The Full Report of the Parliamentary Select Committee on the Decline of the Kenya Shilling Against Foreign Currencies

REPORT OF THE PARLIAMENTARY SELECT COMMITTEE ON  THE DECLINE OF THE KENYA SHILLING AGAINST FOREIGN CURRENCIES


Preface

SUMMARY OF FINDINGS

SUMMARY OF RECOMENDATIONS

Introduction

SUBMISSIONS TO THE SELECT COMMITTEE – GOVERNMENT INSTITUTIONS AND AGENCIES

SUBMISSIONS TO THE SELECT COMMITTEE – COMMERCIAL BANKS

SUBMISSIONS TO THE SELECT COMMITTEE – SUBMISSIONS BY ECONOMIC EXPERTS

SUBMISSIONS TO THE SELECT COMMITTEE – OTHER STAKEHOLDERS

SUBMISSIONS TO THE SELECT COMMITTEE – POLICY RESPONSES

SUBMISSIONS TO THE SELECT COMMITTEE – COMMITTEE FINDINGS AND RECOMMENDATIONS


SUBMISSIONS TO THE SELECT COMMITTEE – TABLES AND FIGURES


SUBMISSIONS TO THE SELECT COMMITTEE – PROPOSED AMENDMENTS


REPORT OF THE PARLIAMENTARY SELECT COMMITTEE ON THE DECLINE OF THE KENYA SHILLING AGAINST FOREIGN CURRENCIES


ANNEX I. (MINUTES OF THE COMMITTEE SITTINGS)

ANNEX II. (CBK REGULATORY INTERVENTIONS-BANKING CIRCULARS-LETTERS)

ANNEX III. (FOREIGN EXCHANGE HOLDING BY BANKS -QUARTER ENDING SEPT 2011)

ANNEX IV. (SUBMISSION BY MINISTRY OF FINANCE)

ANNEX V. (SUBMISSION BY HIGH LEVEL COMMITTEE FORMED BY THE PRIME MINISTER)


ANNEX VI. (REPORT OF THE HIGH LEVEL COMMITTEE FORMED BY THE PRIME MINISTER)

ANNEX VII. (SUBMISSION BY CAPITAL MARKETS AUTHORITY)

ANNEX VIII. (SUBMISSION BY EQUITY BANK)

ANNEX IX. (SUBMISSION BY KCB)

ANNEX X. (SUBMISSION BY COOPERATIVE BANK)

ANNEX XI. (REJOINDER BY KENYA COOPERATIVE COFFEE EXPORTERS)

ANNEX XII. (CENTRAL BANK OF KENYAS LETTER TO FAMILY BANK)

ANNEX XIII. (SUBMISSION BY BARCLAYS BANK OF KENYA)


ANNEX XIV. (SUBMISSION BY CFC STANBIC BANK)


ANNEX XV. (SUBMISSION BY KENYA BANKERS ASSOCIATION)

ANNEX XVI. (SUBMISSION BY MICAH CHESEREM)


ANNEX XVII. (SUBMISSION BY KENYA PRIVATE SECTOR ALLIANCE)


ANNEX XVIII. (SUBMISSION BY PARLIAMENTARY BUDGET OFFICE)

2 thoughts on “The Full Report of the Parliamentary Select Committee on the Decline of the Kenya Shilling Against Foreign Currencies

  1. How the Kenyan Members of Parliament Voted:

    TO DELETE THE RECOMMENDATION AGAINST THE GOVERNOR OF THE CENTRAL BANK OF KENYA PROF. NJUGUNA NDUNG’U FROM THE REPORT (VOTED YES)

    1. Ali Mohamud Mohammed

    2. Njoroge Baiya

    3. Francis Baya

    4. Peris Chepchumba

    5. Mohammed Gabbow

    6. Nelson Gaichuhie

    7. Chachu Ganya

    8. Joseph Gitari

    9. Robinson Githae

    10. Yusuf Haji

    11. Philip Kaloki

    12. Jamleck Kamau

    13. Maina Kamau

    14. Kambi Kazungu

    15. Boni Khalwale

    16. Peter Kiilu

    17. Gidion Mbuvi

    18. Jeremiah Kioni

    19. Joseph Kiuna

    20. Mwangi Kiunjuri

    21. Simeon Lesirma

    22. Katoo ole Metito

    23. John Mututho

    24. Peter Munya

    25. Victor Munyaka

    26. Daniel Muoki

    27. Johnstone Muthama

    28. Chirau Ali Mwakwere

    29. Peter Mwathi

    30. David Njuguna

    31. Muturi Mwangi

    32. Lewis Nguyai

    33. Walter Nyambati

    34. Chris Okemo

    35. Wilfred Ombui

    36. Sam Ongeri

    37. Dalmas Otieno

    38. Gonzi Rai

    39. Silas Ruteere

    40. Saitoti George

    41. Mahmoud Sirat

    42. Ferdinand Waititu

    43. Clement Wambugu

    44. Yusuf Hassan

    45. Affey Mohammed

    46. George Nyamweya

    TO KEEP REPORT INTACT(VOTED NO)

    1. Shakeel Shabbir

    2. Ali Mohammed

    3. Olago Aluoch

    4. Edick Anyanga

    5. Yusuf Chanzu

    6. Lucas Chepkitony

    7. Benedict Gunda

    8. Emilio Kathuri

    9. Adan Keynan

    10. Wilbur Otichillo

    11. Luka Kigen

    12. Jackson Kiptanui

    13. Josephat Nanok

    14. Gideon Konchella

    15. Henry Kosgey

    16. Elijah Lagat

    17. Nkoidila Ole Lankas

    18. Benjamin Langat

    19. Moses Lessonnet

    20. Raphael Letimalo

    21. Magerer Langat

    22. Oyugi Magwanga

    23. Jakoyo Midiwo

    24. Mohammed Maalim

    25. Robert Monda

    26. Thomas Mwadeghu

    27. John Mbadi

    28. Manson Nyamweya

    29. Simon Ogari

    30. Martin Ogindo

    31. Sospeter Ojaamong

    32. Ayiecho Olweny

    33. Fred Outa

    34. Alfred Sambu

    35. Jomo Washiali

    36. Edwin Yinda

    37. Omar Zonga

  2. NATIONAL ASSEMBLY
    OFFICIAL REPORT
    Thursday, 1st March, 2012
    The House met at 2.30 p.m.
    [Mr. Deputy Speaker in the Chair]

    Page 29 Thursday, 1st March, 2012 (P)

    MOTION

    ADOPTION OF REPORT ON DECLINE OF KENYA SHILLING AGAINST FOREIGN CURRENCIES

    Mr. Keynan: Mr. Deputy Speaker, Sir, I beg to move:-
    THAT, this House adopts the Report of the Parliamentary Select Committee on decline of the Kenya Shilling against Foreign Currencies laid on the Table of the House on Tuesday 14th February 2012.

    From the onset, I would like to take this opportunity to thank my colleagues for having allowed this House to pass the Motion that established the Select Committee that was required to look into the drastic decline of the Kenya Shilling against foreign currencies. Secondly, I would also like to thank the Speaker and his office for all the support they have given to the Committee and the staff to enable them to come up with this comprehensive report. I would also like to thank the Clerk and his team for all the support that was extended to the Committee.

    Having said that, our mandate was to look into the causes or the issues that triggered the drastic decline of the Kenya Shilling from Kshs83 to Kshs107 to the Dollar. The Committee held a number of meetings with more than 30 stakeholders including the Ministry of Finance, the officials of the Central Bank, the membership and the officials of the Kenya Bankers Association, a number of economic and financial experts, law experts and representatives of a number of commercial banks. In these meetings, our desire was to find out what really triggered the drastic decline of the Kenya Shilling from Kshs83, in particular from the months of September, October, November and December, 2011.

