How KCB Group’s $8 million old banknote sparked diplomatic controversy

On April 19, military intelligence in the Democratic Republic of Congo (DRC) arrested two Kenya Airways personnel in connection with the loss of customs documents for unspecified valuables.

Their detention sparked a diplomatic standoff between Nairobi and Kinshasa and threatened to damage friendly relations between the two East African Community (EAC) members. In late April, Kenya Airways suspended flights to the Democratic Republic of the Congo, and Kinshasa responded by refusing to accept documents from Kenya’s new ambassador.

As events unfolded, the contents of the cargo that started the diplomatic dispute remained secret.

However, on May 16, Kenya’s Foreign Minister Musalia Mudavadi said the cargo was $8 million in old banknotes that had been withdrawn from circulation by its Kenyan subsidiary, Trust Merchant Bank (TMB). . KCB Group in Kenyahad been shipped to the United States for replacement.

Mudavadi told a parliamentary committee that there was documentary evidence on the shipment and denied any suggestion that it was a money laundering attempt, as claimed by authorities in the Democratic Republic of Congo.

“The Trust Merchant Bank (TMB) of the Democratic Republic of the Congo, with the approval of the Central Bank of the Democratic Republic of the Congo, transfers currency withdrawn from circulation and transfers the currency to the United States Federal Reserve Bank for destruction; “It’s a new currency,” Kenyan Foreign Minister Musalia Mudavadi told parliament on Wednesday.

“This is a tradition and has been done before and has been done in other countries as well. Even when our currency is demonetised, it is usually the issuing authority, the Central Bank of Kenya (CBK). ). If it’s Pound Sterling, they take it back to the Bank of England.”

The Kenyan and two Congolese employees were released on May 6 after Mudabadi visited Kinshasa to try to restore normalcy. Pave the way to KQ The airline will resume flights to the country, one of its most profitable routes.

TMB, which was acquired by KCB Group in 2022, said in a statement that the consignment of old dollar notes was accompanied by appropriate documentation and approved by the country’s regulatory authorities, including the central bank.

“Although the Bank has complied with all procedures necessary for this type of business, this is not the first time that this has happened and is typical of banking business, particularly when the banknotes are not suitable for circulation because of their condition or series. Yes, for banknotes that do not exist,” TMB said.

DRC military intelligence claimed that the money was being transferred to Nairobi via Kenya Airways to fund rebel and anti-government activities. On December 15th, rebel forces in the Democratic Republic of the Congo They met in Nairobi to form a coalition government against President Felix Tshisekedi ahead of elections in December 2023.

Prime Minister Tshisekedi will visit Kenya as part of easing tensions and for bilateral talks with President William Ruto, as KQ flights resume to the troubled eastern Democratic Republic of Congo cities of Kinshasa and Goma. It is expected.

“A few days ago, I visited Kinshasa as a special envoy of President William Ruto and delivered a special message. We are also making further efforts to ensure the normalization of relations with the DRC, We are looking forward to a state visit, which he will agree to and will also decide on a date,” Mudavadi told MPs.

Since joining the EAC bloc in 2022, DRC has emerged as an important trading partner for Kenya. According to the Kenya National Bureau of Statistics (KNBS), exports to the Central African country will increase by 49% to $202.2 million (KN26.45 billion) in 2022, surpassing other African countries. It has grown the fastest compared to other countries.