Ethiopia: German company involved in corruption scandal concerning Worldbank money for rural electrification

Convictions and the subsequent sentencing that prosecutors from the Federal Ethics & Anticorrupti-on Commission (FEACC) won last year has prompted the World Bank to launch a probe into the conduct of international suppliers, allegedly involved in a rural electrification project, Fortune learnt.

Three weeks ago, the World Bank sent two officers from its integrity department to talk to Ethiopian authorities on the case where an Ethiopian civil servant, Brehanu Hika, was found guilty of taking bribes and acquiring illegitimate wealth, in August 2012. Subsequently, judges at the Federal High Court sentenced him to a three year jail term, and a fine of 4,500 Br.

His appeal to the Federal Supreme Court, filed in October 2012, was rejected.

Brehanu was a procurement expert at the Rural Electrification Fund (REF), under the Ministry of Wa-ter & Energy, where he had been serving as secretary in a procurement committee, when REF tried to buy solar powered energy sources. He was found guilty of soliciting bribes from bidders, whilst also taking money from a foreign based supplier, Communications & Accessories International (CAA). A German based firm established 1986, CAA was one of the bidders that participated in getting the project budgeted at 30 million dollars.

This amount was part of a 200 million dollar universal electric access program, which Ethiopia laun-ched with the support of the World Bank, in 2005. The program is hoped to help the country enhance its national electrification coverage, from 51pc to 75pc, by 2015, by electrifying small towns and vil-lages through low and medium voltage distribution lines. Out of the total 5,163 towns and villages that are electrified, 99pc of energy generated comes from this program.

In March and July 2010, REF had issued a notice for three international tenders inviting prospective foreign suppliers interested in undertaking these projects. Four companies, including CAA, the Spanish ‘Solener Madrid’, the Israeli ‘OMNO Agriculture Ltd’ and the Indian ‘Angelique International Ltd’ had responded positively at the time.

During the administration of these bids, the procurement expert had solicited bribes from bidders. As a result, the civil servant was found to have 371,000 Br in an account with the Commercial Bank of Ethiopia’s Bole Branch, and shares worth 37,000 Br in Awash International Bank. He was also accused of accumulating 713,879 Br of wealth, hardly justified as savings from a monthly salary of just 5,250 Br. When investigators from the Commission searched his car, a few days after they put him into custody, they discovered 420,000 Br in cash.
Commission prosecutors, nonetheless, succeeded in convicting one of the suppliers and its senior executive, although in abstantia. CAA and its Director, Riehnhard Joseph Burda, were found guilty of bribing Brehanu in their attempt to gain illegitimate benefits for the company. 

The World Bank has yet to make its decision as to whether any of these companies should be inclu-ded in its list of debarred entities. Lead by a Vice President, the Bank’s Integrity Department receives complaints and launches investigations on cases of corruption.

“When firms and individuals are found to have engaged in fraudulent, corrupt, collusive, coercive or obstructive practices, the World Bank may impose a sanction as debarment,” said the Bank on its official website. “Debarred entities are then ineligible to be awarded a World Bank-financed contract, either permanently or for a designated period of time. Sanctions hold wrongdoers accountable for their misconduct and help deter others from engaging in similar behaviour.”

There are now over 140 entities debarred, since 2004, from taking part in any project financed by the World Bank across the world.

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Source: Addisfortune – Independent News & Media