    In all the meetings that we have had, there are issues that came up, in particular from the officials of the Central Bank of Kenya and other Government officials. They stated the things that, indeed, triggered the drastic decline of the Kenya Shilling against foreign currencies. These are the theories that we were told. One of the theories that we were given – and I call them “theories” because I will qualify why they are theories – was the Euro Zone crisis. All of us are Kenyans. All of us live in the IT world which is a global village. As we are aware, the Euro Zone crisis is at its worst as I speak today. Some of the economic giants in Europe have recently had their credit rating downgraded, for example, France, Germany and even others like Greece and Spain or the countries that are called BRICS and Portugal. They have very serious economic problems.

    If indeed, this was one of the causes, it should not have been one of the triggers for those three months. It was there for three years and it continues to be there. As I speak, the crisis is worse and therefore, we ruled out that that was not one of the triggers. The second theory that we were told was the United States debt crisis. Again, we live on Planet Earth. The US debt crisis has been there for the last two to three years and it continues to be there. Therefore, when we looked at the impact of the US debt crisis, from every aspect, again, we ruled out that that was not the cause. The third cause that we considered, that we were told, was the Arab Spring. We all know the origin of the Arab Spring. It was Tunisia and it is still there. That again, as far as the international oil prices are concerned, that again, did not have any serous effect on the drastic decline of the Kenya shilling. Again we ruled out that.

    The fourth theory that we were given was the escalating food prices. By the time the shilling drastically declined from Kshs83 to Kshs107 in the months of September, October, November and December, this country again did not benefit from the long rains. That is the time when the long rains were going on. Therefore, if the issue of prices of food was anything that would have contributed to this, in particular, on the balance of payments, that again, we ruled out was not the cause. Having ruled out those four theories that we were given, we went ahead and considered all the other possible causes. We looked at the information that we were given, in particular, by the financial experts, representatives of the banks, the representatives of the Government and by the officials of the Central Bank, both directly and indirectly.

    [Mr. Deputy Speaker Left the Chair]

    [The Temporary Deputy Speaker

    (Ms. A. Abdalla) took the Chair]

    I want to define a number of issues before I go to the contents of this. In today’s world, there is something called economic crime. Economic crime, by the UN definition says that “economic crime refers broadly to any non-violent crime resulting in financial loss”. Therefore, the second thing that we considered as a theory is indeed, whether what happened in Kenya during this period constitutes an economic crime against the people of Kenya, against the people of East Africa, against the people of Africa and against the people of the world. I say this because again we considered the eminence; the premierness of the nation of Kenya. About 67 per cent of the GDP of East Africa is that of Kenya. Kenya contributes 67 per cent of the GDP of the entire economies of the East African countries. To that extent, Kenya is an economic hub, a diplomatic hub, a premier nation.

    Therefore, having taken that into account and the important economic role Kenya plays within IGAD, the East African economic block, COMESA, the AU and within the UN as far as economic development is concerned, again, we realized that what happened; the issues that triggered, the issues that made Kenyans paupers and squatters in their own country and the issues that made many Kenyans leave, the simple reason is just because of the drastic decline of the Kenya Shilling from Kshs83 to Kshs107. The interest rates changed from less than one digit of 8 to 10 per cent to 30 per cent.

    In the process, the entire savings of the middle class were wiped out. Many home owners were rendered homeless. One of the benchmarks of economic development as outlined in the Vision 2030 – and the Vision 2030 has three pillars, namely, economic development, political development and social development.

    On economic development, the fundamental issue is macro-economic development. For macro-economic development to be realised, there has to be low interest rates. It is because of this that you consider again the economic policies of the Republic of Kenya vis-a-vis what happened during this particular period.

    I want to refer hon. Members to the contributions of His Excellency the President to the Donde Bill in 1999. At that time, Kenyans were struggling with high interest rates, which were as a result of the Goldenberg Scandal and economic mismanagement in the early 1990s. Therefore, what happened in 2011was reminiscent of what happened in the early 1990s.

    Madam Temporary Deputy Speaker, it is because of this that today many home owners are on the brink of losing their mortgages. Many farmers, in particular of tea and coffee, who are the backbone of the economy of this nation, and who have borrowed loans through their cooperative societies at the rate of 8 per cent are today expected to service the same loans at an interest rate of 30 per cent. Their earnings have not changed. Their income has not changed but the interest rates of the loans have changed from 8 per cent to 32 per cent. That is four times. If somebody was paying Kshs60,000 then now he has to pay Kshs240,000.

    The average bank interest rate today is about 28 per cent. Some banks charge 30 per cent while others charge even 31 per cent. This means the many Kenyans who attempted to borrow money to finance weddings or buy furniture to furnish their houses just because the interest rates were affordable today are on the brink of losing everything that they have invested in. I am told that it is because of the high bank interest—

    Madam Temporary Deputy Speaker, Kenya is basically an agricultural country. This means that many people rely on loans in order to develop their businesses. What business today can give you profit of 32 per cent in this country? We have looked around and we have concluded that there is no legitimate business in this country that can today give you a profit of 32 per cent. It does not exist. Therefore, because of the inaction, or failure of the institutions that are charged with the responsibility of controlling interest rates, Kenyans have been reduced to paupers.

    [The Temporary Deputy Speaker (Ms. A. Abdalla) left the Chair]

    [The Temporary Deputy Speaker (Prof. Kaloki) took the Chair]

    Madam Temporary Deputy Speaker, I know that the Members of this House are privileged members of the Kenyan society simply because we are paid highly. We enjoy a number of duty exemptions but the people who elected us out there in the villages are victims of these high interest rates. This is an election year. If the entire earnings of the middle class, the farmers and business people have been wiped out, we are talking of 38 million Kenyans who are paupers, or who have gone about three stages below the poverty line.

    It is because of this that this House has the onus or responsibility of correcting the situation. I want to quote what His Excellency the President said in 1999 when he contributed to the Donde Bill. A number of senior Government officials were then in the Opposition. They include the current President, Hon. Mwai Kibaki, hon, Ngilu, the current Minister for Water and Irrigation, and hon. Anyang’-Nyong’o. I want to quote His Excellency the President, whose statement attracted strong applause. His Excellency the President, who was then the Leader of the Official Opposition, said:-

    “This country has become a country of commercial interest; in particular tea officials are profit driven, and do not care about the welfare of Kenyans.”

    Mr. Temporary Deputy Speaker, Sir, that is why His Excellency the President, who was then the Leader of the Official Opposition, in his own wisdom, routed for the in duplum rule just to control the interest rates. Members of this House then decided to pass the Bill. Later on, that Bill went through so many controversial stages. Eventually, it did not see the light of day.

    However, that sent a very strong message to the banking sector, that, indeed, the elected representatives of this House were aware of what was happening.

    We should look at the role that the Central Bank of Kenya (CBK), as the regulator, ought to have played. One of the things that you realise is that there was a policy of inaction by the CBK. This contributed to the creation of opportunities for arbitrary malpractice by banks. This also contributed to failure to detect and arrest the speculative activities of some of the key financial institutions.

    Mr. Temporary Deputy Speaker, Sir, this also brought about some sort of communication breakdown between the key financial institutions and the regulator. There was also ineffectiveness of the Monetary Policy Committee, which I will discuss later. Again, there was inadequate policy response. The CBK just decided to sit and watch. In the process, the CBK issued over 20 circulars within a span of two months, but this did not in any way contribute to the stabilisation of the shilling.

    Again, the CBK did not react in good time by putting measures in place in order to stabilize the shilling. The CBK kept the discount window rate below the inter-bank exchange rate and Treasury Bills. This encouraged commercial banks to bypass inter-bank transactions and enjoy the lower discount window rate. During this period, a number of banks engaged in arbitrage malpractice. In the year 2010, all the banks, cumulatively, borrowed from the discount window about Kshs11 billion.

