By Wondwossen Mezlekia
March 27, 2012
The statement
by Ethiopia Commodity Exchange (ECX) in response to the recent article
titled “Is
the government serious about fighting corruption? The case of alleged fraud and
corruption at the Ethiopia Commodity Exchange,"
is commendable in many ways. To start with, the statement was issued by the
company's External Relations Manager on behalf of ECX, effectively delineating
the roles of company communications from the CEO's interactions with persons
and entities outside of the company. This etiquette and separation of duties is
a step in the right direction. In addition, and most importantly, the civility
and courage in which ECX came out to publicly defend itself on an obviously
painful subject is a manifestation of ECX's emerging maturity as an
institution. I tip my hat to ECX for its participation in nurturing a culture
of engaging in dialogue by breaking away from the age-old political culture of
ours, where emotions triumph over objectivity, and differing views are not
tolerated.
When it comes to its content, however, the statement does not provide
any new information that wasn't already uncovered during the research
previously conducted for the article, so it won't affect the fundamental
questions raised in the article. Leaving the sometimes self-contradicting and
irrelevant assertions aside, the main points of the response are: 1) the article “has overstepped the boundaries of factual and
honest commentary” because it failed to disclose the conversation I had with
ECX’s CEO; 2) the extension of the bid submission date by one month was
what caused Millennium
IT's bid security validity period to miss the requirement by 30 days; 3)
the
World Bank canceled the award because no other bidder was considered responsive
by its standards; 4) the bid approval process involved
four layers of controls with an extensive review period; 5) the oversight of
Millennium IT's bid security validity period was a minor technicality in
comparison to the complex parameters evaluated;
and 6) the fact that both the World Bank and the Prime Minister’s Office
had conducted full investigations in 2011 is well known and sufficient. I will
address these by briefly discussing each point.
1) The article omits references to the CEO's explanation
It is true that I had the privilege
of speaking on the phone with ECX’s CEO in January 2012 during which time
we discussed a range of topics. When I raised the complaints surrounding the
said bidding process, the CEO's expressed reaction was a mix of astonishment
and disbelief that I knew about the issue and the conversation about this
particular issue effectively ended. I saw no point in pursuing it any further
after the CEO said, "I am uncomfortable discussing the details of a matter
that is being investigated". I totally agreed and quickly moved on to
another policy related issue, which happened to be of interest to both of us,
and discussed it at length. It was a cordial and very productive call that I
valued and appreciated. At the end of the call, the CEO made it a point to
remind me that the conversation was off the record, to which I responded
affirmatively and kept my promise; thus the omission of any reference to that
conversation in my article. How can I be accused of not mentioning it in the
article if I was also expected to keep my word to the CEO?
For what it’s worth, I could have
insisted and asked the CEO to go on record with or without a comment, but any
information that I may have gathered would not be of material value as it only
represents ECX's version of the story which I am already aware of. I had
knowledge of the allegation for quite some time and had tried in vain to get
the government's response on the status of the case; thus the need for the
public scrutiny.
2) The
extension of the bid submission date by one month is what caused Millennium
IT's bid to miss the requisite
This is
inaccurate. As clearly indicated in the bid document, the bid security must be
valid for at least 148 days after the date of bid opening. In this case, the
tender that was advertised on May 3, 2010 had the bid opening date set for June
15, 2010. The opening date was later extended to July 12, 2010. Millennium IT's
bid security, which was due to expire on October 9, 2010, would have been short
of the required validity period of 148 days even if the bid opening date had
not been extended.
3) The World Bank canceled the award because no
other bidder was considered responsive by its standards
The processes of cancelling a proposal for award and awarding a
contract to the next responsive bidder are two distinctly independent and
mutually exclusive activities. The World Bank cancels a proposal for award and
the portion of the loan allocated to the contract when it determines that the bidder
and the borrower have engaged in corrupt, fraudulent, collusive,
coercive or obstructive practices. It is not clear if the World Bank had
considered awarding the contract to another bidder, but according to its email,
the award was canceled because the World Bank "takes allegations
of fraud and corruption seriously." Therefore, the presence
or lack of another qualifying bidder had no bearing on the World Bank's
decision to cancel the award.
