Corruption of Public Procurement

Agora

Given its track record, ICAC has the undoubted opportunity to redress its perception at a time when the country remains more firmly than ever under the scrutiny of all international agencies

“It would be somewhat mystifying to portend in the CEB-St Louis affair, that without the collaboration or report of either the African Development Bank or Burmeister & Wain Scandinavian Contractor that won the turbine contract, ICAC would somehow be handicapped. The affair is simple in its tenets: the bidding firm’s offer was turned down late 2014 by the Central Procurement Board for some 80 serious inadequacies. End 2014, with the change of government, comes a new Minister, new Chairman and General Manager at the CEB, new personnel at the CPB and IRP and clearly the incoming government holds all the cards…”

By S. Callikan

In all corruption practices, there is a private sector corrupter determined to maximize its profits or thwart competitors and a corrupt element in the politico-administrative nexus that, against monetary or non-monetary favours, will bend or bypass the rules to help the corrupter achieve those ends. Governments, as massive purchasers and sometimes importers of a large variety of goods from pharmaceuticals and medical equipment, to essential commodities like rice and flour, to energy and fuel fossil supplies, not to mention large infrastructure projects, are therefore particularly prone to corruption of the public procurement processes, a well-known phenomenon.

Consumers and taxpayers end up either paying above market value or getting lower quality goods and services. A supposedly free-market competition is distorted to the benefit of the unscrupulous few, and inordinate amounts of corrupt, black monies circulate which need laundering or sheltering in secretive havens. Not surprisingly, all major funding agencies, the European Union, the OECD and large international banking lenders are increasingly intolerant to persistent fraudulent practices, corruption and money-laundering which become so ingrained as to be systemic or organic.

The situation is of course worsened when accompanied by a culture of impunity, the absence of credible, independent investigative agencies or the lack of outcome or observable sanctions in many mediatised cases. That’s not Opposition voices but part of the considered view of the IMF/FATF when short-listing our country’s strategic deficiencies in 2017. In view of the degradation since, we can read those views to mean, in blunt terms, the following: (a) FSC/FIU has little or no idea what a risk-based supervision of the global business sector meant, (b) ICAC has little or no capacity to conduct the necessary money-laundering and financial investigations, and (c) there has been little or no evidence of demonstrable implementation of targeted financial sanctions. We may gripe and moan but nothing of substance was achieved to correct these deficiencies since 2017. We have been unfortunately grey-listed by the FATF in February this year and now, to the despair of our banks, financial institutions, operators and by 15-20% of our economy, we have been blacklisted by the EU.

With all due respect for the incoming Minister of Financial Services, and with hope that we may be wrong, these are not issues that can be addressed by a hastily drafted legal amendment, promulgated upon, implemented and shown to be effective over a few weeks before the 1^st October deadline for the EU blacklist regime to take full effect. Effectiveness we suspect means not only having the basic legal and instrumental bits in place, but a demonstrable change in FSC structure, personnel, culture of kow-towing political masters or a demonstrable track-record of intransigent independence, a mega shift in its up-to-now more than paltry record.

By 2017, Senor Sobrinho’s adventures here, his dalliance with high State and political offices and amendments to the law to grant him investment banking licenses under FSC gaze are known to all country-watchers. On a larger plane, so were probably the dismantling of a business group (BAI/Bramer Bank) without any judicial process or condemnation pronounced. So was the refusal of international arbitration rulings in the Betamax case, where the appeal still has to be heard at the Privy Council. Government since 2015 has been clearly demonstrating the overlordship of political considerations over institutions and other processes, with little checks and balances.

Effectiveness also means a track record of successful investigations by ICAC, more particularly in all high-profile cases where big bucks, top politico-administrative brass, well-heeled insiders, advisors and consultants are dancing hand in hand, locked in pacts of secrecy, to thwart the investigation process or influence its outcome even before any case is brought before the judiciary. Under considerable battering from all quarters, ICAC has recently issued a list of high profile cases which only highlights the deficiencies already referred to. Even allowing for the implicit pact of secrecy and mutual self-interest bonding the partners which have decided to tango together, experienced inquirers, if free to do so, can have access to all documentary evidence, can commandeer financial audits or trails, can ask for judicial mutual assistance and, naturally, can audition various parties.

It would therefore be somewhat mystifying to portend in the CEB-St Louis affair, that without the collaboration or report of either the African Development Bank (ADB) or Burmeister & Wain Scandinavian Contractor (BWSC) that won the turbine contract, ICAC would somehow be handicapped. The affair is simple in its tenets: the bidding firm’s offer was turned down late 2014 by the Central Procurement Board (CPB) for some 80 serious inadequacies, a rejection later confirmed by the Independent Review Panel (IRP). End 2014, with the change of government, comes a new Minister, new Chairman and General Manager at the CEB, new personnel at the CPB and IRP and clearly the incoming government holds all the cards.

In 2015, tender specifications are altered, a new tender launched with ADB input and BWSC’s offer is found to be a perfect fit, albeit at some Rs 700 m more. On a whistleblower input, months following project completion in 2018, BWSC conducts an inquiry which concludes to substantial corruption and monies paid out to ensure its bid met all the revised tender requirements of the client CEB. Five staff members are sacked and two senior staff are under police investigations. Corrupters have been sanctioned at some cost to BWSC, while it is incumbent on local investigators to identify the corrupt, among the key players in “Mauritian administration and others” wherever they might be: Ministry, CEB, advisors, consultants, tender drafters…

Having resisted demands for a commission of enquiry, the Prime Minister and his No 2, the DPM and Minister of Public Utilities and government as a whole are now tied to the credibility and celerity of the investigation by ICAC. Given its track record and the strategic deficiencies listed previously, it may be a tall order for ICAC. Conversely, despite the heavy political intricacies, it has the undoubted opportunity to redress its perception at a time when the country remains more firmly than ever under the scrutiny of all international agencies.

* Published in print edition on 23 June 2020