Kenya’s Central Bank Governor Could Be Probed In $21m Money Printing Row

Prof. Njuguna Ndung'u

VENTURES AFRICA – Kenya’s Central Bank Governor Prof. Njuguna Ndung’u and former Finance Minister Amos Kimunya could be forced to step aside and probed over the loss of over 1.8 billion shillings ($21.35 million) in a currency printing deal if the recommendations of a parliamentary committee are to be implemented.

The Public Accounts Committee (PAC) said that Ndung’u and Kimunya who is now Transport Minister are unfit to hold public office and recommended that legal action be taken against them to recover the lost money.

“Kimunya and Ndung’u having been responsible for the loss of Ksh. 1.8 billion ($21 million) and acted contrary to the provisions of Chapter Six of the Constitution of Kenya, the Public Officer Ethics Act and the Public Procurement and Disposal Act and in that respect, they are unfit to hold public office,” recommends PAC’s report tabled in Parliament.

The two have been accused of acting in contravention of the Constitution and the Public Procurement and Disposal Act.

“The Ethics and Anti-Corruption Commission should investigate them with a view to taking appropriate legal action against them and recovering lost funds,”the report by the 11 member committee read in part.

The PAC was probing the printing contracts between Central Bank of Kenya (CBK) and De La Rue Company from which a deal for acquisition of 40 per cent stake in the company was conceived.

The PAC , which monitors government spending said De La Rue was overcharging the government because when the money-printing contract was put to competitive bidding, the firm bid lower.

The PAC said Kimunya directed the CBK to cancel a long-term contract worth 3.8 billion shillings ($45 million) for 1.71 billion pieces of banknotes in favour of four short-term contracts that cost the taxpayer 5.6 billion shillings ($67 million) for 1.49 billion pieces of banknotes.

The PAC report adds that Kimunya’s ministry was not party to the contract and all reasons for the cancellation were found by the Committee to have been invalid.

Prof Ndung’u has been faulted for not making 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.” read the report.

Kimunya was forced to resign as Finance Minister in 2008 for his role in the secret sale of the Grand Regency Hotel to Libyan investors.

This is also the second time this year that Prof. Ndung’u has faced calls to step down. Early this year, PAC faulted how he handled Kenya’s shilling which hit a historic low of Ksh. 107 against the US dollar last year. A Reuters survey ranked Ndung’u as the worst Central Bank Governor in Africa’s emerging and frontier markets in 2011.

Ndung’u was dubbed the ‘least effective policymaker for failing to spot and act against rising price pressures and presiding over a stunning collapse in the Kenyan shilling’. One analyst described Ndung’u as “asleep at the wheel”.