Why were BWSC’s ‘Christmas gifts’ ignored by Enemalta?
From parent company Mitsui down to BWSC’s subcontractors, Enemalta ignored all previous allegations on the Delimara bidders, while BWSC filed statements of good conduct
Matthew Vella The Danish firm BWSC kept a history of bribery investigations under wraps from Enemalta and the Contracts department, when it signed a declaration that they were never found guilty of “grave professional misconduct”.
From its parent company Mitsui, down to the subcontractors that will provide the technology for the Delimara power station extension, the investigations into foreign bribery reported in the world press raised no eyebrows at Enemalta, which appears not to have carried out any due diligence on the Delimara bidders.
A ‘statement on excluding circumstances’ signed by BWSC back in March 2008, asked bidders to declare whether they had been found guilty of professional misconduct “proven by any means which the Contracting Authorities can demonstrate”.
The declaration – part of the voluminous contract signed for Enemalta’s 144MW turbine – shows both Enemalta and the contracts department ignored the history of the Danish firm, its subcontractors, and even a rival bidder for the €200 million contract, which had also been a BWSC supplier – MAN Diesel.
The most damning report concerns a 1999 internal e-mail by BWSC’s chief executive Soren Barkholt, to issue a $90,000 payment to Felicito Payumo, chairman of the Subic Bay metropolitan authority, in the Philippines, to clear bureaucratic hurdles on the Subic Bay power plant.
The December 1999 memo, first reported by the Danish financial newspaper Borsen, reads: “In our opinion, and this is supported by our agent, the tactic of the Chairman has to do with money, and therefore we strongly recommend to pay, say 90,000 USD of the payment due at ratification in accordance with the Marketing Agreement. We are confident that this part-payment, and the channelling of most of it to the Chairman, will remove his ‘doubt’…”
The memo goes on: “After a meeting with our contact here in our offices it is clear that he has to give smaller amounts to the key people involved, and it is his firm opinion that small amounts before Christmas will have a magnified impact in our favor on the further development.”
The BWSC chief is said to have told the Auditor General during his investigation into the Delimara contract, that the reports were “presumptions, but no proof of bribery.”
The allegations were investigated by the Danish police, but later shelved since the country had not enacted laws against foreign bribery, even though Barkholt’s memo seemed to leave little to the imagination.
Later, the Auditor General had nothing conclusive to state as to whether BWSC could have been disqualified from the contract on the strength of the reports – one of his investigation’s least thorough of considerations.
But it was evident that neither Enemalta nor the contracts department gave any attention to the bribery allegations: the Auditor General noted that he was “not convinced” of the declarations of senior Enemalta officials that they were unaware that Lahmeyer International – consultants on the Delimara tender to Enemalta – had been blacklisted by the World Bank.
But even if the police investigation into BWSC failed to raise eyebrows, Enemalta ignored the convictions and investigations into foreign bribery of BWSC’s subcontractors.
Wartsila, the Finnish supplier of Delimara’s diesel engines, had been implicated in the 2007 investigation by the Bangladesh Anti-Corruption Commission against a state employee, for helping the company set up a power plant in Khulna.
ABB, the Swiss engineers who will be providing Delimara’s AC generators, and Germany’s Siemens, who will be providing the switchgear, have also had their fair share of notoriety. In 2007, ABB faced its second case of investigation into suspect payments made in Europe to win foreign contracts, after declaring it may have violated the US Foreign Corrupt Practices Act bribery law.
In 2008, Siemens paid $1.34 billion in fines after being investigated over €1.3 billion in bribes in investigations carried out in Germany and the United States.
BWSC’s parent company Mitsui, had also been convicted in China of paying bribes to a senior minister over a bid to build a power station.
Anti-corruption watchdog Transparency International had noted that the cases showed that corrupt practices were often deeply ingrained in company culture and were not simple to weed out.
Even MAN Diesel, one of the rival bidders for the Delimara contract which was also awarded subcontracting deals by BWSC, saw charges filed against one of its former executives over a €9 million bribe to secure a gas pipeline modernization contract in Kazakhstan in 2004.
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