    Mr. Baiya: On a point of order, Mr. Temporary Deputy Speaker, Sir. The Report in respect of which this Motion is being moved, particularly on page 18 and especially in the recommendations, purports to issue directives—

    The Temporary Deputy Speaker (Prof. Kaloki): Order, hon. Baiya! Hon. Keynan is moving a Motion.

    Mr. Baiya: Mr. Temporary Deputy Speaker, Sir, I am laying a basis for my point of order.

    The Temporary Deputy Speaker (Prof. Kaloki): What is not in order?

    Mr. Baiya: Mr. Temporary Deputy Speaker, Sir—

    The Temporary Deputy Speaker (Prof. Kaloki): Order, hon. Baiya! Could you resume your seat?

    Hon. Keynan, proceed.

    Mr. Baiya: Mr. Temporary Deputy Speaker, Sir, I am responding to the question that you asked me.

    The Temporary Deputy Speaker (Prof. Kaloki): Order! Order!

    Mr. Keynan: Mr. Temporary Deputy Speaker, Sir, I want to urge my friend to wait for what we are going to say.

    I was saying that a number of banks enjoyed visiting the discount window. The discount window offered an interest rate below the inter-bank rate and Treasury Bills rate. I want to demonstrate to hon. Members that this was what happened. I want to ask—

    The Assistant Minister for Industrialization (Mr. Muriithi): On a point of order, Mr. Temporary Deputy Speaker, Sir.

    The Constitution of this great Republic, at Article 231, establishes the Central Bank of Kenya and proceeds to say that the Central Bank of Kenya shall not be under the direction of any person or any entity. So, I am seeking your guidance. As we proceed, we are now allowing the Mover to move the Motion and table the Report; will we not be violating the Constitution that we have sworn to protect?

    I rise to seek your guidance, first, on the admissibility of the whole exercise and to provide the House with guidance so that we do not contravene the same Constitution we swore to defend. I seek your guidance.

    The Temporary Deputy Speaker (Prof. Kaloki): Hon. Members, the Motion before us has been approved by this House. A Select Committee was constituted here and passed by the same Parliament. It has gone through all the stages; it was approved by the Chair or the Speaker himself. So, let us wait for the Chair of that particular Select Committee to move the Motion. The Motion will be seconded, the Question proposed and then we will debate it.

    Proceed, hon. Keynan.

    Mr. Keynan: Mr. Temporary Deputy Speaker, Sir, I need your protection because I think there is an attempt to make sure that my time is eaten up so that I say very few things. I want to ask my respected friend, hon. Nderitu Muriithi, to hold his horses and I am sure that he will get a chance to contribute.

    I was saying that a number of banks, because of the inaction of the leadership of the Central Bank of Kenya (CBK) got free money and engaged in arbitrage, speculative activities and hording and I will demonstrate this. The interbank exchange rate was far much below the discount window. During this period, banks would go and visit the CBK discount window facility, borrow at 8 per cent or below, go to the Treasury Bills and Treasury Bonds, buy and go back to the same Government. They would borrow at 8 per cent and go back to the same Government and offer the same facility at 26 per cent. In the process, during this period, commercial banks borrowed Kshs600 billion taxpayers’ money for a period of 90 days. They got free money and the person who has the key to the CBK was part of the connivances and the illegal activities. I will tell you how they borrow.

    In 2010, the entire banks combined borrowed from the CBK Kshs11 billion. In 2011, they borrowed Kshs600 billion and this is the list.

    (Mr. Keynan raised a document)

    This is official, it is from the CBK. The Governor may not know but we got it officially from the CBK. I will read it. This indicates two things; either the financial market was very much insolvent or fluid to the extent that some of these big banks were going through financial strains, duress or somebody had allowed them or handed them over the key to our savings.

    The Minister for Transport (Mr. Kimunya): Mr. Temporary Deputy Speaker, Sir, the hon. Chair of the ad hoc Committee has made a very serious allegation on a matter that he says that he has the report that he is quoting which is not included in the Report that has been tabled before this House. Therefore, he is debating a matter that we do not have the details. He should refer to us where it is that he is quoting so that the report can be authenticated by the Chair. This is because of the magnitude of the figures he is talking about and because of the impact it could have on this economy if we are careless with our remarks on the Floor of this House without properly determining the authenticity of the information being tabled here. If he could establish that authenticity— I do not want to disrupt him but because of the seriousness of the allegation, then we can, at least allow him to continue making the very grievous allegation he is making.

    Mr. Midiwo: On a point of order, Mr. Temporary Deputy Speaker, Sir. I beg your indulgence just to caution us to be patient. Even before my Chair in that Committee responds to that, which is not even worth responding to because all that is in the Report, just because he has not read it and they have made up their minds that they have to protect certain things or certain individuals, there is need for any Member who has an interest in this issue to declare his interest, the reason being there are other reports implicating some of the Members talking about the issue.

    The Temporary Deputy Speaker (Prof. Kaloki): I think you are debating now.

    Mr. Keynan: Mr. Temporary Deputy Speaker, Sir, I have been challenged to provide the—

    The Temporary Deputy Speaker (Prof. Kaloki): Hon. Keynan, just stick to the Report. Do not introduce other information outside the Report. Be straight. That way, you will be seconded.

    Mr. Keynan: Mr. Temporary Deputy Speaker, Sir, I was asked a straightforward question. That is why the Members had over two weeks to go through the Report and I want to refer hon. Kimunya to—

    The Temporary Deputy Speaker (Prof. Kaloki): Hon. Members, let us allow the Chairman to complete moving the Motion. Your time is coming.

    Mr. James Maina Kamau: On a point of order, Mr. Temporary Deputy Speaker, Sir.

    The Temporary Deputy Speaker (Prof. Kaloki): Order, you are out of order! Hon. Keynan, move the Motion and stick to it.

    Mr. Keynan: Mr. Temporary Deputy Speaker, Sir, I would like to urge my colleagues to allow that we proceed and listen to the facts and those who have not had an opportunity to go through the Report. I would like to refer hon. Kimunya to page 79.

    The Assistant Minister for Roads (Dr. Machage): On a point of order, Mr. Temporary Deputy Speaker, Sir. Hon. Midiwo made very serious allegations. Could he be ordered to substantiate who is being protected and who is protecting the person being protected on these issues?

    Mr. Midiwo: Mr. Temporary Deputy Speaker, Sir—

    The Temporary Deputy Speaker (Prof. Kaloki): Order, hon. Midiwo! You do not have the Floor. That is now a debate and it will be coming up. Hon. Keynan, move your Motion.

    Mr. Keynan: Mr. Temporary Deputy Speaker, Sir, for those who have not read it, I will table the whole report from the CBK. I do not have any other copy but only this. If hon. Kimunya has not had an opportunity to go through this, it is in the Report and it is annexed under figure 2, under “CBK Discount Window”.

    Hon. Members: Take us through.

    Mr. Keynan: Mr. Temporary Deputy Speaker, Sir, I do not know whether it is my business to take you through. The report is here. Someone can make a copy. A summary of the whole thing signed by the CBK is here and I will not ask somebody to make a copy. I will proceed. I have added it up and this is what it reads. I want to demonstrate that there was free money, arbitrage and the person who was in charge of our national coffers, indeed, was part of the group that handed over our entire savings and taxpayers’ money to a group of international financial speculators and this is what he did.

    Mr. James Maina Kamau: On a point of order, Mr. Temporary Deputy Speaker, Sir. It is as if hon. Keynan is hiding something from this House. Why can he not table everything that he has so that we have a chance of looking at it?

