Diagnosing Corruption in Ethiopia - Ethiomedia

Corruption in the Telecommunications Sector in Ethiopia: A Preliminary Overview 359
Table 8.1 (continued)
Risk Area 3: Appointment of Equipment Suppliers
International experience Typical international risk: High
experience elsewhere, this 2006 vendor financing contract appears to be highly unusual and
of extremely high value, granting one supplier the right to supply all telecoms equipment to
the ETC over a three-year period. Although the ETC claims it invited eight vendors on equal
footing, this is disputed. There appears to be no clear commercial justification for the award,
no proper competitive tender, and no effective contractual mechanism for price protection
or technical compliance. This preliminary analysis does not itself constitute an allegation
that corruption has taken place but does raise serious concerns that are expressed and
addressed in more detail in the “Procurement of Equipment Suppliers” section in this chapter.
Risk Area 4: Delivery and Installation of Equipment
International experience Typical international risk: High
Internationally, this is an area of high risk. Fulfillment of the original contract, subsequent
contract variations requiring additional equipment, undisclosed arrangements, and
inadequate monitoring each may provide the context for price manipulation, fraud, and
bribery. Certifying officers may be bribed so that they order or approve these fraudulent
variations.
Corruption risks in this area increase significantly when the original contract itself was a
product of corruption. Government officials and contractors who collude to award a contract
unfairly are likely to continue with corrupt activity during the execution of the contract,
particularly where there is little prospect that this activity will be detected, reported,
or prosecuted. Typical areas of such risk include the following:
4a. Delivery by supplier of less equipment than required under contract
The supplier should supply 200 kilometers (km) of cable but supplies only 180km. It bribes an
employee of the network operator to overlook the short delivery or relies on the shortfall going
unnoticed as a result of inefficiencies in the network operator’s organization.
4b. Delivery by supplier of equipment that is defective or not in accordance with the specification
The network operator corruptly refuses to pay the supplier for all or part of the equipment,
claiming either that the equipment was not delivered or that it was defective. This claim could
either be because the network operator wants to negotiate an additional price reduction from
the supplier or because an official of the network operator wishes to receive a bribe from the
supplier to withdraw the claim.
4c. Bribery (by supplier) of network operator employee to approve delivery of defective or
inferior equipment or equipment that is less than required under the contract
4d. Bribery (by supplier) of network operator employee or of senior government officer to
order further unnecessary equipment at inflated prices as a variation to the contract
4e. Extortion by network operator employee or government officials against suppliers seeking
payments due
4f. Illegal sale by supplier of equipment imported free of customs and import duties.
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