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Mauricio (Photo: Dan Freeman / Unsplash)
The island nation must pay more attention to warning signs to avoid the slippery slope of corruption. To begin with, it is necessary to improve the controls in the procurement processes.
First published by ISS today
Just a week after Mauritius was placed in the potential of the European Union blacklist for money laundering and terrorist financing, another scandal came back to bite. On June 8, the African Development Bank (AfDB) announced that there was evidence that an energy project it had financed in Mauritius executed by Burmeister & Wain Scandinavian Contractor (BWSC) was marred by procurement corruption.
2019 Report of the Eastern and Southern Africa Anti-Money Laundering Group identified the energy sector as one of the most vulnerable to corruption in procurement, and the Mauritius episode supports this finding. The incident is one of several corruption scandals that have emerged in the last decade, negatively impacting investor confidence and the image of Mauritius as a model of clean governance.
It all started in 2014 when the Central Electricity Board issued a hiring notice for its Saint Louis power plant, which would be funded by the AfDB. The successful bidder was to design, supply, install and commission a diesel power 60MW +/- 10% capacity plant.
The offer also noted that the unit size of each turbine must not exceed 15MW, a clause that later became controversial. Once the tender was closed, the Central Procurement Board received only one presentation: from BWSC.
A few weeks later, the bidding exercise was canceled. The Bid Evaluation Committee said The BWSC proposal was considered not to be–attending to the requirements established in the bidding documents ”. In other words, the request contained substantial deviations from the technical specifications of the tender. BWSC launched an appeal shortly thereafter.
The offer was republished in 2015, which BWSC duly challenged with the Independent Review Panel. The panel ruled that the tender did in fact offer an advantage to BWSC and annulled the company’s application. Despite this setback, BWSC won the contract with an estimated budget of $ 129.7 million.
The company completed the project in October 2017 and took 19 months to complete (the expected time frame was 18 months), at a total cost of around US $ 119.14 million. A termination report by AfDB in 2019 described the implementation of the project by the BWSC as highly satisfactory.
However, after a notice in 2018 followed by its own investigation, BWSC concluded in 2019 that a ‘small group of employees, in connection with the sale of projects in Africa, had acted against our company policies’. The investigation revealed that criminal actions, including bribery, had been carried out. After firing five employees and reporting another two to the police, the company approached AfDB and was subsequently banned in 2020.
This has had a ripple effect in Mauritius. After the issue was raised in Parliament in June 2020, the board of directors of the Central Electricity Board resigned and was replaced. Higher in the government, Prime Minister Pravind Jugnauth removed his deputy, Ivan Collendavelloo, who was also Minister of Energy and Public Services. Collendavelloo had been named in the investigation.
Corruption in public procurement in the Mauritian energy sector is not new. In almost a replica of this year’s scandal, in 1994 the then energy minister was forced to resign after a tender. irregularities around the purchase of turbines for a power plant.
A brief examination of BWSC’s previous projects would have revealed the company’s involvement in questionable deals around the world. These include bribery allegations in the Philippines, contract irregularities in Malta, and scandals in the Bahamas.
Given the high risk of corruption in procurement on such large contracts, it is concerning that warning signs are being ignored, deliberately or otherwise. Perhaps this was because the anti-corruption approach tends to be more in the public sector than in the private sector.
Corruption of companies in their interaction with the state erodes trust in public institutions and prevents equitable access to resources. It leads to inflated prices in public and private contracts which in turn raise the cost to the consumer. Other consequences are tax evasion and illicit financial flows out of the country.
Going forward, those responsible for public procurement must be aware of these challenges and know how to address them. For example, greater transparency is needed in the procurement process. The public should have access to the bidding documents to the extent legally possible.
In the current situation, if the unsuccessful bidders challenged the award of the contract to BWSC, the public would not have had access to some of the tender information.
Controls in the procurement process should also be improved. Public officials involved in tenders must receive training and capacity support. Civil society organizations could play a follow-up role through a civil oversight committee. For tenders that exceed a certain threshold, an ad hoc committee of external stakeholders could provide additional oversight.
There is little doubt that Mauritius’s image of clean governance has taken a hit from these and other corruption scandals. The risks of corruption must be reduced and the culprits held accountable if the country is to avoid the slippery slope of the hill of corruption. DM
Richard Chelin is a researcher with the ENACT organized crime project, ISS Pretoria.
This article was First published by the ENACT draft. ENACT is funded by the European Union (EU). The content of this article is the sole responsibility of the author and under no circumstances can it be considered to reflect the position of the EU.