    Mr. Jamleck Kamau: On a point of order, Mr. Temporary Deputy Speaker, Sir. With all due respect to hon. Keynan, this is a Report that he has tabled before this House. The other document he has over there, he has not tabled it yet. Let him refer us to the documents he has in this Report.

    The Temporary Deputy Speaker (Prof. Kaloki): Hon. Keynan, are you seeking the submission of that Report or you are introducing new information?

    Mr. Keynan: Mr. Temporary Deputy Speaker, Sir, everything that I am saying – and I really need your protection – is within this Report. I have not tilted anything. The annex that I have given out is within this Report. It is a summary—

    The Temporary Deputy Speaker (Prof. Kaloki): Could you then refer to that particular annex?

    Mr. Keynan: Yes, Mr. Temporary Deputy Speaker, Sir. It requires a lot of reading, but one of the figures—

    (Several hon. Members stood up in their places)

    The Temporary Deputy Speaker (Prof. Kaloki): Hon. Keynan, you can appreciate the sensitivity of this matter. Just make sure that when you talk about a document, you indicate the page of that particular document.
    Mr. Keynan: Mr. Temporary Deputy Speaker, Sir, I have said: “Look at page 79, figure number two.” The Central Bank of Kenya (CBK) discount rate is there. I want the hon. Members also to go through the annexes from page—

    Mr. Duale: On a point of order, Mr. Temporary Deputy Speaker, Sir. I said it yesterday and want to repeat it here today. As Members of Parliament, we have three roles; representation, legislation and oversight. It is this House that appointed this Select Committee. It is this Select Committee that tabled a Report. If we hold our horses and allow the Chair to move this Motion, we will have a chance to amend, reject or approve the Report. Can we be given that time?

    Mr. Mbadi: On a point of order, Mr. Temporary Deputy Speaker, Sir. I want to plead with the Chair that this is a very important matter that we are dealing with. This country suffered when the Shilling just depreciated all of a sudden from Kshs80 to Kshs107 to the dollar. Please, protect us so that we can listen to the Chairman and make informed decisions and debate this matter conclusively. Please, do not allow frivolous points of order.

    The Temporary Deputy Speaker (Prof. Kaloki): Proceed, hon. Keynan!

    Mr. Keynan: Mr. Temporary Deputy Speaker, Sir, I have given a copy so that somebody can photocopy it.

    (Several hon. Members stood up in their places)

    The Temporary Deputy Speaker (Prof. Kaloki): Order, hon. Muthama! Order, hon. Baiya! Let us hear the Chairman now. We have heard your points of orders, information and procedures and so, let us now allow the Chairman to complete his submission. Proceed, hon. Keynan!

    [The Temporary Deputy Speaker (Prof. Kaloki left the Chair]

    [Mr. Deputy Speaker resumed the Chair]

    Mr. Keynan: Mr. Deputy Speaker, Sir, I was saying that during that period, there was arbitrage to allow the banks to freely borrow from Central Bank of Kenya (CBK).

    (Several hon. Members stood up in their places)

    Can I continue, Mr. Deputy Speaker, Sir?

    The Minister for Transport (Mr. Kimunya): On a point of order, Mr. Deputy Speaker, Sir. I rose on a point of order because I believe that we set up this Committee because we had a special interest to know what was happening to the Shilling. The Committee has presented us with a Report. We have assembled here today to receive this Report and discuss it. The Chairman said, and it is on the HANSARD that he had received that extra document informally from the CBK. He started quoting it and it is not in the Report. We do not have it and so, what I was asking is: Can we authenticate that document that he said he had received informally from somewhere? He is now quoting it on the Floor of this House and referring to huge figures that have the capacity to cripple this economy. If we are not careful with the information that we are circulating within this House— If it is not authentic, let us not debate it. Those are the rules of the House. If it is authentic, it is the Chair to guide us and say: “This information is authentic and so we have access to it.” We can then debate it in the House. That is all I raised in the point of order. I would like to ask that we authenticate that information and then the Chairman can go ahead and take us through that new information, which is not in this Report. He found it – and he said it himself – informally from the CBK, and he is quoting it here.

    Mr. Keynan: Mr. Deputy Speaker, Sir, can I clarify this?

    (Several hon. Members stood up in their places)

    (Mr. Gabbow stood up in his place)

    Mr. Deputy Speaker: Order, hon. Gabbow! Order hon. Khalwale!

    Mr. Keynan: Mr. Deputy Speaker, Sir, indeed, the Clerks have photocopied this document. This document was sent to the Kenya National Assembly on 10th February, 2012, signed by one Harun Sirma, OGW, on behalf of the Governor of Central Bank of Kenya. The Clerk received it on 14th February, 2012. This is also in the Report. It is not a fake document.

    (Several hon. Members stood up in their places)

    Mr. Deputy Speaker: Order, hon. Members!

    Mr. Keynan: Mr. Deputy Speaker, Sir, let hon. Members read it. This is an authentic document and I have already tabled it. It has been photocopied. I am only making reference to an official document.

    Mr. Deputy Speaker, Sir, what I said – and I want hon. Kimunya to get this – is that we got a lot of information not directly from the Governor himself, but from the institution. The institution is not the Governor. So, the document is there and it is not my creation. I have made copies of it.

    Mr. Deputy Speaker, Sir, I was only referring to the document. I said that using that document, clearly there was arbitrage. Clearly, banks got a free opportunity to make money out of Kenyans. This is the way they did it during that period. During the said months of 2011, this is the amount that different banks borrowed from the discount window. I want to read because this is public information. If you add all this, it totals to Kshs600 billion in 2011 against Kshs11 billion in 2010. This was free money and this is how they did it:

    Kenya Commercial Bank borrowed Kshs148 billion from the discount window in 2011. In 2010, they borrowed Kshs960 million. You can compare Kshs148 billion against Kshs960 million. In 2011, they borrowed Kshs148 billion and above.

    Mr. Deputy Speaker, Sir, the Standard Chartered borrowed Kshs1,170,000.000 in 2010 and Kshs7,555,000,000 in 2011. Barclays Bank borrowed Kshs2.3 billion in 2010 and Kshs146 billion from the CBK in 2011. Citi Bank in 2010 borrowed Kshs700 million and zero in 2011.

    Bank of Africa borrowed Kshs1.2 billion in 2010 and Kshs23 billion in 2011. Commercial Bank of Africa borrowed zero in 2010 and Kshs3.315 billion. The Co-operative Bank of Kenya borrowed Kshs2.3 billion in 2010 and Kshs186 billion in 2011. CFC Stanbic in 2010 borrowed Kshs700 million and Kshs1.29 billion in 2011. NIC Bank borrowed zero in 2010 and Kshs3.9 billion in 2011. I & M Bank in 2010 borrowed zero and Kshs3.9 billion in 2011.

    Mr. Deputy Speaker, Sir, Equity Bank in 2010 borrowed Kshs1.6 billion and in 2011 they borrowed Kshs23 billion. The Diamond Trust Bank in 2010 borrowed zero and in 2011 they borrowed Kshs2.2 billion. The I&M Bank in 2010 borrowed Kshs12 billion and in 2011 borrowed Kshs22.7 billion. If you add this; the borrowings of 2010 against 2011, in 2010, they are Kshs11 billion but in 2011, the borrowings from the Central Bank of Kenya, at concessionary interest rates are Kshs600 billion and this is what I was saying it belongs to the Kenyan taxpayer.

    Out of this, we have also done a cumulative analysis and these banks borrowed from the CBK at less than 10 per tent. Using the same money for Treasury Bills and Bonds, they offered the same back to the Government at an interest rate of 24 per cent and in the process within those three months, one made close to Kshs29 billion. If this is not crime; if this is not economic crime, I do not know what other things constitute economic crimes.

