. . . alleges Chinese companies have captured state tenders

Contractor drops bombshell


MASERU – A local construction company this week dropped a bombshell when it queried about 10 multi-million maloti government jobs allegedly awarded to Chinese companies under dubious circumstances at the expense of capable and liquid indigenous firms, raising the spectre of state capture. The Lesotho Steel Products (LSP) in a detailed letter to the government watchdog, parliament’s Public Accounts Committee (PAC), laments the loss of income to local companies and thousands of jobs that would have been created for locals on the main jobs and in downstream industries.

The miffed giant construction company “propose(d) the appointment of independent consultants to review the tender evaluations done where projects were awarded to Chinese contractors”. Government immediately pushed back insisting most public sector jobs were awarded to local firms with just a tiny fraction going to foreign firms, including the Chinese. In a 5 June letter to PAC Chairman, Movement for Democratic Change (MEC) leader Selibe Mochoboroane, the LSP conveyed concerns over the number of government construction projects “being awarded to Chinese contractors”. Reliable PAC officials also told Public Eye this week that before writing the letter, LSP officials met Mochoboroane to express their concerns.

Mochoboroane yesterday confirmed meeting LSP officials over the matter. “I haven’t seen the letter yet because it must be in parliament. However, I can confirm that the LSP approached me as the PAC Chairman with those concerns and I advised them to write a formal letter detailing everything,” Mochoboroane said. LSP lists several Chinese-owned companies that have been given work by government, at the expense of locally-owned construction companies which are reportedly capable of handling the jobs, including LSP and Sigma Construction. “It is our opinion that there has been excessive and inexplicable awards by the State and parastatals of contracts to Chinese construction companies. We herewith urgently request your good office to investigate the situation as mentioned above,” reads the letter.

LSP noted that UNIK, China Geo, Mango Tree, Ground Water Consult (GWC), had inched ahead of local companies although the majority of contracts were being awarded to China Geo and UNIK, which LSP claims is in most cases paired with GWC. To level the playing field, LSP adds, the PAC should facilitate for the establishment of a tender review and evaluation panel “especially where GWC are consultants”. “We propose the appointment of independent consultants to review the tender evaluations done where projects were awarded to Chinese contractors and especially where GWC were the consultants,” LSP pleads with PAC. Moreover, LSP raises concern that despite getting the bulk of large-scale contracts, Chinese-owned companies bring in Chinese workers to manage the projects and for skilled labour, despite required skills being available locally.

This, LSP says, is detrimental to Lesotho’s economy as the companies “neither invest in the country nor stimulate its economy”. “Chinese contractors employ very little, if any local skilled labour. The vast majority of management, professionals, artisans and operators are all Chinese citizens. This raises the issue of work permits,” LSP says. According to LSP, while it is difficult for construction companies to secure work permits for foreign employees, it seems relatively easy for Chinese-owned companies to secure the same for their Chinese employees. “Local construction companies find it very difficult to obtain work permits for specialist expatriates. Contrary to this, we believe the vast majority of Chinese employees working for construction companies have work permits.

“There appears to be an inconsistency, or bias, in the approval of work permits. Chinse contractors invest very little, if any, in Lesotho. They import as much as possible from China and do not stimulate or add anything of great significance to the local economy,” the letter reads. LSP further provides a list of tenders it claims were awarded to Chinese owned companies. The first tender that LSP has concern with, is Contract No. MCA-2017/18-WASCO-L5T-01 of the Water and Sewage Company (WASCO), for the construction of water supply infrastructure for Butha-Buthe and Hlotse.

While the tender was eventually awarded to three Chinese contractors, namely; UNIK, China Geo and Mango Tree, LSP claims it has it on good authority that LSP and Sigma were initially recommended for the tender, only for WASCO to somersault and appoint the three foreign companies, with the consultants being a joint venture between Mot MacDonald (MM) and Ground Water Consult (GWC). “There appears to be a significant trend throughout where GWC is the consultant and UNIK are being awarded the project. The relationship between GWC and UNIK needs to be investigated. One enquires how many contracts have been awarded to UNIK where GWC was the consultant,” LSP claims.

The second contract that they had an issue with, LSP submits, is RFB No. LNDC/RFB/001/2017, for the construction of Ha-Belo Infrastructure and Factory Shells in Butha-Buthe District, which was also awarded to UNIK with GWC as consultants, despite the LSP/Aveng quotation being the lowest yet competitive in terms of “technical ability, experience, resources, availability and financial capacity”. “Again, the consultant is GWC and the contract was awarded to UNIK. During the public tender opening, LSP/Aveng JV tender price as read out was the lowest. Together with Aveng, LSP offered a highly competitive tender not only as far as price was concerned, but also in terms of technical ability, experience, resource availability and financial capacity,” LSP maintains.

The LSP/Aveng Joint Venture, LSP adds, should have won the contract as they had available capital in excess of R800 million in cash, available at tender stage, despite recording losses over the past couple of years “which is not unique and is a common trend among large construction companies in South Africa”. “The personnel the JV proposed had sufficient similar experience and/or qualifications as called for by the tender requirements. The circumstances under which the contract was awarded are questionable. First of all, it was tendered in May 2017, just before the elections in Lesotho on 3 June 2017,” LSP alleges. “Secondly, a new LNDC Board was appointed and shortly after that, the contract was awarded. The contract was awarded to UNIK, a foreign Chinese-owned company. It is a well-known fact that they employ Chinese expats as managers and skilled labour. They import the vast majority of plant and equipment from China, including material.”

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