Nigeria’s Federal Court orders EFCC to investigate ZTE contract


Nigeria’s Federal High Court has ordered the Economic and Financial Crimes Commission (EFCC) to immediately start an investigation into the $470 million CCTV (closed-circuit TV) security camera project that was awarded to China-based ZTE.

The project was awarded to ZTE in 2011, but the CCTV installations have not worked. Several Nigerian lawmakers have alleged that there was corruption in the manner the contract was awarded to the company.

The CCTV security cameras were aimed at tackling security challenges posed by terrorists group, including Boko Haram, that are carrying out deadly attacks in several cities in the country. As a result, the Nigerian government entered into a contractual agreement with ZTE to execute the project, dubbed National Public Service Communication System (NPSCS), at a total cost of $470 million.

Lawmakers have alleged that the contract award process did not conform to policy guidelines. There have also been allegations about use of substandard material in the project.

The application seeking an order to apply for judicial review and compel NFCC to investigate and prosecute, among other defendants, ZTE, the Nigeria Communication Commission and the Minister of Federal Capital Territories, was initiated by a lawyer who sued as a concerned Nigerian.

The lawyer, Olugbenga Adeyemi, alleged in his suit that there the project involved misappropriation of funds and financial impropriety.

Justice Adeniyi Ademola’s ruling to order an investigation highlights the growing controversy surrounding the process of awarding of ICT projects to Chinese and other companies in Africa. Senior Nigerian government officials have been investigated and named by NFCC as recipients of bribes by Siemens in order to win favors for supply contracts. The German company has admitted wrongdoing and accepted responsibility.

In Zambia, the Zambian government last year terminated a $210 million CCTV contract with ZTE in the wake of allegations of corruption. The contract was awarded by senior government officials under a direct agreement, without an open tender procedure, raising suspicious of corruption. Critics of the project say costs may have been inflated and that the Zambian government could have lost well over $100 million had the project not been terminated. The project was supposed to have assisted with crime prevention, traffic management and general monitoring on the streets of the capital, Lusaka. The country’s anti-corruption watchdog is still investigating the matter.

In Algeria, ZTE and China-based Huawei Technologies were found guilty by a judge in 2012 of corruption charges related to tenders for state telecom contracts, specifically for bribing executives at the state-owned telecom network Algérie Télécom, between 2003 and 2006. In addition to a two-year ban on participating in telecom bidding in the country, the two companies were also fined about $30,000 each.

Last year, Huawei Technologies was taken to court by a local IT company in Zimbabwe, Secure Dynamix, on allegations that Huawei did not follow proper procedure in a $218 million telecom tender. Secure Dynamix wants the court to compel the country’s Anti-Corruption Commission to launch an investigation into how state-owned mobile operator NetOne contracted Huawei to supply equipment for the tender and the manner in which the State Procurement Board awarded the tender.

Similar allegations have also emerged in Kenya and Uganda, where Chinese telecom companies are accused of corruption in winning tenders.

In Kenya, controversy surrounded the awarding of the country’s digital migration signal distribution operation to China’s Pan African Network Group in 2011. Opposition Kenyan lawmakers accused the Kenyan government of flouting the tender process and knocking local companies out of the bidding.

Less than three years ago, the Ugandan government blocked a $74 million loan from the Import and Export Bank of China (EXIM) meant for a digital migration project, in order to check into procurement irregularities and overpricing. The Ugandan government has not indicated whether the loan process was restarted.

Huawei also got embroiled in a controversy over a tender to lay fiber-optic cables in Uganda. The national transmission backbone and e-government infrastructure initiative was a $106 million project, funded by a loan from EXIM Bank of China. The project was temporarily halted over controversy involving allegations of inflated costs and the use of incorrect cabling.

“Without question, Chinese companies have misconduct in their race to win tenders and none has been punished so far in Southern Africa mainly because China funds most of these telecom projects,” said Edith Mwale, telecom analyst at Africa Center for ICT Development.

Mwale said as long as telecom projects in the region continue being funded by China, Chinese companies will continue misbehaving with little fear of punishment.




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