By Andrew Cawthorne

NAIROBI, Sept 13 (Reuters) - Kenya's central bank was embroiled in more controversy on Saturday over a bid to move a deputy governor in a step she linked to her anti-graft stance.

Critics have often connected the bank with corruption scandals dogging east Africa's largest economy in recent years to the despair of many Kenyans and foreign investors.

To the surprise of local markets and political observers, the central bank's No. 2, Jacinta Mwatela, was told this week she had been made permanent secretary -- the top civil service rank -- in the Ministry of Northern Kenya and Other Arid Lands.

Local media suggested the long-serving bank official was paying the price for her opposition to some shady practices at the bank including dubious money-printing deals.

Mwatela fuelled that impression with a letter, published in newspapers on Saturday, opposing the move as illegal because she had a four-year appointment contract signed by President Mwai Kibaki running until May 12, 2009.

"Kindly clarify to me how I am supposed to perform two high responsibilities since I am currently the Deputy Governor of the Central Bank of Kenya as duly appointed by His Excellency the President," she said.

"I am now aware of its (the appointment's) revocation," she added in the letter to Francis Muthaura, Kenya's most senior civil servant and permanent secretary of the president's office.

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Mwatela was quoted in the Standard newspaper as saying she had opposed a tender to print Kenya shilling notes. "It is very strange that this is what I got when I am trying to protect public resources and insisting we follow the law."

Mwatela told the Nation paper a new tender to international printer De La Rue broke rules on transparency. "The procurement is illegal. It is in conflict with the Procurement Act," said Mwatela, who has been at the bank for three decades.

Neither she nor other bank officials could be reached on Saturday for comment on the case. De La Rue declined to react.

"I don't think we would want to comment on that. It sounds like a local issue," said a spokesman for the firm in Britain.

Kenya's central bank has a history of controversy.

The nation's biggest corruption case "Goldenberg", named for a holding company, saw $1 billion in central bank money siphoned off in compensation for bogus mineral exports in the 1990s. More recently, former central bank governor Andrew Mullei stepped down after being accused of awarding lucrative consultancies to his son. He was acquitted in May 2007.

And this year, activists accused the government of secretly selling a Central Bank-owned luxury hotel at a knock-down price. Kenya's finance minister denied any impropriety but has stepped aside during an official investigation.

Government spokesman Alfred Mutua said media reports that Mwatela's move was illegal because she enjoyed security of tenure at the central bank were wrong.

"Officers employed in the public sector can be removed or deployed to various offices," he said in a statement.

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