Details have surfaced of an incident where the new Sri Lanka Telecom (SLT) Board of Directors has been allegedly misled by a Long Term Evolution (LTE) network project sponsor to safeguard a bidder who received a tender during the previous regime bypassing the normal tender procedures.
The Sunday Leader exclusively exposed the incident last year and the SLT internal auditors then carried out an in depth audit to unearth the facts that the highest bidder was offered the tender to implement a LTE network dragging the institution into a massive loss, close to a staggering US$ 13.61 million which is similar to the amount of quarterly profit that the SLT normally gains.
The Sunday Leader is in possession of the SLT internal audit report dated April 29, which clearly states that there was a manipulation in the process and has recommended to appoint an independent consultant to further review the audit findings.
The report further states recommending, “If the consultant proves that the audit findings are accurate, to remove Project Sponsor M.B. Herath and Project Manager L.C.A. Sirimanne forthwith since making further decision on the LTE project under the said officers is not advisable and to take stern disciplinary action against all Special Commercial Evaluation Team (SCET) members and against the project sponsor and to lodge a case in CID for further investigation”.
Colombo Magistrate’s letter to CAO, SLT and SLT Internal Audit Report
The report further states, “The technical and commercial evaluation criteria was changed according to the project sponsor’s recommendation after the opening of technical and commercial bids at the meeting held on June 4, 2014 which was chaired by the then Group Chief Executive Officer (GCEO). Even though project sponsor has stated that the approval from Senior Tender Board (STB) had been obtained, he had not submitted it to date and at the meeting held with GCEO on April 22 he was advised to submit the said approval but he has not done it. This should be considered a serious tender procedure violation.”
Therefore SLT employees have filed a case against the allegedly scandalous irregular scam in the Colombo Fort Magistrate Court (Case no: B/2057/15) and the Colombo Magistrate on July 21 through a court order had instructed the SLT Chief Administrative Officer to give a statement to the Financial Crime Investigation Department (FCID) (case no: F/ 074/ 2013) with the internal audit report of the tender.
Tenders were called for this project (F/074/2013) in September 2013, for the implementation of a LTE network; to design, supply, implement, configure and commission an LTE network in turnkey basis. The scope included external integration with existing infrastructure set up and it was declared in the tender that the bill of quantity (BOQ) provides the fully blown solutions proposed in the bid and that no any additional equipment/ item for future upgrades within the five year guarantee period could be made and in the event of any component/equipment is required, it should be done for free (FOC) basis.
But the SLT has allegedly accepted the increased price when it was clearly stated that the bidding proposal should carry the declaration.
Hence a Special Commercial Evaluation Team (SCET) chaired by the Chief Financial Officer SLT Udeni Samararathna was appointed to finalise the evaluation within a strict timeframe by the then GCEO Lalith de Silva.
Responding to the call, ZTE Corporation, Huawei International (Pvt) Limited and Alcatel-Lucent International (ALU) submitted their bids by April 30, 2014.
ZTE’s quotation for 2,298 base stations was US$ 70.566 million while Huawei’s for 2,000 base stations was US$ 73.165 million and ALU for 1,808 base stations was US$ 84.018 million. As ZTE and Huawei were the lowest bidders, SLT requested the two parties to submit revised offers for 1,555 base stations by June 16, 2014 t. When revising the prices, ZTE’s cost increased by US$ 8.80 million.
The reason given was that they could not include certain items in the first bid. However, to an unknown reason the SLT accepted the increased price disregarding the clear stipulation of the tender procedure that the declaration has to be given in the bidding proposal.
“This is a complete tender rule violation. The SLT Management should have told the bidder to abide by the tender declaration or they should have rejected the offer on the ground that it has violated the rules. Instead they happily accepted the revised prices which were higher than the Huawei price,” a highly reliable SLT trade unionist who wished to remain anonymous said.
Considering the importance of this project to SLT and to the Sri Lankan telecommunication industry, being a socially responsible organisation, Huawei Technologies reduced the original price by US$ 4.45 million on June 16, 2014.
However, to everyone’s surprise, SLT accepted and notified the ZTE’s increased offer on June 16, 2014.
“This is hypocrisy. When Huawei has reduced their prices by US$ 4.45 million, the CEO of the SLT subsidiary company, Sky Network, who was also the project sponsor, asked the Special Commercial Evaluation Team (SCET) to award the tender to the highest bidder,” sources said.
According to the sources, this is not the first time the SLT bypassed the general tender procedures and offered tenders to the highest bidders.
“We have brought up these issues with the management and even with the subject ministers. But no action was taken against such fraudsters,” sources alleged.
Now questions have been raised as to why they have changed the amounts the bidders submitted and offered the tender to the highest bidder.
“According to the revised prices, the lowest bidder is Huawei’s and the difference between the lowest bidder and ZTE is close to US$ 2 million. After the price revision, Huawei offered the service for US$ 54.825 million while ZTE offered its service for US$ 56.823 million. However, the SLT changed these figures and showed the senior tender board that Huawei price is US$ 63.834 million and ZTE price is US$ 56.164 million which is a total fabrication,” sources alleged.
The Sunday Leader is in possession of all the documents pertaining to this tender and the way the SCET has provided wrong information to the STB in their report dated September 5, 2014.
The documents clearly show the way the commercial evaluation team has allegedly manipulated the figures in their report to the STB and the trade union leader accused the STB officials of not going through the initial documents to appraise the bidding prices.
After opening the tender on April 30, 2014, the SCET requested ZTE and Huawei to submit a revised price by June 16, 2014. However, in their report to the STB, the SCET on its page 5 states that for the final evaluation, the prices received up to April 30, 2014 have been considered.
Even the Board Paper No: PLC/T/168/2014 of September 26, 2014 says they have briefed the Board and stated that the evaluation for the implementation of LTE network under the concerned tender has been done accurately and prices received up to April 30, 2014 have been considered for the purpose.
“This is highly irregular. Although on page five the SCET states that the prices received by April 30, 2014 have been considered for the final evaluation, page six of the same report has given the figures as Huawei US$ 63.834 million and ZTE US$ 56.163 million. These figures are totally incorrect.
Let the SLT Board of Directors and the STB members take up the issue and correct the blunder. From where did the SCET taken these figures? By April 30, 2014 ZTE prices were lower than Huawei. But still the figures given in the report are wrong. The prices given by June 16 were much lower and the lowest bidder was Huawei but the figures given were wrong,” sources claimed.
Meanwhile, trade union sources accused the Project Sponsor of misleading the present Director Board to safeguard the interest of M/s ZTE.
“When the audit report was handed over to the audit committee, it was to be given to the Board of Directors for further action. However for an unknown reason, the Board did not take the report and hence no action taken against the wrongdoers. The matter is now in courts and many of our higher officials, who were involved in this tender, have to give evidence before the FCID. Now the Board of Directors have no way to sweep the matter under the carpet. We are waiting to see what the outcome would be as we want the law enforcement authorities to take strict action against all the culprits irrespective of their posts or affiliations. We also request from Telecommunication Minister Mangala Samaraweera to hold an internal inquiry and to take stern disciplinary action against the wrongdoers,” sources observed.
