By Odoobo C. Bichachi & John Njoroge
Multi-million dollar pre-shipment tender at heart of the row
Trade, Tourism and Industry Minister Maj. Gen. Kahinda Otafiire is no stranger to controversy. His latest standoff with the board of Uganda National Bureau of Standards (UNBS), in which he has demanded its resignation, is only the latest around the minister who minces no words, and fights his political battles with bare knuckles.
Publicly, the conflict is about who is frustrating the war against counterfeit goods in the country. Otafiire apparently feels the board is thwarting his efforts to rid the country of counterfeits, some of which include enforcing rigorous pre-inspection and surveillance mechanism.
‘There is a public outcry about the widespread presence of counterfeits and substandard goods on the Ugandan market. The public, which is the consumer, is not protected and both importers and manufacturers of genuine goods are not protected either. The recent alcohol scandal is just the tip of the iceberg.
‘As a political head of this sector, it is within my absolute political mandate and authority to ensure that lives of consumers are safe-guarded and protected,’ Minister Otafiire wrote in two separate communications to the UNBS board chairman William Ssali and UNBS executive director Terry Kahuma.
Inside sources, however, say that the fallout is not just about counterfeits and how to stop them. It is about the multi-million Pre-Verification of Conformity (PVOC) deal awarded to Intertek International in April which both the Public Procurement & Disposal Authority (PPDA) and the UNBS board have demanded be retendered due to procedural errors. The fallout is also due to alleged ‘insubordination’ by the board which has defied several directives and requests from the minister, including a facilitation of Shs 13 million.
‘It is the first time in my entire 30 years of political leadership… that a council that I appoint did not only go beyond their mandate by contradicting my directives to the executive director, but further directed him to disobey me,’ Otafiire wrote in a November 17 letter headed ‘Unacceptable Conflict of Management Roles’ to the council chairman and copied to President Yoweri Museveni, Prime Minister Apolo Nsibambi and the UNBS executive director Terry Kahuma.
Ghosts of pre-shipment
In the early 1990s, the biggest corruption scandals in the country revolved around the tendering and awarding of pre-shipment services. Leading international firms SGS and Cotecna engaged in long battles over who should take the deal. In the end there was no deal and the country decided to forget about pre-shipment inspection all-together as the way to beat corruption around import verification.
The current standoff between Otafiire and UNBS board looks like a ghost from the past and already many are whispering that entrenched interests are involved in influencing the award.
So far, UNBS has awarded the motor vehicle import pre-inspection tender to three companies ‘ Japan Export Vehicle Inspection Centre (JEVIC) to handle vehicles originating from Japan and East African Automobile and Jadal Kilimanjaro ‘ both based in the United Arab Emirates trading hub of Dubai — to handle vehicles from the rest of the world.
The motor vehicle pre-inspection tender went on without incident perhaps because it was opened up to several players and the sums of money are relatively small. The award of the goods pre-shipment inspection is what, however, has generated the latest stand-off between the minister (and seemingly the executive director) on one side and the board of UNBS and PPDA on the other. And interestingly, it was sparked by one of the names from the past ‘ Socit Gnrale de Surveillance (currently known as SGS S.A.).
Apparently, UNBS was directed by the government in June 2007 to implement the Pre-Export Verification of Conformity programme (PVoC). Following the directive, UNBS commenced the process of acquiring a service provider. The procurement process of open international bidding and the solicitation document was approved by the Contracts Committee on October 3, 2008. On October 9, 2008, UNBS issued an invitation for bids in the local press.
Bids were received on December 1, 2008 from four firms out of the six that bought the bidding documents. These were General Societe De Surveillance (SGS), Intertek International Limited (ITS), Bureau Viritas Bivac BV (BV), and Global Inspections. Cotecna Inspection East Africa Limited and Pre-qe International Limited did not return the bid documents.
After a long evaluation process, UNBS awarded Intertek International the deal to handle all Uganda’s goods pre-shipment inspection. One of the losers, SGS, however petitioned PPDA on four grounds, two of which the latter granted; namely that the bidders were not guided in the bid document on how to present their financial bids which led to submission of incomparable bids, and that the Evaluation Committee amended the financial evaluation criteria contrary to Section 52 of PPDA Act and Reg. 172(1) of PPDA Regulations.
