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346 Diagnosing Corruption in Ethiopia
a result, telecoms can be considered in general to be a moderately
high-risk sector. However, the apparent mismatch between de jure and de
facto processes and safeguards in the procurement of high-value telecoms
equipment results in the supply of equipment being perceived to be the
area of highest risk.
The large sums involved render the overall perceived corruption risk
in Ethiopia’s telecoms sector to be particularly high by international standards.
By contrast, the low levels of petty corruption reported in the sector’s
day-to-day interaction with the public results in that area of
corruption risk being relatively low.
To gain a better understanding of the nature of the major corruption
risk identified, a more detailed analysis was undertaken of a particularly
high-value, and controversial, contract for the supply of telecoms
equipment. The next section describes this analysis.
Procurement of Equipment Suppliers: The 2006 Vendor
Financing and Supply Agreement
The vendor financing contract entered into by the ETC in 2006 appears to
be highly unusual. This section studies it to cast light on broader corruption
risks related to the ETC’s procurement of equipment suppliers. This brief
study should not be seen as an investigation or interpreted as alleging in
itself that corruption has necessarily occurred. However, the circumstances
as perceived both by stakeholders and by independent observers do raise
serious questions about the control of corruption risks in this sector.
The 2006 agreement is of high value and grants one supplier the right
to supply all telecoms equipment to the ETC over a three-year period. In
contrast with normal ETC practice, 15 no evidence is immediately apparent
in this case that there was a commercial justification for the award of
such a large contract to one supplier, that a competitive tender took place,
or that there was an effective contractual mechanism for price protection
and technical compliance. The following preliminary analysis seeks to
understand this in more detail.
In 2006, the ETC placed a contract with an international supplier to
provide financing for, supply, and install telecoms equipment up to a
value of US$1.5 billion. The agreement as signed provided for a 13-year
loan period, with the first three years being interest-free. The ETC agreed,
for a period of three years, to place all telecoms contracts with the
supplier. Specifically, the agreement required the ETC to place nine prespecified
equipment packages with the supplier.