    Secondly, I was just clarifying on the issue of arbitrage and how banks are misusing it. This country has become a cartel centered economy. We have the maize cartels, the sugar cartels, the oil cartels and now we have the bank cartels in the name of forex cartels. For how long shall we allow our middle class; the Kenyan taxpayer to pay an interest rate of 30 per cent? Which business today can give even the privileged Kenyans who are Members of this House an income or profit from an investment or whatever source a profit of 30 per cent? That does not exist!

    To continue, we looked at a number of all other issues and one of the things, as a Committee, we realized was that this problem was “manufactured”. This problem was designed and executed within the offices of the regulator and this is why we are here today. Before this report, there was a performance rating carried out by the peers of the Governor from different countries and our own Governor was voted as the worst performing governor and I table the report. I would like to urge Mr. Kimunya that, that was not done by Parliament. It was done by other entities, international entities and, indeed, our Governor got less than 3.1 out of an index of 10 and was rated as the worst performing governor. This was not the Kenyan Members of Parliament. This was done by the peers.

    Mr. Deputy Speaker, Sir, it is because of this institutional lapse; it is because of the failure by the CBK that all of us are victims including myself, Mr. Deputy Speaker and Mr. Kimunya.

    The breadbasket of the Republic of Kenya is central Kenya, Rift Valley, western Kenya and eastern Kenya where we have commercial activities. Our farmers, the maize, sugar cane, coffee and tea farmers have borrowed through co-operative societies from different banks at concessionary rates of less than 10 per cent. Today, all of them are paying interest of between 25 to 31 per cent. How many of them can afford to continue servicing these high interest rates? This is the answer!

    (Applause)

    As much as we want to protect and as much as we want to talk about this and I started with a prelude that, if this does not constitute economic crime as defined by the UN and our own Economic Crimes Act, Section 45, what else constitutes crimes against the people of Kenya and against the people of the world? These are the very issues that the Donde Bill attempted to address. These are the very issues! One of the pillars of Vision 2030 – and I want to refer this to hon. members and this is not something that Mr. Kimunya can dispute – is low interest rates. One of the pillars of Vision 2030 is low rates. The others are social development, economic development and political development. Under economic development, there are macroeconomic policies and under it is no interest regime. By any definition and this is one thing that my colleagues have to get; interest regime is a tool used by any regime to spur development, control inflation and make sure that interest rates go beyond manageable levels. With an interest rate of 32 per cent, this country is ripe for regime change. All of us have failed! We have made Kenyans paupers. We have reduced Kenyans to squatters and to a floating nation. Many Kenyans and I think quite a number of you have heard this, particularly in the middle class, that people have committed suicide because they are not in a position to service their loans.

    (Applause)

    Who else will help them, if they cannot get protection from their elected representatives to force these commercial entities to reduce interest rates without the connivance of the very individuals we have entrusted? If only somebody, anybody in whatever name, can justify how kshs 600 billion belonging to the taxpayers was given to commercial entities— There are only three reasons that will have justified this and I want my colleagues to get it. It is only under three circumstances that, that is possible: All these institutions are under financial strain or duress and if that is the case, then they are insolvent and, therefore, they needed to be put under receivership. That has not been the issue. We have not heard any financial institution that has been put under receivership simply because they have a problem. The other reason is arbitrage; free money for circulation and this country has become an epic centre of international local speculators and this is why today all of us are suffering. This is why today it is a privilege, where I come from, to have a cup of tea with sugar because it is not affordable. A kilogramme of sugar is going for Kshs300. What has caused this? It is because of high inflation. It is because of high interest rates. It is because of mismanagement of our economy. If we cannot put our foot down, it is because of regionalism, tribalism and personality cult. I want all of us – colleagues look at me, watch the four corners, the shape of this building – to know that Kenyans are watching us. Kenyans are suffering. Kenyans have been reduced to destitute. Kenyans have been made a profit nation simply because of the activities of a few. I want to see those who will say that an interest rate of 32 per cent is justifiable under the UN Convention, our statutes and under the current Constitution and this is why all of us took the Koran, the Bible or whichever means to swear that we are going to defend the rights of Kenyans. If this is not so, I want to be protected and be informed if there is such a thing!

    Mr. Deputy Speaker, Sir, I want to also go to the other issues that might have contributed to this. It is clear that as a result of inaction by the very institution that is tasked with this, one of the banks that greatly plotted the exchange—

    The Minister for Transport (Mr. Kimunya): Mr. Deputy Speaker, Sir, like I have said and I want to reiterate, we are here to get the truth and nothing but the truth. Looking through the document that has been tabled by the Chairman of the Committee and which is the basis for his argument that the banks committed an economic crime for taking money from the public and lending it back to the same public, when I look at this document, there is a schedule here that shows the lending through the CBK window. But his argument that all these money was borrowed and lent in three months and then banks made so many millions because they borrowed cheap and lent to the Government at 26 per cent, I do not see the substantiation. I do not see the substantiation to the effect that the Kshs600 billion was lent to the Government in three months at 26 per cent. This is because when you add up the figures within the last three months, it is just about Ksh120 billion. I think it is important that we do not confuse this House with numbers – mind boggling figures – to make sentimental issues and for purposes— So I would like us to get the hon. Member to substantiate his claims which is very fundamental that the banking sector in Kenya committed an economic crime by taking Kshs600 billion of the public and lending it to the same public within the three months and made a profit of Kshs29 billion because these papers do not substantiate what the hon. Member is talking about.

    Mr. Mbadi: Mr. Deputy Speaker, Sir, even though I listened and heard the Chair say very well that this Kshs600 billion was for the year – a whole financial year; 12 months not three – could Mr. Kimunya declare his interest in this matter because we are aware that he was named together with Prof. Ndungu in the Cockar Report? Could this be the reason why he is trying to stop us from debating this important Motion just because he wants to protect his friend?

    The Minister for Transport (Mr. Kimunya): Mr. Deputy Speaker, Sir, I wish to declare my interest in this matter both as Deputy Leader of Government Business and as Member of Parliament for Kipipiri. My interest is to seek the truth and nothing but the truth and to avoid introduction of gossip and extortionist issues being brought to the Floor of this House.

    Mr. Midiwo: On a point of order, Mr. Deputy Speaker, Sir.

    Mr. Deputy Speaker: Order! The Chair will not allow any unparliamentary language to be used here. Mr. Kimunya, the word “extortionist” is not parliamentary unless you are prepared to substantiate that, indeed, there is a Member of this House who is extorting somebody else. In the absence of that, you must withdraw that term.

    The Minister for Transport (Mr. Kimunya): Mr. Deputy Speaker, Sir, I wish to withdraw the term “extortionist.”

    Mr. Keynan: Mr. Deputy Speaker, Sir, again, I want to urge Mr. Kimunya to take time and read the report. As I said, he is distorting facts and the whole country is watching. I said I was comparing 2010/2011. Let him not change the facts because Kenyans are watching. I know and as somebody said there are interests, but allow me to complete. As we did this, we realized that there are quite a number of banks who flouted the CBK guidelines. The Governor, in his own wisdom of the financial institution, did not take any action.

    We realized that during this period there was an increase of foreign exchange trading by different banks. Those who are familiar with financial issues can clearly get what that meant. Because of this, commercial banks decided to hold the whole nation at ransom. For comparison purposes, I want to read something. I want to read the profit margins that the banks made during the later period of 2011 as compared to what they borrowed. Kenya Commercial Bank (KCB) in 2010, their profit margin was Kshs6.5 billion. In 2011, their profit was over Kshs10 billion. That is an indication of how they benefited from this trading. Standard Chartered Bank in 2010, their profit was Kshs6 billion. In 2011, their profit was Kshs7.6 billion. Barclays Bank in 2010, their profit was Kshs8.7 billion. In 2011, their profit was over Kshs10 billion. The same applies to Stanbic Bank and all other commercial banks.

