BWSC allowed to wriggle out of ‘past corruption’ question

Attorney General Peter Grech has advised the government not to press charges against BWSC for omitting to mention that its subcontractors had previously been found guilty of any professional misconduct… after pointing out that the wording of the contract by the government differed from that stipulated by the law regulating public contracts.

The wording of BWSC’s statement differs from the requirement of Maltese law, in that the law excludes “economic operators” previously found guilty of bribery from tendering process. However, the statement signed by BWSC only referred to the company applying for the tender, without mentioning two subcontractors, Siemens and ABB, which had previously been convicted for bribery offences.

This emerges from a legal opinion issued by Attorney General Peter Grech on 1 July 2011.

According to the Attorney General, the wording of a written statement signed by  BWSC in which it declared that it had not been previously convicted for bribery  differed  from the wording of the law regulating public contracts.

While the law excludes “economic operators” previously found guilty of bribery from tendering process, the statement signed by BWSC only referred to the company applying for the tender.

This emerges from a legal opinion issued by attorney general Peter Grech on 1 July 2011.

As part of the tendering procedure, BWSC had signed a written statement declaring that it had not been  previously convicted of “professional misconduct”.

Tenderers were warned that inaccurate or misleading information may lead to the exclusion of the organisation from participation in future tenders and a financial penalty representing 10% of the contract being awarded.

BWSC and other bidders were asked to sign this statement to comply with Regulation 49 of the Public Contracts Regulation, which states that “any economic operator may be excluded from participating in a public contract” if it had been previously convicted of an offence concerning his professional conduct by a judgement recognised by Maltese law.

But in his legal opinion, the attorney general notes that “the wording of the statement” made by BWSC and the other bidders “differed from the wording of regulation, in that while the latter referred to the possible exclusion of an ‘economic operator’ from participating in a public contract, the former was specifically addressed to the tenderer and included the contractual penalties together with exclusion as a sanction following a false declaration.”

The AG proceeded to conclude that since “the tenderer was BWSC and nobody else” any legal action taken against it on the basis of allegations that one or more of its subcontractors were found guilty of corruption “is likely to fail.”

This is because “from the wording of the statement, it results that all declarations made in it are made by the tenderer and concern the situation of the tenderer.”

Since the statement made by BWSC also applied to “any member of the consortium” submitting the tender, the AG also tried to established whether subcontractors should be considered to have been part of a consortium. 

This raised the question on whether BWSC’s sub-contractors can be regarded to be part of the consortium. If this were the case, these would have been obliged to declare past cases of corruption.

But the AG concluded that since the agreement was not signed with a consortium but  with BWSC as a company, it is unlikely that the courts would consider “any person who did not appear as a party to the contract to have in fact been a party.”

The AG concluded that the only way to convict BWSC would be to prove that “it actually made a statement about its subcontractors,” or that it was asked questions about its subcontractors to which it did not reply truthfully. Since this was not the case, he advised the government not to proceed with legal action.

The legal advice was tabled by Finance Minister Tonio Fenech in his reply to a question by Labour MP Evarist Bartolo, who asked him to state what screening and verifications were made by Enemalta and the Contracts Department vis-a-vis cases of corruption and professional misconduct involving subcontractors Wartsila, ABB and Siemens.

German industrial giant Siemens – listed as a BWSC subcontractor that will provide the switchgear for the Delimara power station extension – has acknowledged ‘past misconduct in its global business’ and is debarred from any business related to the World Bank group.

Siemens agreed to pay a record $1.34 billion in fines in December 2008,  after being investigated for serious bribery, involving Heinz-Joachim Neubürger, former chief financial officer, Karl-Hermann Baumann, another former CFO and ex-chairman, and Johannes Feldmayer, a former management board member. The investigation found questionable payments of roughly €1.3 billion, from 2002 to 2006 that triggered a broad range of inquiries in Germany, the United States and many other countries.

In May 2007, a German court convicted two former executives of paying about €6 million in bribes from 1999 to 2002 to help Siemens win natural gas turbine supply contracts with Enel, an Italian energy company. The contracts were valued at about €450 million. Siemens was fined €38 million.

ABB, the Swiss-Swedish engineering group, has agreed to pay more than $58m to settle criminal and civil charges in relation to alleged payment of bribes and kickbacks in Mexico and Iraq.

The Swiss-Swedish engineering group was charged by the US with conspiracy and violating the Foreign Corrupt Practices Act.

Prosecutors alleged that ABB and its subsidiaries and agents made “concealed, corrupt payments” to officials at a state-owned Mexican electric utility to gain contracts, and paid more than $300,000 in kickbacks to the former Iraqi government to win orders under the United Nations oil-for-food programme.

Wartsila was caught up in Sweden’s largest ever bribery prosecution case, but was found not guilty in all instances of the so-called ‘Gotland case’.