Opinion | Sunday, 30 May 2010

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Delimara – ‘Only corrupt companies need apply’

According to the bid submitted by BWSC on 4 March 2008 for the extension of the Delimara Power Station, the manufacturer of the 132kV Switchgear for the plant will be supplied by the German Company Siemens. On the same day Erik Breiner Kristensen of BWSC signed the ‘Statement on Excluding Circumstances of Regulation 49 of Public Contracts Regulations 2005’. This declaration binds the bidder and also all his subcontractors, including Siemens.
In his declaration Erik Breiner Kristensen stated that Siemens and all the other subcontractors have never “been convicted of an offence concerning professional conduct by a judgement which had the force of res judicata in accordance with the laws of Malta or the country in which he is established.” He also signed that Siemens has not “been declared guilty of grave professional misconduct”, corruption, fraud and money laundering.
When Eric Breiner Kristensen of BWSC signed such a declaration on 4 March 2008 he knew that “the provision of inaccurate or misleading information in this declaration may lead to my organisation being excluded from participation in future bids.” More binding than this he knew that “bidders who have been guilty of making false declarations will incur financial penalties representing 10% of the total value of the contract being awarded.”
There is no indication that Enemalta, the Department of Contracts or government bothered to check Kristensen’s barefaced lie about Siemens, the same way they did not check Lahmeyer International, also involved with Siemens in corruption in Africa. After Lahmeyer International was blacklisted by the World Bank, Enemalta Corporation – through a direct order – appointed it as an “independent” consultant to evaluate the technology of the bids for the Delimara Power Station extension, even though Lahmeyer International and BWSC had the same exclusive agent in Malta – Joseph Mizzi and Lahmeyer International and BWSC had been partners in building three power stations in Iraq. Until the end of this year, Siemens is also blacklisted by the World Bank because of corruption by three of its companies in Russia between 2004 and 2006.
In its April 2010 Report on the BWSC’s contract for the Delimara Power Station extension, the National Audit Office states: “Enemalta senior officials declared under oath that they were not aware that Lahmeyer was blacklisted by the World Bank for the period 2006-2013. This Office was not convinced of the explanations given.” How can we believe that senior Enemalta officials reading trade journals dealing with energy companies never came across one of the many news items about Siemens’ involvement in corruption worldwide over many years?
In the decade before Eric Breiner Kristensen of BWSC, between 1998 and 2008, signed a declaration that Siemens has never been involved in corruption bribery and fraud, Siemens had been named in numerous cases of corruption in many countries around the world. In 1998 Siemens concluded a US$1 billion identity card contract in Argentina. Siemens was charged and found guilty in the United States under the Foreign Corrupt Practices Act of making multi-million dollar payments to high-level Argentinean officials from 1998 to 2007 in connection with the 1998 contract.
The Securities and Exchange Commission also took legal action against Siemens in connection with the same contract. Instead of waiting to be found guilty Siemens opted for an out-of-court settlement. Companies in the Bahamas, China and Dubai were used by Siemens to transfer payments to officials of the government of Argentina, including President Carlos Menem, his interior minister and his immigration chief.
German courts have also found Siemens guilty of corruption. In 2007 Siemens had to pay a penalty of €201 million in connection with charges of bribery in Libya, Nigeria and Russia. In November of the same year, prosecutors in Milan filed charges against Siemens and two of its employees in an investigation on bribery involving Eni. In January 2008, a few weeks before Eric Breiner Kristensen of BWSC signed the declaration stating that Siemens has never been involved in corruption, Norway’s Department of Defence stopped doing business with Siemens and conducted investigations in bribes it paid to ministry members. Later on that year Norway imposed a fine of $400,000 against Siemens for corruption in defence contracts.
How can we believe that when Eric Breiner Kristensen in 2008 signed the declaration that Siemens has never been involved in corruption he did not know that in mid-November 2006 over 270 police and tax investigators raided the offices and homes of Siemens’ staff as part of the biggest corruption scandal involving a German company? Is it possible that he never heard that in autumn 2006 Munich prosecutors began to investigate the disappearance of €200 million from Siemens’ accounts? Was he not aware of Siemens’ announcement in December 2006 that it was looking into more than €420 million of what it called ‘dubious payments’ since 1999?
In its report for 2008 Transparency International reports: “In May 2007 two former Siemens officials were convicted of bribery and abetting bribery in a multimillion-dollar deal with the Italian energy utility ENEL. Both received suspended jail sentences but were ordered to pay €400,000 to charity. The state court of Darmstadt ordered Siemens to forfeit €38 million from its ENEL deals. During the trial the two men admitted paying kickbacks worth €6 million to the utility’s managers for contracts valued at €450 million for Siemens gas turbines between 1999 and 2002. The defendants revealed that slush funds had existed at Siemens’ power generation division for many years.”
Siemens is not the only sub-contractor of BWSC in the Delimara Power Station extension contract. Others, including companies like ABB and Wartsila, have also been involved in cases of corruption. But BWSC made a false declaration about them even though it knew that such a declaration “will incur financial penalties representing 10% of the total value of the contract being awarded.”
The least that Enemalta, the Department of Contracts and the government can do now to make up for failing to screen the companies involved in this contract is to impose a penalty of 10% on BWSC for making a false declaration and providing inaccurate and misleading information about its subcontractors. When Enemalta published the invitation to tender for the Delimara Power Station extension it should have made it clear then that to succeed, bidding companies had to be corrupt.

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