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358 Diagnosing Corruption in Ethiopia
Table 8.1
(continued)
Risk Area 3: Appointment of Equipment Suppliers
International experience
Typical international risk: High
3b. Bribery by the supplier of the network operator’s employees or of senior government officials
(i) to award the contract to the supplier;
An international supplier appoints a local agent who is paid a percentage of the sale price if
the contract is won. The agent then approaches a senior official of the network operator, or a
government minister, and offers a share of the commission if the supplier is awarded the contract.
The tender procedures or result is manipulated accordingly.
(ii) to agree on an inflated price;
The international supplier enters into a subcontract with a local contractor. The subcontract
price is significantly higher than the value of the work involved. The local contractor offers a
bribe to an official or minister on the basis that, if the international supplier wins the order, the
local contractor will receive a subcontract and pay the bribe out of the surplus in its subcontract
price.
(iii) to agree on supply of excess, unnecessary, unsuitable, or defective equipment;
(iv) to replace working equipment with new equipment;
(v) to award contracts without proper equipment specification and pricing;
(vi) to award numerous contracts to one supplier with no commercial justification; and
(vii) to bypass requirements of tender.
3c. Wrongful elimination of tenderers by network operator’s employees to fix the contract
award
3d. Failure by network operator to debar poorly performing suppliers
3e. Appointment by network operator’s employees of suppliers in whom they or senior
government or party officials or financial supporters have a commercial interest.
In Ethiopia
Current risk in Ethiopia: Very high
3a, 3b, 3c, 3d, 3e. This is the highest area of perceived risk in Ethiopia, with reports of all five
of the typical risks listed above. In particular, procurement procedures are understood at
times to be manipulated or bypassed along the lines currently being investigated by the
FEACC. Many former ETC officials are currently facing corruption charges.
The risk is especially high in Ethiopia because of the extraordinarily high costs of supplies
involved, which means that significant corrupt gains can potentially be made on the
basis of relatively few transactions. In addition, the bulk of telecoms equipment is supplied
by major international companies that have the financial capability to offer large bribes
and to pay these bribes outside the country, thereby making illicit payments difficult to
trace. This potential for major incentives increases the possibility of intervention by senior
government officials who may request that procurement procedures and anticorruption
safeguards be bypassed.
Particular concerns are expressed in media reports, expert interviews, and in study workshops
about a US$1.5 billion vendor financing contract that appears to have been placed without
competitive tender and in breach of the ETC’s own procurement procedures. By comparison with
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