Malawi Revenue Authority (MRA) has come under fire following its decision to flout its own laid down procurement guidelines in order to accommodate Swiss company – SICPA in a fiscal marks international competitive bidding process.
The tender sought the services of the supply of monitoring, printing, and retailing of fiscal tax stamps.
The original tender was opened in April 2021 having been advertised under the procurement reference number, MRA/TAX STAMPS AND MSOLUTION/01/03/2022.
Among others, the Authority stated that it would reject a recommendation for award if it determines that the bidder recommended for award has, directly or through an agent, engaged in corrupt, fraudulent, collusive or coercive practices in competing for the contract in question.
MRA sources have confided that the initial tender drew seven bidders, including SICPA.
The sources said they expected the management to block SICPA since bidders are, under bidding conditions, expressly forbidden to have any contact or influence with government officials during bidding periods.
But in a desperate attempt to accommodate SICPA, the authority re-tendered the contract in March 2022 without explaining tangible reasons for the action.
“Our management has since removed from the bidding documents a clause that requires that the bidders should not have a record of corrupt practices in order to accommodate SICPA,” said a source on a strict condition of anonymity.
“It was clear that this would make an outright award to SICPA difficult and raise questions. It seems clear that the re-issue of a new tender is clearly aimed at compromising all the other participants, considering that their pricing is public knowledge,” he added.
His account has been corroborated by an announcement MRA made recently that it would issue a new bid for the same services.
The announcement came after President Lazarus Chakwera, while on a trip to Belgium in February this year, traveled to Lausanne, Switzerland to meet Mr. Philippe Amon, Executive Director of SICPA.
State House said the President engaged the leadership of SICPA about his Administration’s digitalization agenda and the need to create a digital footprint and platform that enables the state to have no activities in Malawi’s economy that go undeclared.
“This is part of President Chakwera’s quest to end the era of illicit economic transactions that perpetuate corruption,” State House said.
Asked to comment on the meeting, MRA Head of Corporate Affairs Steven Kapoloma said the Authority would not be in the best place to explain what transpired during the meeting.
A quick search online revealed that SICPA, a Swiss company operating in the authentication of banknotes and traceability markets, was the target of an anticorruption probe in Brazil. As on April 2018, in addition to the administrative investigation, a former executive vice president was being tried on criminal charges in the country.
Both cases involved the alleged payment of millions of dollars in bribes to secure a contract with the Brazilian Mint. SICPA was also under investigation by Brazil’s Ministry of Transparency and Comptroller-General of the Union, and former company executive Charles Nelson Finkel was being tried in a federal court in Rio de Janeiro.
Federal prosecutors alleged Finkel, who has American and Brazilian citizenship, paid $14.5 million in bribes to a fiscal auditor in order to secure SICPA a contract worth more than $1 billion with the Brazilian Mint.
According to prosecutors, because of bribes SICPA’s Brazilian unit was deemed the only company able to implement a tracking system in the cold drinks industry.
From January 2010 until June 2015, prosecutors said, CFC Consulting Group, a consulting company held by Finkel, paid $14.5 million to MDI Consultoria, a firm owned by fiscal auditor Marcelo Fisch de Berredo Menezes and his wife Mariangela Defeo de Menezes.
CFC Consulting, headquartered in the US, sent the money to MDI Consultoria in a fictitious services agreement during the time that SICPA was working for the Brazilian Mint, federal prosecutors told the courts.
In May 2019, Charles Nelson Finkel was found guilty and sentenced to prison for 11 years and 6 months for corruption and bribery linked to obtaining and executing SICPA’s contract with the Brazil Federal Revenue. In June 2021, SICPA agreed to pay 135 million francs in a ‘settlement agreement’ with local authorities.
Despite this tainted track record, MRA has reportedly settled for this company in a contract that will see Malawians paying K2.2 billion more because SICPA’s bidding price in the first tender was 40 percent higher than the other compliant tenderer.
In reaction, SICPA conceded of a case in Brazil where it was found administratively liable. It told Malawi24 that the case involved its former consultant and that its employees were neither found guilty nor convicted of corruption
“In regards to the allegations relating specifically to Brazil, it is important to note that no employee or manager working for SICPA in Brazil was convicted nor recognized guilty. The two SICPA entities in Brazil entered into a Leniency Agreement with Brazil’s Office of the Comptroller-General (CGU) and Attorney General’s Office (AGU) in June 2021”.
“Whilst SICPA was found administratively liable for the actions of a former external consultant by the Brazilian authorities, SICPA’s Brazilian entities were not condemned for corruption. SICPA can continue to operate its existing public contracts in Brazil and can be awarded new public contracts,” claimed the company in two emails sent to Malawi24.
The company also insists that it “strictly abides by applicable procurement laws and regulations” and that it has never secured any tender through illicit or engaging people of political influence.
“SICPA has never obtained a contract in any illicit manner anywhere in the world. SICPA has never been convicted of corruption anywhere in the world and strongly contests any accusation of corruption. SICPA is committed to doing business with integrity and acting in accordance with all applicable laws around the world,” reads a statement to Malawi24.
The company claimed that there was nothing sinister over the meeting its directors and officials had with President Lazarus Chakwera whose commitment to fighting corruption continue to be doubted by the public following the arrest of an investigative journalist. It has also been alleged that there are agents of the current administration who want the Director General of the Anti-Corruption Bureau (ACB) prosecuted over an audio leak that Chakwera called painful and embarrassing.
The company accused the media of disregarding all journalistic ethics; and believes its work “systematically triggers opposition” from its competitors or some of the sectors controlled.
MRA is yet to comment on the matter.
Meanwhile, an investigative journalist, Gregory Gondwe, was recently arrested as the Chakwera administration is accused by members of the donor community of attempting to strife the media and work of independent journalists.
*This post was updated on April 14, 2022 with information provided by SICPA.