[kictanet] Safaricom cancels Sh1bn-plus tender in staff bribery claim

[S.M. Muraya]

An "International" audit firm favored by bureaucrats in go.ke and NSE
listed firms lost (due to internal fraud) about 40M in 2013 in one small
incident. What struck me most is when one of the fixers noted even data
storage (backup records) were missing. This is an "International" firm
consulted (favored over our niche firms stuck in Kenya and therefore
more patriotic) about ICT Policy in Kenya.

Finance professionals have told me more than once, crooks (even in
international organizations) favor one big firm, one big deal, to solicit
bribes from one party - not from 3 or 4 specialist/niche firms - increasing
their demands (risks) for kickbacks from different quarters ):

http://www.businessdailyafrica.com/Safaricom-cancels-Sh1bn-tender-in-staff-bribery-claim/-/539546/2634568/-/format/xhtml/view/printVersion/-/10svbgq/-/index.html

Safaricom cancels Sh1bn-plus tender in staff bribery claim[image: Kenya’s
top telecommunications firm Safaricom is locked in a legal dispute with the
Lebanese company Mobinets over the cancellation of a Sh1 billion tender.
PHOTO | FILE]

Kenya’s top telecommunications firm Safaricom is locked in a legal dispute
with the Lebanese company Mobinets over the cancellation of a Sh1 billion
tender. PHOTO | FILE

IN SUMMARY

   - Safaricom says in papers filed at the Milimani Law Courts that
   Mobinets colluded with its employees to ensure the tender went to the
   Lebanese firm.
   - The firm had in June last year contracted Mobinets to supply, instal
   and maintain a system to manage network planning, configuration tools,
   inventory and work flow but the telecoms operator cancelled the deal on
   September 1, sparking a court battle.

Telecoms operator Safaricom
<http://www.businessdailyafrica.com/stocks/-/1322440/1394278/-/shkse6/-/index.html>
cancelled
a multi-million dollar tender it had awarded to Mobinets SAL Limited after
it found out that the Lebanese firm bribed its employees to secure the
lucrative contract, a Nairobi court has been told.

Safaricom says in papers filed at the Milimani Law Courts that Mobinets
colluded with its employees to ensure the tender went to the Lebanese firm.

Safaricom had in June last year contracted Mobinets to supply, instal and
maintain a system to manage network planning, configuration tools,
inventory and work flow but the telecoms operator cancelled the deal on
September 1, sparking a court battle.

Mobinets went to court seeking orders compelling Safaricom to seek
arbitration on the matter as provided for in the contract documents.

Safaricom has, however, maintained that the agreement it signed with
Mobinets in June last year provided for immediate termination of the deal
in the event that either party was found to have engaged in any acts of
corruption.

“Safaricom was under obligation to terminate the agreement with immediate
effect upon determination at any time that Mobinets representatives engaged
in corrupt practices during the procurement or execution of the agreement,”
said James Maitai, Safaricom’s head of quality and service assurance.

Mobinets claims Safaricom has refused to provide it with the names of staff
who were bribed, times, dates and places and full details of the alleged
collusion.

READ: Lebanese firm sues to stop Safaricom cancelling deal
<http://www.businessdailyafrica.com/Corporate-News/Lebanese-firm-sues-to-stop-Safaricom-cancelling-Sh1bn-deal/-/539550/2599962/-/o23uurz/-/index.html>

The Lebanese firm also insists that the matter should be tabled before an
independent arbitrator to salvage the Sh1 billion it has invested in the
project.

The Tripoli-based firm has denied engaging in any act of corruption with
any of Safaricom’s employees.

Safaricom has not indicated how many employees were involved in the alleged
bribery scam or whether they have been sent packing.

The telecoms operator has, however, sacked 159 employees over their
involvement in unethical activities in the past three years, according to
fraud statistics the firm releases at the end of its financial year.

READ: Safaricom fires 56 employees in graft related cases
<http://www.businessdailyafrica.com/Corporate-News/Safaricom-fires-56-employees-in-graft-related-cases/-/539550/2497370/-/14gnyxmz/-/index.html>

The telecoms operator is expected to release its fraud statistics for the
year ending March 2015 in the next few weeks as part of a campaign against
corruption.

Safaricom reckons that the provision on arbitration only applied to
resolving disputes that have taken more than 30 days without an amicable
settlement.

Safaricom faults Mobinets for filing the suit, as it claims the two parties
were in the process of concluding talks over a possible settlement where it
was to offer the details the Lebanese firm was asking for.

“Safaricom and Mobinets commenced the process of amicably settling the
matter. The parties had agreed on the protocols and individuals responsible
for ensuring the process of disclosure but Mobinets filed this suit before
that process was concluded,” Mr Maitai adds.

Justice Farah Amin on Tuesday directed the two parties to file their
respective responses to claims made in the suit so far, and to appear
before her on March 18.

The Lebanese firm claims to have completed the functional specifications of
the software system to Safaricom’s preference, which it says required
equipment worth $6.2 million (Sh558 million).

It also claims to have sealed deals with other hardware and software firms
worth $5 million for the completion of its contractual obligations as per
the agreement with Safaricom.

Mobinets therefore argues that termination of the deal will interrupt its
other businesses around the world that will be associated with Safaricom’s
claim of corruption.

“The allegations of corrupt practices by Safaricom pose a grave
reputational risk to Mobinets. For instance, Vodafone Limited has on the
basis of the allegations terminated all future business with Mobinets,”
said Labib Shalak, Mobinets’ CEO.

But Safaricom argues that the contract has already been terminated, and
that quashing the decision amount to changing terms of an agreement that
has already outlived its purpose.

The telecoms giant argues that quashing the cancellation would also violate
its rights, as it had the green light from the agreement to pull the plug
on the deal in the event it discovered corrupt practices in its award.

“Grant of the orders sought by Mobinets would amount to re-writing the
agreement in denying Safaricom its right, as freely negotiated between the
parties to terminate the deal with immediate effect in the circumstances
envisaged,” Safaricom says.

The Lebanese firm says it was forced to move to court over fears that
Safaricom would offer another firm the contract while the dispute was
pending between the two firms.

Safaricom insists that calls for arbitration are futile as the agreement
was terminated with immediate effect. Besides, Safaricom argues it is for
the Arbitration Tribunal and not the High Court to determine whether a
dispute is ripe for arbitration in any event.

“There is no subject matter of the arbitration under threat to warrant
issuance of an interim measure of protection by this court. Mobinets has
failed to show evidence or threat whatsoever to the subject matter of the
arbitration,” Safaricom adds.

The suit comes just months after Kenya’s private sector was listed as one
of the most corrupt in the world in a report by international audit firm
Ernst & Young last November.

Another report published by PriceWaterhouseCoopers found that tender fraud
is the number one economic crime in Kenya.

Back to Business Daily: Safaricom cancels Sh1bn-plus tender in staff
bribery claim
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