MRA flouts procurement guidelines to favour corruption-tainted SICPA in Fiscal Marks contract

Malawi Revenue Authority (MRA) has drawn the attention of the public, importers, traders, manufacturers, and citizens following its decision to flout its own laid down procurement guidelines to accommodate a corruption-tainted Swiss company – SICPA in a fiscal marks International Competitive Bidding process.

MRA tendered for the supply of monitoring, printing, and retailing of fiscal tax stamps.

The original tender was opened in April 2021 having been advertised under the procurement reference number, MRA/TAX STAMPS AND M[1]SOLUTION/01/03/2022.

President Chakwera poses with Amon of SICPA

Among others, the Authority stated that it would reject a recommendation for award if it determines that the bidder recommended for award has, directly or through an agent, engaged in corrupt, fraudulent, collusive or coercive practices in competing for the contract in question.

MRA further said it would debar a bidder from participation in public procurement for a specified period of time if it at any time determines that the firm has engaged in corrupt, fraudulent, collusive or coercive practices in competing for, or in executing, a contract.

Inside sources at MRA have confided in Nyasa Times that the initial tender drew seven bidders, including SICPA.

But in the desperate attempt to accommodate SICPA, the Authority re-tendered the contract in March 2022 without explaining reasons for the action let alone why the initial tender call failed.

Bidders in the original call spent millions of Kwachas and thousands of dollars preparing for submissions.

Our sources said they expected the Internal Procurement Committee to block SICPA since the procurement rules of course did not appear to apply to SICPA, which are, under bidding conditions, expressly forbidden to have any contact or influence with government officials during such periods.

Bidders are reportedly aware of collusive conversations between top government officials and SICPA officials to influencing the bid outcomes and conditions.

One bamboozled bidder warned of a long drawn legal fight and Anti-Corruption Bureau involvement of SICPA is awarded the contract following contacts with the Head of State and government officials.

A quick search online revealed that SICPA, a Swiss company operating in the authentication of banknotes and traceability markets, was the target of an anticorruption probe in Brazil. As on April 2018, in addition to the administrative investigation, a former executive vice president was being tried on criminal charges in the country.

Both cases involved the alleged payment of millions of dollars in bribes to secure a contract with the Brazilian Mint. SICPA was also under investigation by Brazil’s Ministry of Transparency and Comptroller-General of the Union, and former company executive Charles Nelson Finkel was being tried in a federal court in Rio de Janeiro.

Federal prosecutors alleged Finkel, who has American and Brazilian citizenship, paid $14.5 million in bribes to a fiscal auditor in order to secure SICPA a contract worth more than $1 billion with the Brazilian Mint.

According to prosecutors, because of bribes SICPA’s Brazilian unit was deemed the only company able to implement a tracking system in the cold drinks industry.

From January 2010 until June 2015, prosecutors said, CFC Consulting Group, a consulting company held by Finkel, paid $14.5 million to MDI Consultoria, a firm owned by fiscal auditor Marcelo Fisch de Berredo Menezes and his wife Mariangela Defeo de Menezes.

CFC Consulting, headquartered in the US, sent the money to MDI Consultoria in a fictitious services agreement during the time that SICPA was working for the Brazilian Mint, federal prosecutors told the courts.

In May 2019, Charles Nelson Finkel was found guilty and sentenced to prison for 11 years and 6 months for corruption and bribery linked to obtaining and executing SICPA’s contract with the Brazil Federal Revenue. In June 2021, SICPA agreed to pay 135 million francs in a ‘settlement agreement’ with local authorities.

According to an article published on May 27, 2019 in the O Estado de Sao Paulo newspaper:

“The investigations are part of Operation Vices, launched in 2015 by the Federal Police and the Federal Public Ministry. Since 2008, after CMB (Brazilian Mint) Process No. 1890/2008, which concluded that the bidding was unenforceable, SICPA signed a billionaire five-year contract with the Brazilian Mint in the amount of BRL $ 3.3 billion to execute the services related to the System of Beverage Production Control (Sicobe).

On that occasion, the tax auditor of Revenue Services Marcelo Fisch, who was the general coordinator of Inspection, would have ‘directed the bidding process, smearing it from the origin, in order to lead it to a result that would meet the interests of SICPA. From 2009 to 2015, Fisch would have received unduly US$ 15 million, deposited, over that period, in monthly installments, on the account of MDI Consultoria, owned by his wife Mariangela, also convicted of passive corruption.”

Despite this tainted track record, MRA has reportedly settled for this company in a contract that will see Malawians paying K2.2 billion more because SICPA’s bidding price in the first tender was 40 percent higher than the other compliant tenderer.

“Our management has since removed from the bidding documents a clause that requires that the bidders should not have a record of corrupt practices in order to accommodate SICPA,” said our source on a strict condition of anonymity.

“It was clear that this would make an outright award to SICPA difficult and raise questions. It seems clear that the re-issue of a new tender is clearly aimed at compromising all the other participants, considering that their pricing is public knowledge,” he added.

His account has been corroborated by an announcement MRA made recently that it would issue a new bid for the same services.

The announcement came barely days after President Dr. Lazarus Chakwera met with SICPA Chief Executive Officer, Phillip Amon, on 22 February 2022 in Lausanne Switzerland, where SICPA is headquartered.

It is reported that government officials were treated to SICPA’s capability to support Malawi’s digitization agenda and platform that was required in the MRA bid.

These moves are classically in line with SICPA’s behaviour to nullify public procurement tenders and influence local officials to eliminate competitors when the company is unable to win on a competitive basis.

MRA Head of Corporate Affairs Steven Kapoloma refused to comment on the matter, preferring that a questionnaire be sent to Wilma Chalulu for response.

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