Graft watchdog advises against awarding ‘mega projects’ without bidding

Graft watchdog advises against awarding ‘mega projects’ without bidding
June 26 17:57 2016

The anti-corruption watchdog has advised the government to reverse changes brought to the public finance regulations last year that allowed large-scale projects to be awarded without a competitive bidding process.

The cabinet or its economic council was authorised in May 2015 to award ‘mega projects’ and projects carried out with concessional loans or foreign assistance without approval from the tender evaluation board.

In a paper shared with the government and made public on Thursday, the Anti-Corruption Commission said the changes “[leads to] extreme increases in the price of goods and services sought by the state, loss of transparency, loss of competitiveness, and paves the way for corruption.”

The new rules gave “absolute power” to the cabinet to award projects.

In addition to the lack of transparency over how companies are chosen and invited to submit proposals, “the regulation does not oblige [the cabinet] to set up a mechanism to evaluate proposals professionally and financially,” the ACC said.

The ACC advised the government to amend the regulations to make it mandatory to evaluate bids from more than one party even if the tender evaluation board is bypassed.

State institutions were previously required to seek approval from the tender evaluation board to award contracts for projects worth more than MVR1.5 million (US$97,276).

The economic council is now only required to review information such as the project’s details, estimated cost, and chosen contractor before approving contracts.

The new rules also authorised the cabinet to award “special projects” to state-owned companies, publicly listed companies with a portion of shares held by the government, or “institutions that the government accepts as a national organisation or association.”

The anti-corruption watchdog’s recommendations come more than a year after the changes came into force.

The government has since awarded lucrative contracts without a bidding process to Chinese and Saudi Arabian companies.

In late May, a massive project to construct a new passenger terminal at the international airport was awarded to the Saudi BinLadin Group for an undisclosed amount.

The US$200 million Malé-Hulhulé bridge project was awarded last November to China’s CCCC Second Harbour Engineering – a company blacklisted by the World Bank over fraudulent practices during a road improvement project in the Philippines.

The parliament is meanwhile considering changes to the tourism law that would authorise the government to award islands for resort development without a public bidding process.

During debate on the government-sponsored amendments last week, opposition MPs accused the government of planning to “legalise corruption” after the theft of US$65 million from resort lease payments under President Abdulla Yameen’s watch.