/ 11 February 2005

SA frozen out of note tender

The Central Bank of Kenya (CBK) has secretly removed the South African Bank Note Company, a subsidiary of the South African Reserve Bank, from a shortlist of international security printing firms in line to win a tender worth almost R800-million to print “new generation” currency for the East African country over the next five years.

The South African firm has been replaced as “favourite” to gain the lucrative tender by a French company, Francois-Charles Oberthur Fiduciaire. The company is linked to a financial scandal that last year rocked the government of President Mwai Kibaki, who rose to power in 2002 on a wave of anti-corruption sentiment.

A source close to the tender process in Nairobi told the Mail & Guardian: “On January 20, the government ordered the CBK to remove the firm from the final shortlist. No explanation was given. Prior to this it was clear that the CBK [tender] committee regarded the South Africans as frontrunners to win the massive job.”

There were four other companies on the shortlist. But it is the French firm’s inclusion, rather than the sidelining of the South African company, that has caused a public outcry in Kenya: in December the country’s parliamentary accounts committee [PAC] recommended to the government that Fiduciaire be “blacklisted” from doing business with Kenya because of Fiduciaire’s links with Anglo Leasing and Finance — a “company” apparently registered in Liverpool, England to which Kenyan government officials in late 2002 and early 2003 clandestinely paid the equivalent of almost R200-million of taxpayers’ money for the supposed production of “terrorist-proof, tamper-proof” passports.

The Kenya Anti-Corruption Commission says Anglo Leasing subsequently “contracted” Fiduciaire to print the travel documents. But the passports were never delivered, and the money disappeared. David Mwiraria, Kenya’s Finance Minister, remains adamant that, upon detection of the fraud in April last year, “all the missing money was repaid” and that “Kenya hasn’t lost a single shilling”.

In a report, Kenya’s PAC concluded: “Oberthur [Fiduciaire] … should be blacklisted and precluded from award of contracts in the Republic of Kenya.”

But the government has ignored the PAC’s recommendation.

Andrew Mullei, CBK Governor, was adamant that the South African Bank Note Company was replaced by the French firm “because the South Africans haven’t got the experience or the security capabilities to handle the task” despite the fact that the South African subsidiary has been printing the country’s currency since 1963.

Mullei also confirmed that the CBK’s tender committee was in favour of keeping the South African company on the shortlist — but that “government had stepped in” as Fiduciaire “was well known internationally and prints currency for many African countries”.