St Louis 2: The Pandora’s Box

If there is a will to get to the bottom of this corrupt act, the inquiry must start from where the bribe money originated up to where it landed. Does ICAC have the capacity and know-how to do that?

By K. Murali

On 8th June 2020, the African Development Bank (ADB) opened a Pandora’s box and out came what looks like one of the most dastardly corruption acts in our history.

On that day, the ADB posted on its website the agreement that it had reached with Burmeister & Wain Scandinavian Contractor (BWSC) regarding “sanctionable practices in a power generation project financed by the Bank in Mauritius”.

According to the Prime minister, it was then and then only that the Minister of Energy and Public Utilities came to meet him to apprise him of the situation.

From then onwards, events unfurled rapidly to the extent that today we know that:

  • “members of the Mauritian administration and others, through the intermediary of third parties” have received “huge” amount of bribe money;
  • the bribe money was given through two intermediaries’
  • according to BWSC, it’s a whistleblower’s call in April 2018 that set the ball rolling. Per their protocol, they caused the matter to be investigated by an independent party and according to the findings “the investigation concluded that certain employees of BWSC had violated their employment contracts and the company’s Code of Conduct. Furthermore, the investigation gave reason to suspect that certain employees had engaged in bribery. According to the investigation, the actions were carried out by certain employees in one department in BWSC. On the recommendation by the law firm Poul Schmith, BWSC promptly summarily dismissed the involved employees and reported two persons to the Danish police. Upon the completion of Poul Schmith’s investigation, BWSC self-reported the case to the African Development Bank and other relevant stakeholders”; and
  • the CEB was informed in February 2019 in an email to Shamsheer Mukoon, Acting General Manager of the CEB.

This act of corruption is no ordinary one. It was carried out by intelligent and sophisticated protagonists, operating at the highest level of a world renowned international company, intelligent public officials at the highest level of our country, smart middlemen and high calibre professionals.

One has therefore to tread carefully and exercise the highest acumen in trying to see daylight in this act of corruption.

The first step is to take a close look at each protagonist, analyse the actions and narratives, following which a clear picture of the modus operandi will emerge.

BWSC’s narrative inconsistent

BWSC describes itself as “a global turnkey developer, contractor and operator of custom specific engine-based and boiler-based power plants. Our ambition is to provide highly efficient and reliable energy supply while ensuring low environmental impact and low cost for the power plant owner and consumers. Within the last four decades, BWSC has supplied more than 180 turnkey power plants to 55 countries with a total generating capacity above 4,100 MW”. It is indeed a global player in the energy sector.

In 2016 BWSC entered into a contract agreement with the CEB.

In all such contracts there is a clause against corrupt practices. In particular, if a contractor (BMWC) engages in acts of corruption to secure or have unfair advantages in the procurement of a contract, it exposes itself to financial penalties or even to punishment for a criminal act.

It has been established that corruption has taken place and huge bribes have been offered.

BWSC’s narrative is that it has “conducted” its own investigation and found that

“certain employees of BWSC had violated their employment contracts and the company’s Code of Conduct. Furthermore, the investigation gave reason to suspect that certain employees had engaged in bribery.

“According to the investigation, the actions were carried out by certain employees in one department in BWSC. On the recommendation by the law firm Poul Schmith, BWSC promptly summarily dismissed the involved employees and reported two persons to the Danish police.”

Are the findings consistent with the narrative? BWSC wants us to believe that “certain employees” paid a huge sum of bribe money (out of their own pockets?) to very senior officials and lesser ones in Mauritius without its Senior Management being aware of what was going on? But the source of the bribe money is not revealed by BWSC!

Why did BWSC take so long to inform the parties concerned, being given that the whistleblowing took place in April 2018?

Finally, being given that BWsC is likely to face huge penalties for this act of corruption, is it in its interest to engage in an act of full disclosure?
Is its report complete being given that it has not covered nor disclosed the source of the bribe money?

Clearly, the role of BWSC in this matter should be completely reassessed if an independent inquiry is to be carried out.

ADB’s due diligence?

The African Development Bank has financed the project and was initially reluctant to part with information but, at the end, it provided an abridged version of the report of the ADB’s Office of Anticorruption and Integrity to the Prime Minister.

As a financing institution, ADB has an obligation to carry out an exercise of due diligence as to where it is putting its money and to keep a watchful eye on the processing of the project up to its completion.

It appears that the fact that an Emergency Certificate was attached to the project a few hours before it was to be taken up at the level of the Independent Review Panel (IRP) did not raise an alarm at the ADB in spite of the fact that there really was no risk of any imminent blackout in the country?

CEB and Government of Mauritius

In 2014, the offer of BWSC was rejected as it contained some 200 deviations with 80 major ones.

In 2015, after the general elections of Dec 2014, the bid for the St Louis 2 project was launched again and this time there were no major deviations. Were the specifications reframed to accommodate BWSC’s technology, particularly in relation to environmental and performance issues?

The offer of BWSC was eventually accepted after an Emergency Certificate was attached to it; that in effect shielded it from outside scrutiny, in this case that of the IRP. The project was completed well within the scheduled time.

It is worth noting that the Completion Report, which Ivan Collendavelloo is putting forward as a mark of excellence for him and the CEB, deals ONLY with the post-award aspects of the project up to its completion. It has nothing to do with the pre-award ones and the alleged corrupt acts.

It is in February 2019 that CEB was first appraised that substantial bribes had been given towards the award of the St Louis 2 contract.

In Oct 2019, the Board of the CEB was apprised of the case. It did not recommend any action, and the matter was considered closed.

On 8th June 2020, BWSC and ADB reached an agreement whereby BWSC was debarred from bidding for projects financed by the ABD for a period of 21 months.

A lot has been said about the handling of the case by the CEB, but there are a number of issues which need to be accounted for by the CEB Management, its Board and the Government. It is to be noted that the Ministry of Finance and the Ministry of Energy have representatives on the board of the CEB.

First, all contracts, of the type entered by the CEB, include a clause against bribery and corruption. The contractor is specifically warned that involvement in corrupt practices and bribery are not tolerated and severe financial penalties and legal actions are to be applied for such malpractices. Therefore, upon receipt of the letter from BWSC in February 2019, there was an obligation on the CEB to issue a Notice of its intention to apply the relevant clauses with respect to corrupt practices irrespective of whether the inquiries had been concluded or not. CEB needs to explain why this was not done – which means that BWSC has been allowed to get away scot-free.

Second, there are three parties to the contract, namely The Client (CEB/Government of Mauritius), the Contractor (BWSC) and the Financing Agency (ADB).

BWSC has been paid its money in full. ADB will be reimbursed for its loan. The aggrieved party, the CEB, is at the receiving end of a criminal act by BWSC.

What is behind the move by the African Development Bank and Burmeister & Wain Scandinavian Contractor negotiating and entering into an agreement behind the back of the aggrieved party, namely the CEB? What have the CEB/Government of mauritius been left out of and what has been done about that?

It is clear the actions of the ADB and BWSC have led to a situation where the scope of a criminal inquiry is limited to “employees” of BWSC and lesser mortals of the aggrieved party.

It is also clear that if there is a will to get to the bottom of this corrupt act, the inquiry must start from where the bribe money originated up to where it landed.

Does ICAC have the capacity and know-how to do that?


* Published in print edition on 7 July 2020

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