Central Bank of Kenya’s procurement of new currency printing services from a German firm was flawed, Auditor General Nancy Gathungu has said.
CBK assigned the German firm trading as Giesecke+Devrient Currency Technologies, the Sh14.5 billion tender through a ‘classified’ direct procurement.
The firm is expected to print 460 million pieces of Sh50 notes, 690 million pieces of Sh100 notes, 260 million pieces of Sh200 notes, 170 million for Sh500, and 460 million pieces of Sh1,000.
A total of 2.04 billion currency notes are set to be printed (with a monetary value of Sh689 billion), down from the 2.35 billion in the 2019 series.
The new currencies are already in circulation (for Sh1,000 notes) with the others expected to follow in due course. Gathungu has poked holes in the procurement saying the law was not followed to the letter in the identification of the firm.
In a report tabled in Parliament, the auditor said a review of the process revealed flaws with the internal processes.
“The internal processes prior to the procurement were not followed in compliance with Regulation 84 of the Public Procurement and Asset Disposal Regulations, 2020,” she said.
According to Gathungu, the rules required CBK to appoint a special committee to handle the procurement of classified items.
The committee was to aid the identification and assessment of the suitable currency supplier.
It was also required that the director general of the Public Procurement Regulatory Authority monitors the procurement. Section 9( 1 )(d) of the Public Procurement and Asset Disposal Act and attendant regulations spell that the procurement regulator monitors the tendering process.
“In the circumstances, management did not fully comply with the Public Procurement and Asset Disposal Act, 2015 and the attendant regulations,” Gathungu said.
The findings came in the wake of an ongoing probe by MPs on whether the law was followed in awarding the tender among a barrage of questions.
When he faced MPs on the query, CBK boss Kamau Thugge said the tender was approved by the National Security Council and the Cabinet.
The Cabinet memo approving the tender was signed by the National Treasury and the process approved by the Attorney General.
He said the move followed a shortage of bank notes after contract with De La Rue ended in January last year.
For CBK, the government followed the practice of many countries where such contracts are handled as classified.
MPs want explanations on
why the tender was not floated in
the open.