    The reasoning is that the more they borrowed from the discount window, the more they manipulated foreign exchange with the connivance of the very regulators who were supposed to protect the Kenyan taxpayers; the more profit they made. If this does not constitute economic crimes against the people of Kenya, I do not understand it. Again, if you look at what happened, there is an institution called the Barings Bank in Ireland. That particular bank was allowed in the mid 1990s to arbitrarily engage in similar activities like these. That calls for regime changes. The entire leadership of South East Asia was wiped out because of high interest rates. We are lucky because whenever such issues arise, we go back to our tribal cocoons and our regions in the name of protecting our own. That has cost an interest rate of 30 per cent today. Even Greece which of late has had very serious economic crisis, the interest rate remains at 6.5 per cent. Could we compare the same to 30 per cent? It is because of this trading. If the Governor would have acted prudently, this issue would not have arisen. As a result of this, there is a crisis in the mortgage industry.

    The salaries of the entire middle class have remained the same. Interest rate has skyrocketed almost by four times. Who will assist these Kenyans?

    There is a particular Kenyan I want to mention who works for one of the parastatals whose salary is Kshs170,000. This particular Kenyan had a mortgage of Kshs72,000 while the interest rate was 9 per cent. The interest rate changed from 9 per cent to 29 per cent in that particular bank where he has a mortgage. Out of the blues, that person was asked to service a mortgage of Kshs188,000 against a salary of Kshs170,000. Is that person not a candidate for suicide? Is that Kenyan not in serious financial trouble? These are the issues that we must raise. I do not see any other group with legitimacy other than the elected representatives to put this thing to order so that the Government of the day can protect the savings, properties and everything owned by Kenyans.

    Mr. Deputy Speaker, Sir, there are a number of issues on this particular phenomenon which have come to our attention as a Committee. We interacted with the Kenya Bankers Association. One of the things that they said is that they have a problem with the way the bank is managed. We also interacted with the Ministry of Finance. We realized that there was total communication breakdown between the CBK and the Ministry of Finance. There was a lot of capital flight because it was free for all. Anybody could do anything in the name of a liberalized economy. It is because of this that many international criminals in the name of financial speculators and international hoarders come to the Kenyan market.

    The day this House appointed a Select Committee to investigate the decline of the Kenya Shilling, it stabilized. In fact, for those of you who are keen, the day we tabled this report, the shilling appreciated. That itself is a clear indication that Kenyans out there and in particular the financial market are watching what we are doing. They appreciate, understand and are looking forward to this Parliament solving some of the problems. Going to the recommendations, we realized that the man who is the head of that key institution slept on the job, just like other international institutions that did performance rating and this is what they had to say. This was not Parliament. I want Mr. Kimunya to listen to this:
    International Performance Rating. There was a performance rating on the Governor in the website by Reuters and international financial agency based in South Africa. This is what they said: “This man was asleep—“

    The Minister for Transport (Mr. Kimunya): On a point of order!

    Mr. Deputy Speaker: Order, Mr. Kimunya.

    Mr. Keynan: Mr. Deputy Speaker, Sir, I want you to protect me from Mr. Kimunya.

    Mr. Deputy Speaker: Order, Deputy Leader of Government Business! You must be actually the example of dignity in the House.

    Proceed, Mr. Keynan!

    Mr. Keynan: Mr. Deputy Speaker, Sir, if Mr. Kimunya insists on the same we will be forced also to protect ourselves and we will say a lot of things that we know. So, please, respect us and we will respect you.

    The Minister for Transport (Mr. Kimunya): On a point of order, Mr. Deputy Speaker, Sir. You have heard Mr. Keynan threatening me on the Floor of this House that he has a lot of information against me that he will reveal. Is he not imputing improper motives on an hon. Member of this House?

    Mr. Deputy Speaker: Mr. Keynan, you cannot impute improper motives on a fellow hon. Member without a substantive Motion.

    Proceed.

    Mr. Keynan: Mr. Deputy Speaker, Sir, I was saying that there a lot of things that we know and I did not specifically refer to Mr. Kimunya. I said this was one of the ratings given by the—

    Mr. James Maina Kamau: On a point of order, Mr. Deputy Speaker, Sir. Mr. Keynan is not referring to the Chair. He is referring to Mr. Kimunya. Why can he not address the Chair?

    Mr. Deputy Speaker: Mr. Keynan, refer to the Chair.

    Mr. Keynan: Thank you, Mr. Kamau for that correction. I do accept. One of the analysts who was part of those who were doing the performance ratings said that the Governor of the CBK was asleep at the wheel and, therefore—

    Mr. Jamleck Kamau: On a point of order, Mr. Deputy Speaker, Sir!

    Mr. Deputy Speaker: What is your point of order, Mr. Jamleck Kamau?

    Mr. Jamleck Kamau: On a point of order, Mr. Deputy Speaker, Sir. You ruled very clearly that Mr. Keynan is imputing improper motives on the Minister, could he first of all before proceeding, apologize for that?

    Mr. Deputy Speaker: Order, Mr. Jamleck! You are not the Chair. Proceed, Mr. Keynan!

    Mr. Keynan: Mr. Deputy Speaker, Sir, these were the comments of one of the analysts. He said, “The Governor of the Republic of Kenya was asleep at the wheel” and another one said, “He missed the plot entirely” which means he did not understand what was going on. This is not me.

    Mr. Deputy Speaker, Sir, the person and institution tasked with this job have slept on the job; nobody is saying the Governor is culpable at this stage. We are saying that because there are unique issues that happened during this period of time in line with the provisions of the Banking Act and Central Bank of Kenya Act, the Governor should step aside so that due process can take place. If indeed, investigations find that the man was not culpable, he will come back. At this stage nobody should have the slightest idea or feeling that we are saying the Governor is culpable, no. We are saying that something happened.

    We realized there was communication breakdown between him and the key institutions. Again, the issue of the monetary policy was turned into a club. This is a committee that would have handled professionally the issue of interest rates and other policy issues on the CBK and the financial sector. This, again, is a club of a professor and his student. It is known and not something that I am going to speculate. We have suggested a number of legal amendments for the position of the Governor and the Deputy of the CBK to be advertised in a transparent and professional manner so that he does not become an appointee at the whims of any individual.

    Mr. Deputy Speaker, Sir, we have also said that in the CBK the Governor is both the chairman of Board of Governors and the Governor. We said we should suggest institutional separation so that the Governor remains the Governor and there is a board. This is an amendment we are suggesting to the CBK Act.

    We are also saying at least the department that is in charge of bank supervision must be strengthened so that they can at least detect some of these shortcomings. Again, we are also saying the sanctions against some of the banks or financial institutions that are engaged in arbitrage and other criminal activities are minimal. We are suggesting an amendment.

    We are also suggesting the monetary policy committee to be enlarged.

    Mr. Deputy Speaker, Sir, we are also saying the issue of supervisory, oversight and institutional role of CBK should develop tools efficiently to monitor financial markets. On the independence we are also suggesting that—

    The Assistant Minister for Industrialization (Mr. Muriithi): On a point of order, Mr. Deputy Speaker, Sir. I have read this Report and the Committee says clearly that arbitrage is not an illegal activity. However, the Chairman has repeatedly said in his remarks that the banks engaged in arbitrage and, therefore, engaged in economic crimes and criminality. Is it in order?

    Mr. Deputy Speaker: Wait for your moment. That is a point of debate. You will have your moment to say that this does not constitute what Mr. Keynan says. Proceed!

    Mr. Keynan: Mr. Deputy Speaker, Sir, I was saying there is also need to put a mechanism of an internal review within the banks so that these issues can be detected. On the fiscal policy, we are saying there is need to place in tariffs and non-tariff barriers on non-commercial import services. This is given as one of the reasons but again we realized that this is a problem that has been going on.

