Saint-Louis Gate & The Corruption of Public Procurement

We trust that ICAC has the beef and hat to demonstrate convincingly for the external watching world that we are not quite the banana republic that our notorious listings and local antiques make us out to be

By Jan Arden

The Saint-Louis gate financial and corruption scandal has emerged again after the last bout of episodic activity late last year when ICAC investigators, back from Scandinavia, hailed the extensive critical help received and promised rather rapid outcomes. The affair has been treated several times here and elsewhere but some historical perspective is worth going over.

The Central Electricity Board’s (CEB) love saga with the Scandinavian turn-key power supply contractor Burmeister & Wain Scandinavian Contractor (BWSC) does not date from 2015 and the company would certainly contend that its winning bids over the past 30 years, are due to its track-record for reliability in the provision of goods and services it was commissioned for and its intimate knowledge of the electricity generation and distribution network in Mauritius and those responsible for it at different decision-making or influencing levels.

That certainly should have facilitated things for the country to benefit from up-to-date turbine technologies, shipment and commissioning of the large consignments and whatever coordinated ground and civil works that had to be undertaken on site through a reliable local contractor, which seems to have been PADCo lately.

That could be the narrative of either or any from the preferred contractor (BWSC), the buyer (CEB), the local contractor (PADCo), the decision-makers in a non-Emergency context (Central Procurement Board), the appeal bodies (Independent Review Panel), the Energy Ministry and the political brass. A rather warm and cozy relationship that seemed to have every justification to be and to incrust itself, barring the odd appeal from any supplier feeling it had been unfairly weeded out of a tender, either through cleverly restrictive specifications drafting or a less than above board assessment and recommendation.

In conditions when a ministerial certificate for Emergency Procurement is issued for whatever reason, matters seem even simpler for tender allocation with virtually no appeal procedures. On top of that, if the preferred contractor somehow gets access to confidential strategic planning documents related to the country’s energy and electrical demand forecasts, or the supply requirements and their proposed future induction, it is far better placed than any would-be competitors that might upset the cozily humming applecart.

Late 2014, when tender requirements controversially seemed to favour a single supplier, which coincidentally turned out to be BWSC, the tender was accordingly and rightly cancelled to be re-issued. By that time a new government and a new ministerial and institutional setup (CEB, CPB, IRP, etc.) were commandingly at the helm. But as could be expected by any punter as a bankable certainty, BWSC (and its local contractor PADCo) won the re-tendered exercise, albeit at a package fee of some Rs 750 million above its 2014 bid offer. The project, cloaked under Emergency procedures disbarring any meaningful appeal to controversial elements but bringing them to public attention, was duly completed on schedule within the 18-month specified period, and there was much rejoicing in institutional officialdom and the new political nomenklatura on handing-over in October 2017.

It is a matter of history that it was only after an anonymous tip-off from Africa in 2018 followed by immediate investigations by the external law cabinet Poul Schmith, that BWSC Headquarters concluded in 2019 that a small group of high-level staff, in connection with sale of projects in Africa (including Mauritius), had acted against the company’s principles and policies against corruption.

After acting promptly by dismissing five employees and reporting two others to police, BWSC commendably approached the international African Development Bank (ADB), accepting to be disbarred from international projects in 2020 for twenty-one months, in return for a longer-term reputation recovery now that considerable damage had been done. The funding agency ADB conducted its own inquiry and concluded that it is “more likely than not”, that BWSC engaged in corrupt and fraudulent practices in relation to a project in Mauritius.

After the issue was raised in Parliament in June 2020, the Central Electricity Board’s management board stepped down and was replaced. Under a gathering firestorm of public and Opposition pressure, Prime Minister Pravind Jugnauth had to dismiss his deputy, who was also energy and Public Utilities minister, Ivan Collendavelloo who had apparently been named in the investigation. Institutional cadres are now being called in to explain their involvement. The next politically exposed person (PEP) of note to be roped in last week, is Prof Swaley Kasenally over allegations ranging from six free tickets and Rs 0.5 million of cash benefits through local contractor PADCo.

While not condoning any hanky-panky in public procurement, this is somewhat surprising when allegations in the press about the PADCo conduit for alleged bribery monies are reported at about Rs 38m in the Saint Louis gate affair to some Rs 200m in the combined BWSC local projects in Mauritius and Rodrigues. The Professor immediately alleged that the investigative authorities, namely ICAC, are rushing into hasty overdrive through the pressures that must have been exerted at the level of the FATF/ESAAMLAG audit completed earlier this month, necessary for exiting the notorious grey and blacklists.

If that thesis has some grounding, it may not be beyond reasonable assumption that independent investigative or regulatory authorities may not have had an entirely smooth ride under vigilant probing by FATF auditors of their activities and high-profile trials or results secured.

We trust that ICAC has the beef and hat to conduct this model case of corruption under the tropics without fear or favour and demonstrate convincingly for the external watching world that we are not quite the banana republic that our notorious listings and local antiques make us out to be. A reputation for clean and good governance built up patiently and skillfully over decades, a role-model for Africa and Least developed countries, a blue-eyed boy of European capitals cannot continue with its blithe careening run without immense costs to the country as it struggles for a post-pandemic reset in a world order that is not averse to asking tough questions.

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Tourism & Hospitality

World Tourism Day 2021 falls on this 27th September and our industry, not spared from the Covid-19 cataclysm, either in direct or indirect activities, cannot wait for a controlled re-opening that should help save jobs and finances, without placing national health onto very risky shores. The dissonances from Health statistics and high-level communication have contributed significantly to population distrust and wariness that even its weariness with the restrictions cannot erase. However, we trust that, after months of hand-wringing, the authorities have their plans and systems in readiness with pre-defined alert levels and correlate responses should the re-opening prove more problematic than hoped for.

This year’s theme celebrates ‘Tourism for Inclusive Growth‘, an attempt for an upbeat booster that has to be adapted to the reality of every destination’s main concerns, but seems to reflect that while the sector is a boon for foreign exchange inflows and hospitality industry related jobs, it is more often than not a cloistered island of prosperity for owners and investors, with only some crumbs available for smaller units, the indirect jobs and more generally, the population at large, the latter bearing the costs of living increase through differential tourist spending power.

In and during the pandemic, the Mauritian population has been made the silent witness to several large players queuing up for public funds for salvage under terms and conditions that remain largely confidential, in particular with regard to their own contribution from accumulated reserves, equity funds and past dividend pay-offs when the weather was normal. Some big names are traditionally all-inclusive enclosures, with minimal effort at sharing the spoils, even loathe to accommodate the most well-dressed locals for a day’s lunch. We await the Tourism Minister’s declination of what the World Tourism theme and the support of public funds during the pandemic means under our sun.

* Published in print edition on 28 September 2021