This morning, September 7th, 2012, newspapers reported that the PPDA has cancelled the tender to construct a 700MW electricity dam at Karuma. For a country that has been experiencing electricity shortages for the last 25 years, this is a major setback. However, the story of cancelling the Karuma tender is not isolated. The article below was published in my column in Sunday Monitor, Without Mincing Words, on February 6th 2006.
The controversy surrounding the $100 million tender for the production of national identity cards is a classic case of the depredations of corruption in our weak and divided State. Three companies bid to supply the IDs and got the following scores - Super Com from Israel (66.7), Face Technologies of South Africa (81.6) and Contec Global from the United Kingdom (65.9). The contracts committee of the Ministry of Finance and Economic Planning awarded the contract to Face Technologies.
Contec Global felt cheated and appealed to Finance Minister Ezra Suruma, who purported to stop the award. Super Com also cried foul and took the matter to the Inspector General of Government who in turn wrote to the Finance Ministry ordering a stop of the award. A visitor to Uganda may think that our country has a system of checks and balances to control corruption. Don't be fooled because this is the very way in which corruption manifests itself in Uganda.
Over the last 10 years, the State in Uganda has found it difficult to award a contract that is worth more than $20 million. A roll call of all past tenders reveals the pattern: attempts to build hydro-electricity dams at Karuma and Bujagali ended in failure after years of struggle between the competing interests while the contract to build valley dams for cattle keepers turned into a thieving enterprise - and no dams.
The tender for pre-shipment inspection services kicked off battles between Bivac, Cotecna and SGS – but ended in no deal, just like the tender for procurement audit services (the SWIPCO scandal) paralysed our nation! Even attempts to sell a bank (e.g. Uganda Commercial Bank) or privatise hotels (Nile and Sheraton) turned into protracted battles, which were resolved after seven years.
Plans by the National Social Security Fund to build Workers House were riddled with corruption and delays while the other, a housing estate in Nsimbe, collapsed on its face; the list is endless.
Politicians and bureaucrats everywhere have powers to allocate [property] rights over scarce resources. This places them in a position to bargain for a share of the benefits they allocate hence corruption. However, there is no evidence that corruption per se is bad for investment and economic growth.
Some of the most successful countries like Japan and South Korea had as much corruption as Uganda or Kenya. In 1995, ex-President Roh Tae Woo of South Korea was arrested for corruption and he admitted to accumulating a personal fortune of $650million.
In Uganda's case, corruption adversely affects investment because it plays in a weak State in the context of ethnically fragmented politics.
Institutions like Parliament, the Inspectorate of Government, the Public Procurement and Disposal of Assets (PPDA), etc, although established to fight corruption actually get captured by it.
Instead they provide the foreign aid dependant, donor pressured government with a perfect alibi that it is committed to fighting corruption. In reality they are appropriated as mere pawns in the factionalised struggles for government tenders.
In the case of the ID tender, anyone of the three bidders may even be just as good as the other to do the job. The national issue for Uganda therefore may not be whether it is Super Com, Face Technologies or Contec Global who takes the deal, but rather that; can the deal be awarded at all and within the required timeframe? Sadly, state institutions in Uganda have demonstrated an incredible incapacity to just wriggle themselves out of pressures of bribing bidders.
When the Ministry of Finance gave the deal to Face Technologies, Super Com and Contec Global effectively challenged the award before the IGG. But here is the problem: if Face Technologies won because it bought off the entire Ministry of Finance contracts committee, Super Com and Contec Global will only get a favourable rating from the IGG because they paid off the investigating staff!
Because such deals involve millions of dollars, these foreign companies pay high bribes to poorly remunerated investigators from the IGG's office. Here is my prediction: if Face Teclnologies feels short-changed by the IGG, it may take its case to Parliament and find hungry legislators - fresh from election campaigns and crumbling under the weight of debt.
Parliament will pass a resolution, stopping the award in record time, and immediately appoint a select committee to investigate. The committee will then become a theatre for lobbyists! Foreign companies lack the necessary social ties with our legislators. To bridge this gap, they hire local handlers to dish out the bribes. But there is also need to show off political muscle demonstrating that our all-powerful President Yoweri Museveni is with you.
Super Com will up the ante and get the President's son-in-law, say Odrek Rwabwogo, to be their "partner". Not to be outdone, Face Technologies may give the President's brother, say Gen. Salim Saleh, a seat on its board, while Contec Global may seek out the President's brother-in-law, say Sam Kutesa, and subcontract one of his firms to business with it.
So the battle for a tender will rage inside the President's family, kick off a storm in Parliament, heighten the debate in the media where journalists and columnists will be paid to write favourable articles for the competing firms!
Anti-corruption bodies will not spared. As companies lock horns in this life and death battle, the matter may end up in courts, but even these are not immune to corruption.
Under such circumstances, the price of the project will sky rocket so that by the time the deal is finally awarded, it is seven years later, and the tender price has multiplied four-fold. The investor then transfers all costs to the final consumer - the taxpayer.
What seems a battle to fight corruption is actually the petrol that fuels it. In other words, Suruma and the IGG have opened a Pandora's box.