The creation of this committee, composed of both CBK insiders and outsiders, aims to eliminate collusion, insider trading and the fixing of contracts at higher prices in the absence of bidding calls. ‘competitive offers, expected to provide the best goods and services at the lowest prices.

In April, the CBK awarded Germany’s Giesecke+Devrient Currency Technologies GmbH (G+D) a five-year contract worth 14.10 billion shillings ($109,422,740) to print new currency notes. bank, replacing the British company De La Rue, which had been in office for decades.

The banking regulator said the German company was selected in a classified purchasing process amid a risk of banknote stock shortages, which would have had serious economic and security implications for the country. .

The Auditor General says CBK violated Regulation 84 of the Public Procurement and Disposal of Assets Regulations 2020, which requires a special committee to be appointed to guide the procurement of classified goods.

“In these circumstances, the management of (CBK) has failed to fully comply with the Public Procurement and Disposal of Assets Act, 2015 and Regulations thereunder, 2020,” Ms Gathungu said in her report examining CBK’s books for the financial year ending June 30, 2024.

Under the agreement, the German company is expected to print 2.04 billion banknotes in five years to replace worn out or destroyed ones, while 330 billion banknotes are currently in circulation in the country.

The conditions of the tender included the printing of 460 million pieces of 50 shilling bank notes, 690 million pieces of 100 shilling notes, 260 million pieces of 200 shilling notes, 170 million pieces of 500 shilling notes and 460 million pieces of 1,000 shilling notes.

It took the National Assembly’s Finance and National Planning Committee to force CBK Governor Kamau Thugge to reveal the name of the German company and how much the deal would cost the taxpayer to print the new currency.

Regulation 84 of the Public Procurement and Disposal of Assets Regulations (2020) states that an accountant of a national security organ or purchasing entity that deals with classified items must appoint a special committee to manage the purchase and disposal of its classified items.

“In establishing the special committee, the accountant shall submit the names of the appointed members of the special committee to the Cabinet Secretary, the county executive committee or the governing body of that contracting entity for approval,” the regulation states.

The secretary of the special commission is the head of the purchasing function at the CBK.

The committee is responsible for developing specifications for the new currency, coordinating procurement and identifying the banknote printer as well as conducting market research on currency printers.

In this case, the committee was also expected to evaluate and negotiate the Sh14.5 billion monetary deal and ensure that taxpayers get value for money.

Dr Thugge told the Finance Committee that the tender was in compliance with the Public Procurement and Disposal Act before the audit.

“The classified purchasing process was therefore necessary to avoid a stock-out crisis. The procurement was carried out in accordance with the Public Procurement and Elimination Act, and with the approval of the National Security Council and Cabinet,” Dr Thugge told MPs.

“The cost of the tickets was $109,422,740 at the exchange rate in effect on the date the contract was signed. The contract for the 2019 series tickets was for $112,856,000.

The notes will bear the signatures of Dr Thugge and Principal Secretary to the Treasury, Chris Kiptoo. They will bear the printing year 2024 and carry new security threads with color changing effects specific to each denomination. CBK said the rest of the features remain the same as the series released in 2019.

British printer De La Rue – in which the government has a 40% stake – stopped operations in Kenya in the financial year ending March 2023 due to a lack of new orders and spent £15.1 million ( 2.48 billion shillings) to dismiss. 300 workers, pay lawyers and write off its assets.

Dr Thugge said CBK embarked on a search for a new currency printer after De La Rue made a business decision to close its printing plant in the Ruaraka area of ​​Nairobi.

“Around mid-2023, the CBK determined that the country was at risk of running out of banknotes. A stockout carries significant economic and national security risks. A stock shortage of 1,000 shilling notes was imminent,” the CBK governor said.

“Due to its national security implications, the CBK request was initially reviewed by the National Security Council before being presented to the full Cabinet. The Cabinet memo was signed by the CS Treasury and the Attorney General,” he said, adding that the National Security Council and Cabinet approved the classified procurement as requested.

The CBK said the average cost of printing 1,000 banknotes is $53.5 (Sh6,842) compared to $48 (Sh6,198) spent on printing the 2019 series by De La Rue.