Additionally, it is misleading to
assert that there was no other responsive bidder. As it happens, there were at
least two other qualifying bidders whose bids were responsive enough to satisfy
the initial evaluation requirements, at the point where Millennium IT's bid
should have been disqualified. It may be difficult to draw conclusions on
whether either of the bids meets ECX's technical requirements without reviewing
the results of the technical evaluation, but it is evident from the bid
documents that the bids submitted by CMA Small Business Systems and Securities
and Trading Technologies were both responsive as per the bidding guidelines.
Interestingly, the opening bid price offered by these bidders was even less
than Millennium IT's price by USD 1,133,393 and USD 1,585,105, respectively.
Millennium IT's opening price was USD 3,585,105, which was further boosted up
by USD 1,270,695 to a total cost of USD
4,855,800.
4) The bid
approval process involved four layers of controls with an extensive review
period
ECX seems to be suggesting here that the “minor technical error” by the
bid evaluation committee had also been overlooked by everyone in the bid
approval process that involved four layers of controls and an extensive review
period of over six months. What this confirms is the significance of the second
line of defense in risk management which is the readiness to intercept
fraudulent activities after the fact as it was effectively demonstrated by the World
Bank's action to promptly cancel Millennium IT's award. Apparently, one of
those layers, which happens to be the World Bank, knows the difference between
an oversight and fraud. And that is why ECX's alleged fraud and corruption needs
to be investigated by the Federal Ethics and Anti-corruption Commission.
5) The
oversight of Millennium IT's bid security validity period was a minor
technicality
The oversight of the invalidity of the bid security may be claimed to
be a minor technical error, but the subsequent cover-up acts are suspicious.
Asking all bidders, the winner and the ones who had already known that
their bids were rejected alike, to extend the bid security validity after the
completion of the evaluation is deliberate. It seems that ECX had chosen to fix
the records in a way that would outwardly qualify Millennium IT's bid for
evaluation rather than taking corrective measures as soon as the invalidity of
Millennium IT's bid security was pointed out by the complainant bidder. This is
not a minor technicality.
6) The
World Bank and the Prime Minister’s Office had conducted full investigations
and that should suffice
The World Bank's investigation is not sufficient as the sole purpose of
such an investigation is to protect the Bank's own business as evidenced in
this case by the Bank’s action to cancel ECX's proposal to award the contract
to Millennium IT and secure its money. As a sovereign nation, it is the
government’s responsibility to investigate every allegation of fraud and
corruption in the public's interest and hold purported perpetrators
accountable. In Ethiopia, the Anti-corruption law is cut and dry and the duty
of the executive branch of the government is to implement the law impartially,
without cherry picking to afford preferential treatments to some suspects over
others. Unfortunately, this sense of fairness and rule of law is what has been
missing in Ethiopia.
According to the revised proclamation for the establishment of the
Federal Ethics and Anti-corruption Commission, investigating and prosecuting
alleged or suspected corruption offenses committed by public officials or
employees is the duty of the Commission, not that of a de facto investigation
committee. The difference between the two is that the former is bound by law,
at least supposedly, to prosecute anyone suspected of committing a crime of
corruption, whereas the latter is an informal administrative body that can only
serve the government’s political purposes. That is why the handling of ECX's
alleged fraud and corruption outside the Commission’s jurisdiction becomes very
suspicious and concerning.
The purpose of the article to which ECX responded is to publicly make
the case for why the alleged perpetrator(s) at ECX should be treated like
anyone who is suspected of corruption as provided by Article 25 of the
Constitution which guarantees that "all persons shall be equal before the
law and shall be entitled to equal protection of the law without any
discrimination whatsoever."
ECX cannot be the defendant and plaintiff at the same time. So, instead
of trying to cast doubt on the article's integrity with hopes of mystifying the
alarming phenomenon it has publicized, it would be better if ECX just steps
aside and let the authorities join the discourse and help restore the public's
trust.
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or comments: poorfarmer@gmail.com