    Finally, there is the issue of the in duplum rule which is in the law. This was a product of the Donde Bill which again was not legislated during that time but later on it was put into law.

    This is not yet in operation. This would have protected many Kenyans who are not in a position to service their loans.

    In concluding, there are critical issues as a nation we need to address. There is need to prove a level playing field for all Kenyans regardless of their tribe, their region, their social or political affiliation to engage in productive economic activity. This is one thing that is lacking in the current financial market. It is so skewed that Kenyans do not have the same opportunity to do business as required by the Constitution. The same equality under the law must be reflected in practice and in action. This is one thing that we need to see.

    The issue of current account deficit is one of the issues that were said. Again, to the best of our recollection, to the best of what we have seen—

    Mr. Ogindo: On a point of order, Mr. Deputy Speaker, Sir. I rise on a point of order as a Member of this Select Committee. I am privy to the documents that we received and compiled as part of this Report. Most of these reports were annexed and numbered. Looking at what is now circulating here, a number of annexes are missing from the Report.

    Mr. Mbadi: On a point of information, Mr. Deputy Speaker, Sir.

    Mr. Deputy Speaker: Do you wish to be informed by Mr. Mbadi?

    Mr. Ogindo: Mr. Deputy Speaker, Sir, critical among the missing reports was a report we received from the CBK. When you look at this Report now it has annexes (iv) to (ix). Annexes (i) to (iii)—

    Mr. Mbadi: On a point of information, Mr. Deputy Speaker, Sir.

    Mr. Deputy Speaker: Have you accepted information from Mr. Mbadi?

    Mr. Ogindo: Mr. Deputy Speaker, Sir, I hope to benefit.

    Mr. Deputy Speaker: Mr. Mbadi, proceed!

    Mr. Mbadi: Mr. Deputy Speaker, Sir, indeed, what Mr. Ogindo is raising is true. I have just gone to Room 8 and checked. There are a number of annexes that have been omitted from this Report. That has been done probably from the Clerk’s office. Therefore, we need to be helped on how to proceed and know who did this.

    Mr. Deputy Speaker: Can the chairman conclude? Indeed, that falls within the Clerk’s Department and the Speaker’s office.

    Mr. Ogindo: Mr. Deputy Speaker, Sir, the second thing is that most of the reports that are circulating here are not signed. Therefore, on account of those two issues, I want to invite your ruling so that you determine how we proceed because the Report we are debating now is incomplete to the extent that we completed our Report.

    Mr. Deputy Speaker: Order! Let us hear from the Committee Chairman.

    Mr. Keynan: Mr. Deputy Speaker, Sir, I want to read. There is figure 1, figure 2 and figure 3. Figure 2 was supposed to give the CBK a discount window and inter-bank rate. It is only the graph that is there. That official document that came to the Clerk’s office is missing from this and this is not signed. I think that is a very serious omission. All the annexes from (i) to this which were part and parcel of the original Report that I signed need to be part of this. Those were the annexes with incriminating information.

    Before you make a decision on the same, this is a very serious omission because the one you have is from institution to institution; it is from the CBK to the National Assembly, not me.

    It is the National Assembly that forwarded this.

    Mr. Ogindo: On a point of information, Mr. Deputy Speaker, Sir.

    Mr. Keynan: Yes.

    Mr. Ogindo: Mr. Deputy Speaker, Sir, I wish to inform the chairman that to the extent that those annexes are missing from this Report, this Report loses its merit and it cannot be moved.

    The Assistant Minister for Roads (Dr. Machage): On a point of order, Mr. Deputy Speaker, Sir. Now that the beans have been spilled a serious accusation is now being directed to the Chair, indeed, your office. The accusation is that certain pages have been removed by your office. That is a very serious allegation. Would I be in order to ask for adjournment for the same to be addressed?

    Mr. Midiwo: Mr. Deputy Speaker, Sir, I want to seek your indulgence. Some of the issues which have been raised about the details in this Report were surely in this Report when we finished it.

    Mr. Deputy Speaker, Sir, we knew that what you are seeing happening was a possibility because of what we are dealing with. As you know, I am involved in the investigations of this depreciation of the shilling and the issue of interest rates.

    So, we knew even as we went to Mombasa to complete this Report that if we did not protect it, the crooks would get hold of it.

    Mr. Deputy Speaker, Sir, I want to plead with the Chair because the information which is missing is so fundamental that—

    The Minister for Transport (Mr. Kimunya): On a point of order, Mr. Deputy Speaker, Sir. I believe we all have responsibility to protect the institution of this House. An accusation has been made that the Office of the Speaker is responsible for the missing information from this report through the Clerk. Hon. Midiwo has gone further to purport that, that office is full of crooks. I am not even sure whether the word “crooks” is Parliamentary or not. It is my responsibility to protect the institution of Parliament and its offices.

    Mr. Midiwo: Mr. Deputy Speaker, Sir, may I complete—

    The Assistant Minister, Ministry of State for Special Programmes (Mr. Gabbow): On a point of order, Mr. Deputy Speaker, Sir. When this Report was being moved today, we brought to the attention of the Chair that we did not have the full report with us here. However, we agreed to continue with it the way it is. Now, tactics are being applied to stop us from debating it. Why is it coming at a later stage? They continue to talk about the report that was there. So, we need your ruling because you allowed this Report to continue and the debate to continue.

    Mr. Deputy Speaker: Order! Mr. Midiwo, conclude your point of order!

    Mr. Midiwo: Mr. Deputy Speaker, Sir, I want to plead with my colleagues that we be sober. At the end of the day, this debate is about the haves who believe they must have and the rest of us who do not have opportunities to steal.

    Mr. Deputy Speaker, Sir, I, therefore, want to plead with you to give us, as the Committee Members, a chance to investigate and find out who may have taken the Report and what their intentions were before we continue this debate.

    The Assistant Minister for Youth Affairs and Sports (Mr. Kabando wa Kabando): On a point of order, Mr. Deputy Speaker, Sir. I rise on a point of order under Standing Order No.25, which could as well have been initiated by hon. Machage. It says:-
    “A Member who wishes to postpone to some future occasion the further discussion of a question which has been proposed from the Chair may claim to move “That, the debate be now adjourned”, or, in Committee of the Whole House “That, the Chairperson do report progress.”

    Mr. Deputy Speaker, Sir, given the arising matters, I would request that this debate be adjourned to a future time. As you make that decision, how the country wishes that the same vigour, excitement and energy from some of us is shown consistently, particularly even when we are talking about the stolen funds from the Kazi Kwa Vijana (KKV) kitty.

    (Several hon. Members stood up in their places)

    Mr. Deputy Speaker: Order, hon. Members! Order! Hon. Members, indeed, the accusations or rather the claims that were made from the Floor are very serious and weighty. Ordinarily, a report which is laid on the Table of the House should be circulated in its original form. I am made to understand through the Clerk’s Office that there were certain lapses. Indeed, this Report is not complete. Clearly that responsibility would be borne by an office in this Parliament. The Chair now directs that any further debate on this Motion be adjourned. The same Motion be listed on the Order Paper at the earliest opportunity after proper circulation of the document or rather the Report in its original form.

    (Several hon. Members stood up in their places)

    Mr. George Nyamweya: On a point of order, Mr. Deputy Speaker, Sir.

    Mr. Deputy Speaker: What is your point of order? I will only entertain one point of order from hon. George Nyamweya!

    Mr. George Nyamweya: Mr. Deputy Speaker, Sir, by the admission of the Chairman and the Committee itself, and by your own acknowledgement that the document which has been tabled is not complete, therefore, surely, we cannot adjourn to debate an incomplete document. It should be withdrawn and then they table a proper document.

