

De La Rue has already signed the agreements for the JV with the Treasury, from which it is awaiting signatures to finalize the documents.

 

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