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German e-passport bidder unmasked

Staff Reporter

MASERU – Mühlbauer Technology Group, one of the five companies that have submitted bids to make Lesotho’s e-passport, left a trail of scandals in Uganda.

Mühlbauer, a German firm, is one of the five firms approached by Lesotho’s home affairs ministry to bid for a multi-million maloti contract to make the country’s new passports.

Bids for the tender were opened on February 8 and the adjudication process is underway.

But the selective tender process that has been used to identify the e-passport contractor has raised eyebrows amidst allegations that other reputable companies were excluded and the process might be manipulated.

Questions have also been raised about the background of some of the companies, especially Mühlbauer, which also won a secret tender to make South Africa’s passports.  

Now it has emerged that Mühlbauer was invited to tender despite its not-so-clean dealings when it won the contract to update the voters’ register for 2011 general elections and to make the national identity cards for Uganda last March.

The contract, worth €64 million (about R625 million) did not go through Uganda’s tender regulations.

Instead, media reports say, the German ambassador to Uganda Reinhard Butchnolz facilitated the company’s meeting with President Yoweri Museveni on March 4 and eight days later it got the contract.

Museveni, who was expected to win another five-year term in Friday’s polls and possibly extend his rule of the East African country to 30 years, used his presidential powers to award the controversial.

The drama around the Mühlbauer contract actually started unfolding three years before it was awarded.

In 2005 the government of Uganda announced a tender for identity documents.

Three companies responded but the tender was cancelled after corruption was unearthed during the process. 

Mühlbauer did not submit its bid at that time.

Reports say in January 2010 the company, founded in 1981, submitted a bid for the Uganda Electoral Commission’s bio-metric voter registration but the process was stopped by the country’s procurement authority after irregularities were discovered.

The electoral commission ignored the advice by the country’s procurement authority to re-evaluate the bid.

Instead, the contract went to Mühlbauer whose initial tender had fared badly.

Later senior officials in the electoral committee would tell the media that they were not involved in giving the tender to the company.

Surprisingly, although the ill-fated tender that Mühlbauer had bid for was for cleaning up the voter register the contract that it eventually signed included the making of IDs.

A storm erupted with the procurement authority claiming that it had neither handled nor approved the bids.

The opposition demanded answers but instead of obliging the government reacted by classifying the information on the contract as top national secret, effectively barring parliament from scrutinising the process. 

In an interview with Uganda’s Independent newspaper last year Mühlbauer’s project manager, Matthias Ritter, admitted that the company had been helped to get the contract by Germany’s ambassador to Uganda.

Ritter said the Ugandan government had approached the company directly yet the truth is that the contract had initially been open for bidding until the process was abruptly suspended after irregularities.

Mühlbauer had barely started work when other bidders challenged the contract on grounds that it was fraught with irregularities.

At the same time a city commission agent, John Katto, dragged the company to court for alleged breach of contract.

Katto told the Commercial Court of Uganda that he had helped the company land the contract but it was now refusing to pay him the 10 percent commission it had promised.

He wanted the court to compel Mühlbauer to pay him €6 million as compensation. 

He claimed that in 2009 a Mühlbauer representative instructed him to help secure the deal to update the voters’ register and the national ID project.

Katto claimed he did just that but when he submitted his invoices the company refused to pay.

In its response Mühlbauer said Katto could not sue it because it is merely a brand represented by its division in Uganda.

It also demanded that Katto produce evidence that he was indeed appointed to secure the contract.

The matter is still in court.

The courts are also yet to decide on a case challenging the validity of Mühlbauer’s contract.

Despite the court cases Mühlbauer still started cleaning-up the voter register and making the IDs.

To start the job it had received a deposit of €23 million but before it could even issue a single ID the company approached the government of Uganda and requested an extra €6 million on top of the Euro 64 million that it had charged for the whole contract.

It said the extra amount was for the training of personnel yet the contract had stipulated that the €64 million would cover everything.

Irked by the excesses, opposition parties tried to block the release of the extra amount demanding that the company must first prove that the €6 million was necessary.

The opposition parties also complained that the Mühlbauer contract could have been inflated and the company could have negotiated itself too favourable a deal because it did not go through the normal tender process. 

They cited similar projects in Kenya and Tanzania that had cost less despite the fact that the two countries have far more people than Uganda. 

The Observer, a daily paper, reported that studies conducted before the contract was awarded revealed that the project would cost nearly five times less what Uganda eventually paid to Mühlbauer.

The paper also revealed that while paying heavily for Mühlbauer’s services the government of Uganda had rejected a free offer by the government of Japan to make the IDs.

“Currently, no financial aid is being provided to this project from a donor or overseas country. As such,
the Japanese government should be the first to make such financial aid
ahead of any other donor in any other country . . . which will allow the Japan side to establish good relations with Uganda and to market Japanese companies at an early stage,” The Observer quoted the Japanese proposal as having said.

Mühlbauer’s implementation of the project was also chaotic from the beginning.

The firm brought in 2 000 registration kits but it was estimated that it needed about 4 000 kits to finish the job in time.

And when the process was eventually done it was discovered that the voters’ roll that they had supposedly “cleaned up” had 500 000 ghost voters.

There were double entries and some of the details were wrong.

This is not the first time that Mühlbauer has courted controversy.

In 2009 the government of Serbia investigated allegations that the company had corruptly won a tender to supply the country with biometric passports.

The economic minister Mla?an Dinki? was accused of being linked to the company after it won a contract to supply biometric passports to that country.

Dinki? vehemently denied the allegations and accused the media of peddling falsehoods.

Lesotho’s Home Affairs principal secretary Rets’elisitsoe Khetsi told the Lesotho Times last week that he had done nothing wrong by using a selective tender process to identify firms to make Lesotho’s e-passports.

Khetsi said because the government was in a hurry to sort out the passport crisis an open tender process would have wasted a “lot of time”.

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