    (Several hon. Members stood up in their places)

    Mr. Deputy Speaker: Order! Order! The fact that the document is not complete is not a mistake of either the Committee or the plenary of this House. It is a mistake that will be borne by the Clerk’s Office. Under the circumstances, the Chair directs that this document will be fully bound and will be circulated in its original form. The matter be listed on the Order Paper at the earliest opportunity.

    For the time being—-

    (Several hon. Members stood up in their places)

    Order! Order! Hon. Members, I can see the anxiety and passion with which you all want to prosecute this matter. Ordinarily, as patriotic Kenyans who want to get to the bottom of a matter that is before the House, you should hold your horses and say your piece at the appropriate moment. You should stop, indeed, occupying the House in a lot of dilatory matters.

    This Report will be circulated in its original form, and the matter will come before this House at the earliest opportunity.

    (Several hon. Members stood up in their places)

    Order! Order! For moment, the matter rests at that.

    Next Order!

    Dr. Nuh: On a point of order, Mr. Deputy Speaker, Sir.

    Mr. Deputy Speaker: What procedure hon. Dr. Nuh!

    Dr. Nuh: When the Hon. Assistant Minister for Youth Affairs and Sports moved the dilatory Motion, the procedure in the Standing Order No.25—-

    Mr. Deputy Speaker: Order! That procedure and Standing Order is on matters—

    (Dr. Nuh stood up in his place)

    Order! Order! You need to acquaint yourself with the practices much more than you have done so far. That Motion is when Members themselves want to adjourn a Motion. It is supposed to be put without any debate. For the moment, on this matter, the Chair is exercising its own authority and discretion because there was a lapse in the report. This is a matter that is internal to the Clerk’s Office and the Chair is giving a direction on the same. I have already put that matter to rest.

    Next Order!

    NATIONAL ASSEMBLY
    OFFICIAL REPORT
    Tuesday, 6th March, 2012
    The House met at 2.30 p.m.
    [Mr. Speaker in the Chair]

    Page 21 Tuesday, 6th March, 2012(P)

    CONSIDERED RULING

    DEBATE ON REPORT ON DECLINE OF THE KENYA SHILLING TO PROCEED

    Hon. Members, the second Communication is that you will recall that the Chairman of the Parliamentary Select Committee on the decline of the Kenya shilling against foreign currencies commenced moving the Motion on the above Report on Thursday, 1st March, 2012. However, the Member for Rangwe, Mr. Martin Ogindo, rose on a point of order claiming that copies of the Report circulated to the Members were not signed and that the annexes were missing. He, therefore, sought guidance from the Chair on how to proceed as the Report was incomplete. The claim was further spoken to by two other Members. The Chair directed that further debate on the Motion be deferred and that the Motion be listed on the Order Paper at the earliest opportunity after circulation of the Report as tabled in the House.

    Hon. Members, I have perused the Report that was tabled in the House on 14th February 2012 and confirm that it is the same Report as I approved. Pursuant to Standing Order No.181 (3), a Report of a Select Committee together with the minutes of the proceedings of the Committee and with such note or record of any evidence by the Committee as the Committee may deem fit shall be laid on the table of the House by the chairperson of the select committee or by some other Member authorized by the committee on its behalf within 14 sitting days of the conclusion of its proceedings.

    These minutes are appended as annexure (i). The list of annexes which are 18 in number are on page six of the Report and are intact. I have, however, ascertained that some copies given to the Members contained only the main Report but not the annexes.

    The claim that some annexes had been removed is, in view of the foregoing, not accurate. Copies have now been made of the Report in its original form together with all the annexes as tabled in the House.

    Thank you.

    Hon. Members, the effect of that communication is, therefore, that business at Order No.11 will proceed when we get there.

    Those who do not have the Report may make efforts to obtain copies thereof which are readily available both within the Chamber and in Room No.8. Next order!
    NATIONAL ASSEMBLY
    OFFICIAL REPORT
    Tuesday, 6th March, 2012
    The House met at 2.30 p.m.
    [Mr. Speaker in the Chair]

    Page 36 Tuesday, 6th March, 2012(P)

    MOTION

    ADOPTION OF REPORT ON DECLINE OF KENYA SHILLING

    THAT, this House adopts the Report of the Parliamentary Select Committee on Decline of the Kenya Shilling against Foreign Currencies laid on the Table of the House on Tuesday 14th February 2012.

    (Mr. Keynan on 1.3.2012)

    (Resumption of Debate interrupted on 1.3.2012)

    Mr. Keynan: Mr. Speaker, Sir, before I commence, will I be in order, because of what happened, to ask you to use your discretion for additional time?

    Mr. Speaker: Order, hon. Keynan! As the Chair of the Select Committee, I did follow what transpired when this matter was on the Order Paper on Thursday last week. I know that there were many points of order which you had to respond to. According to our institutional memory, as captured by the HANSARD, you have five minutes. I will exercise that discretion that you have alluded to and add you another five minutes. So, in effect, I will double your time. Ten minutes, therefore!

    Mr. Keynan: Thank you, Mr. Speaker, Sir. I hope that will be enough. Mr. Speaker, Sir, first of all, I would like to take this opportunity to clarify a number of issues that have been deliberately distorted, just to mislead Parliamentarians and also the Kenyan public. This relates to the issue of discount window. I know that later on, a respected former Central Bank of Kenya (CBK) banker, and also a Member of Parliament, who will second this Motion, will also dwell on this particular issue. But the issue of discount lending per se is not illegal. But what happened? At that particular time, the counter-lending, first of all, was the last resort lending facility by CBK. The circumstances that warrant any financial institution to visit that facility are three.

    Mr. Speaker, Sir, first, the particular institution must be in a dire financial strain. Two, there must be nationally acknowledged liquidity crisis which, again, must be within the confines or province of the regulator. The last one, which is very unlikely, is to visit the facility simply because it is there for profiteering purposes. In our context, and I want to confirm for purposes of record, indeed, the amounts borrowed from the discount window for the year 2011 for 12 banks out of 43 banks – and I will name the banks – indeed, totaled to Kshs 600,000,189,000. This is not a fallacy. For the whole of 2010, the same is Kshs11,000,112,000. This is documented and factual. These are records from none other than the regulator, CBK.

    Mr. Speaker, Sir, the banks are divided into three categories; the big banks locally, the international banks, the medium banks and small banks. Again, the issue we ought to ask ourselves as citizens of the Republic of Kenya is: What liquidity crisis did Kenya Commercial Bank, Barclays Bank of Kenya, Stanbic, Standard Chartered, Equity and many other banks experience that warranted them to visit that facility without any control by CBK? If that question could be answered! Whose work was it? If these questions are answered, then this issue of Kshs600 billion or it did not happen will not arise. The fact is that, that facility was visited. It is not one day thing. A bank would visit that facility today and borrow Kshs2 billion. Tomorrow, another one would come and borrow Kshs10 billion. The next day— In total cumulatively for the year 2011— This is not a fallacy or fiction. It is a reality and it is within CBK. It is in the documents that they gave us, and which forms part of the Report. What prompted this? Where was the regulator? The import of this is high inflation. That money is something that the market could not accommodate. Therefore, it means that the Kshs600 billion and other monies that were given to those particular banks, in economic terms, is paper money which has no value. That is not something that the economy can accommodate.

    Mr. Nyammo: On a point of order, Mr. Speaker, Sir. I think the hon. Member should not mislead this House and the nation. What kind of borrowing is he talking about? What was the duration of borrowing? The borrowing that we have in mind and we are aware of is overnight borrowing.

    Mr. Speaker: Order! Order, Member for Tetu! I think you have skills in this area, but the way you have prosecuted that point of order, I am afraid, I cannot allow i

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