De La Rue Suspends Kenya Operation

The world-renowned security printing firm of De La Rue plc is temporarily suspending its operations in Kenya while the company continues its dispute over owing taxes and tries to ward off an investigation into allegations regarding a contract with the government of India. The Basingstoke, England based company is also waiting to see if King Charles III of England will decide to print new bank notes on which his vignette will appear.

According to a January 21 posting on the web site ThisIsMoney.co.uk, “the eco-friendly king has decided that wallets full of new bank notes would be wasteful, and only wants ones with his image to be printed gradually, to replace those soon to go out of circulation.”

One day earlier the bank note printer acknowledged that while the company had not received anything officially from authorities, De La Rue had learned through unofficial sources of an investigation by Indian authorities into a former Indian finance secretary in which the historical activities of De La Rue in India prior to 2016 have been implicated.

Sources indicated the Central Bureau of Investigation in India was investigating former Indian Finance Secretary Arvind Mayaram regarding allegations he may have awarded a three-year contract extension in 2013 to De La Rue for the supply of exclusive security thread for Indian bank notes without the mandatory security clearances.

On January 15 Kenya’s Tax Appeals Tribunal ordered the company to pay Kenya Revenue Authority 1.1 billion shillings in taxes (about $8.03 million U.S.). De La Rue had signed a contract with the Central Bank of Kenya to print bank notes. The court ruled De La Rue could not offset royalties paid to its parent company De La Rue International as an allowable expense under Section 15(1) of the Income Tax Act.

De La Rue reacted by issuing a statement reading, “De La Rue is disappointed with the ruling and its Kenya subsidiary is preparing an appeal to the Court of Appeal.”

The KRA conducted an audit of the company’s taxes between 2013 and 2017. De La Rue had disputed that it paid royalties to the company’s international holding company for services rendered to it and for that reason no taxes were due on the company’s income.

Kenya closed a joint venture agreement with De La Rue in 2019 through which Kenya paid 700 million shillings (about $5.6 million U.S.) for a 40 percent stake in the company’s domestic operation in that country.

De La Rue plc Chief Financial Officer Rob Harding announced on January 31 that he would be stepping down to join PayPoint plc as chief financial officer. He will allegedly remain with De La Rue for six months “to assist with an orderly transition.”

The following day Kenya’s central bank announced there are sufficient coins and bank notes in circulation that there shouldn’t be any concerns.

CBK Governor Patrick Njoroge addressed the press during a February 1 post-monetary Policy Committee briefing. At that briefing Njoroge said, “The currency needs are completely fulfilled and so the move will not affect the supply,” adding, “Owing to current global market demand, and no expectation of new bank note orders from the Central Bank of Kenya for at least the next 12 months, De La Rue Kenya has suspended bank note printing operations in the country.”

Kenya issued new coins on Dec. 11, 2018 to comply with Section 231 (4) of the 2010 Constitution of Kenya. On May 31, 2019, Kenya issued new bank notes printed by De La Rue to comply with the constitution. De La Rue plc sells high security paper and printing technology for more than 69 currencies worldwide. The company has the capabilities to designs and produce polymer substrate composition bank notes using security features including holograms, micro threads, and other current anti-counterfeiting technology.