The cancellation by PPDA of Intertek’s pre-shipment deal caused the ire of both the UNBS board and Minister Otafiire but for different reasons. UNBS was angry that it was the first time its board was learning of the deal.
‘We only got to learn of it after PPDA received the request for review, and after the Solicitor General refused to endorse the deal because there was no board resolution authorising it,’ a member of the board told The Independent on condition of anonymity.
The UNBS board too upheld PPDA’s decision and recommended that, like the vehicle pre-shipment inspection, the goods tender be awarded to multiple companies, not just one.
In a June 19 letter to PPDA, the UNBS executive director rejected the grounds of cancellation saying the order to retender ‘is a travesty of justice and will result into costly, unfair and time wasting miscarriage of justice.’
On June 22, Otafiire weighed in on the matter in a letter to his Ministry of Finance counterpart who is the line minister for PPDA. Otafiire peppered his letter with accusations against PPDA of ‘dubious ethical and professional approach’ and even questioned the idea of listening to complaints of a company like SGS ‘which has been awarded contracts related to inspection of goods in Uganda before and it has a record of scandalous performance€¦’ saying ‘€¦they are virtually a blacklisted firm and ought not to have been permitted to participate in the tender, let alone request for re-tender’!
Otafiire’s letter concluded as follows: ‘(1) as minister, I reject this directive to re-tender, (2) I hold this output by PPDA Board as improper, contemptuous, misinformed and irregular (3) I question the professionalism of PPDA management, (4) I hold that the conduct of PPDA management smacks of corrupt tendencies judged from attempts to mislead their board by omission and commission, (5) I advise that you seek to re-orient the attitude of PPDA to realise that they should be a facilitator not hostile expatriate tribunal acting without regard to national resources and public good.’
The letter was copied to the President and Solicitor General, among others.
The Independent could not establish whether the Minister of Finance has responded. However, PPDA and the UNBS board have stuck to their guns; there were flaws in the process and the transaction should therefore be redone altogether.
‘Mistakes were made during the procurement process. We noticed them at the last minute when the issue was brought to us. We merely advised the executive director on what was legally correct to do: follow the recommendations and directives of PPDA by cancelling the process and ordering a fresh bidding process. Re-advertise the tender and let more companies bid. We live in a liberalised economy; give Ugandans a variety to choose from,’ UNBS board chairman William Ssali told The Independent.
But in the process, the board has drawn the ire of the minister who accuses it of frustrating his attempts to save Ugandans from counterfeit and substandard goods.
Otafiire’s cold start
Apparently, Otafiire’s tenure as political head of the standards body seems to have begun on a cold note when, soon after his appointment as minister of Trade, Tourism and Industry, he was invited on March 30th to meet the board and UNBS staff to familiarise himself with the work of the organisation. He never showed up even after confirming, and indicating he was on his way. This left staff and the board who had put aside everything to meet the minister quite livid.
Over the last ten months or so, the minister has had little contact with the board. He has, however, been dealing directly with the executive director Kahuma, even reportedly directing policy. This is something the board has found anomalous.
According to a board member who spoke to The Independent on condition of anonymity, ideally communication from the minister to the bureau should be through the council except in very exceptional cases where, even then, the council should be copied in. Otafiire has, however, given several directives to the executive director without copying in the council.
Some of these directives include the appointment of a State House ‘special envoy’, one Dan Rwihura, to head a parallel surveillance team with carte blanche terms of reference; the demand for funding of Shs 13 million to facilitate his tour to sensitise the public on counterfeits; and the emergency appointment of pre-shipment companies on a six months contract to stem counterfeits.
Indeed several correspondences The Independent has seen are directly between minister-to-executive director. For instance on October 29, Otafiire wrote a letter titled ‘Creation of Surveillance Team’ to the executive director stating thus:
‘Following numerous complaints from the consuming public about importation of sub-standard goods into our economy and taking cognisance of your bureau’s constraints, I have sent you Mr Dan Rwihura from President’s Office to help set up a surveillance team to track down illicit movement of goods that are not certified by UNBS as appropriate for consumption. He will choose his own workmates randomly from your team as well as include any other that he will deem fit for purposes of executing that responsibility. Render him maximum cooperation’.
On the same day [October 29] Trade, Tourism and Industry permanent secretary, Julius Onen, wrote to UNBS executive director on behalf of the minister requesting the organisation to fund the minister’s trip around central Uganda to ‘appreciate the challenges faced by the sector’. The minister required Shs 2,850,000 for his allowances for 15 days at a rate of Shs 190,000 per day while three officials accompanying him would pocket Shs 4,950,000 broken down into Shs 110,000 per day. His two bodyguards would pocket Shs 2,700,000 broken down into Shs 90,000 per day while the driver would take Shs 850,000, which is Shs 55,000 per day for the 15 days. According to the letter, the minister’s two vehicles would consume Shs 800,000 worth of fuel each bringing the total fuel bill to Shs 1,600,000. In total, UNBS was expected to release Shs 12.95 million for the minister’s trip.
Earlier on October 27, the minister had written to the executive director instructing him to ‘as a matter of urgency to appoint pre-inspection teams in the various regions from which Uganda’s major imports originate on a six months basis until the procurement issues are resolved’. He also stated in the letter that he was ‘taking full political responsibility for these emergency measures to save the Ugandan consumers from malpractices in our standards lapses they have been subjected to,’ adding, ‘I therefore expect immediate implementation of this directive’.
All these directives were quashed by the board on grounds that they were irregular and did not conform to the laws governing UNBS and good principles of management.
Apparently some members of the board feel there is a nexus between the executive director and the minister to override the board all in the name of fighting counterfeits and substandard goods without due regard to procedure and good governance principles.
For instance, the executive director had approved payment of Shs 13 million for Otafiire’s trip.
‘Let us re-order other priorities and avail the funds,’ he scribbled on the request letter on November 11.
The board’s rejection of the funding request seems to have rubbed the minister the wrong way and was one of the grounds for demanding its resignation as one of the measures ‘to create sanity in the Bureau’. In his letter to the board dated November 11, he said: ‘My mandate as a minister and political head of this sector also includes public sensitisation and outreaches on all issue pertaining to the sector. In my planned countrywide tour, I will shoulder political accountability on some issues arising from your lapses on standards, a financial request to enable me conduct this activity was legitimate and in order. It was in this perspective that a request was made not only to UNBS but to other agencies too under this ministry. They went ahead and made their contributions.’
Board refuses to go
In an elaborate response to the minister’s accusations, the board in a November 23 letter titled ‘Response to Demand for NSC Resignation’ and copied to the president, prime minister, IGG, among others, insists there are no grounds to resign. Instead, the board members accuse the minister of flouting principles of good governance and levelling misguided accusations against it.
For instance on funding his trip, the board says ‘it is implementing strict financial guidelines including adherence to strict budget lines. Accordingly, this being an unbudgeted request it is procedurally irregular and cannot be authorised.’
With regard to the Intertrek deal in which the minister alleged the flaws were created by the board’s interference in the tendering process, the board insists it only learnt of the flaws after an administrative request for review and after the Solicitor General declined to endorse it without the board’s authority. Consequently, it is misplaced to blame the board and use it as a ground to demand its resignation.
UNBS board also said counterfeits are not currently under the mandate of UNBS; that the mandate rests with the Uganda Registration Services Bureau in the Ministry of Justice. However, UNBS board together with the Trade ministry initiated a draft Counterfeit Goods Bill indentifying UNBS as the implementing institution. The bill has however been lying at the ministry since March 31, 2009.
‘The board is there to protect the interest of Ugandans, help the executive director in decision making and guide the minister in his directives. That is our job. I have an excellent council of professionals that include four professors and a competent legal counsel. We will not resign. We did nothing wrong. Personally I am a food scientist by education and seasoned civil servant who has worked for 33 years. I will not allow myself to be dragged into illegal issues. Anything that does not follow the prescribed set procedures, guidelines and regulations can send us to jail,’ said Ssali.
How the disagreement pans out will likely define the direction of not just the war against counterfeits but also the war against corruption in procurement and abuse of public office. And equally importantly, it will add another speck to Minister Otafiire’s controversial political career, having only emerged out of another procurement bruising battle over the Naguru Housing Estate where he fought the equally controversial former IGG Faith Mwondha.
The question, however, is why Otafiire who came into the ministry a few months ago after the procurement deal begun is more convinced than the board that this is a good deal.