A case review: corruption scandals in Afghan defense ministry
This report has been developed on basis of evidences which show the Afghan Ministry of Defense and Mujtaba Ali firm, signing a contract, have embezzled a large amount of money.
On January 18, 2019, the Afghan
Ministry of Defense (MoD), in contrast to the Procurement Law of Afghanistan,
signed a contract worth a billion Afghanis with Mujtaba Ali- a Technical and Construction Company. On
May 16, 2019, the Daily Etilaat-e-Roz sent an email to the National Procurement
Authority (NPA), asking NPA officials to give details about the contract. On
May 16, 2019, the NPA replied to the email, giving details of the Procurement Law
of Afghanistan. In the email, the NPA officials also gave details about the
procedure and law of procurement in the country, and introduced references for
further follow up. On July 20 and 21, the investigative reporter of the Daily
Etilaat-e-Roz, reached to the executive director of Mujtaba Ali Technical and
Construction Company, asking him to respond to the claims made against the firm
but to no avail. Instead of replying to the claims, he indirectly offered
bribes, and asked the reporter for retraction.
It is a case of alleged financial
corruption. This report has been developed on the basis of evidences. Elyas
Nawandish and Khadim Hussain Karimi, Etilaat-e-Roz’s senior reporters, have
spent months, studying evidences which show that a large amount of money has
been embezzled by parties involved in a contract signed between the Ministry of
Defense and Mujtaba Ali Technical and Construction Company.
Description of allegation
On October 3, 2017, officials at the MoD filed an application to the Directorate of Procurement and Purchase of the Ministry of Defense, asking them to get a number of power generators repaired. In the application letter, they explained that power generators were out of service and all army bases across the country were in immediate need of generators. On October 3, 2017, the Directorate of Procurement and Purchase of the Defense Ministry held an Open Tender to invite private firms to submit Bids for the repair of generators. On January 22, 2018, seven private companies, including Mujtaba Ali Technical and Construction Company, O.E.M firm, Masud Hamid and Adnan Elham Company submitted their proposals.
In the first round of the tender, six private firms submitted quotations. Documents indicate that Masud Hamid and Adnan Elham Company submitted a quotation worth 11,221,175 afghanis, the cheapest quotation offered. O.E.M Company submitted a quotation worth 750,000,000 afghanis.
In the second round, a private firm submitted a quotation worth 22,358,227 afghanis. In the third round, Masud Hamid and Adnan Elham Company submitted a quotation worth 12,988,567 Afghanis and Mujtaba Ali Technical and Construction Company submitted a quotation worth of 158,888,236 afghanis.
After the first round of tenders
closed, on March 25, 2018, a joint committee of the executive body of the MoD,
prepared a report on the Open Tendering and submitted to the office of acting
defense minister Tariq Shah Bahrami. On April 22, 2018, the acting minister
issued an official letter, rejecting the proposals submitted for repair of
power generators, citing them incomplete and flawed. In the letter, Bahrami
urged the committee to review the Open Tendering process.
By that time, the Ministry of Defense had held the first round of Open Tendering, Hamid Rahman was heading the Department of Construction and Properties of the MoD. On May 12, 2018, Mr. Rahman, regretted the rejection of the proposals by the acting minister, issued a letter in which he urged the Directorate of Procurement and Purchase to hold a new round for Open Tendering. “Given a seven- month-delay, I would like to request you to solve issue as we are in an urgent need of power generators,” the letter read.
On Mach 11, 2018, the acting defense minister filed an official letter to the Office of the President, asking the President to approve the resignation letter of Hamid Rahman. Three days later, President Ashraf Ghani approved the resignation letter of Hamid Rahnan. Following the approval of his resignation by the President, Mr. Rahman stepped down. (Whether he was forced to resign or he stepped down on his will remains unclear).
On May 26, 2018, Tariq Shah
Bahrami, in a classified letter with serial number 100, dated May 23, 2018,
asked President to appoint Najibullah Shinvari as the head of the Department of
Construction and Properties of the Defense Ministry. Issuing a decree with
serial number 528, the President appointed Najibullah Shinvari as the head.
With the appointment of
Najibullah Shinvari, the second round of tendering began. Mr. Shinvari issued a
letter with serial number 87, dated June 9, 2018, asking the acting defense minister
Tariq Shah Bahrami, to change Open Tendering into Single Source Procurement. In
the letter, Shinvari justified his decision as a measure to ‘save time’. “By
changing procedure from Open Tendering to Single Source Procurement, we can
avoid wastage of time. Most importantly, power generators should be repaired immediately
as the army bases are in urgent need of power generators. The confidentiality
of the army bases should not be disclosed,” the letter read.
On June 19, 2018, Bahrami, in
contrast to the content of his previous letter, in which he had ordered a
complete review of the Open Tendering, approved Shinvari’s request.
As per provision no 5, article
18 of the procurement law, “Open Tendering is the default procurement method.
If procurement through open tendering is not feasible, a written justification
shall be placed in the record of the procurement proceedings stating the
reasons for using other procurement method, from the above list.”
In a written justification, the
Ministry of Defense, justified “time limit, confidentiality of army bases, and
urgent need of power generator as the main justification for changing from Open
Tendering to Single Source Procurement.
Awarding contract to Mujtaba Ali Technical and Construction
Following the approval of the letter by acting defense minister, on July 9, 2019, Mr. Shinvari officially introduced that Mujtaba Ali Technical and Construction Company was the qualified firm to win the contract. In an official letter, he mentioned that they [a committee commissioned by the Ministry of Defense] paid visits to the Masud Hamid and Adnan Elham and Company, Mujtaba Ali firm to check their backgrounds. The committee selected Mutaba Ali firm as eligible. “The technicians of Mujtaba Ali firm were disciplined, the company maintained a standard filing system, and it was equipped with well-prepared workshops in Shahr-e-Naw and different parts of the country,” read an official letter issued by Mr. Shinvari.
With no mention about the rest
of companies, Mr. Shinvari declared Mujtaba Ali Technical and Construction
Company as a qualified firm to win the contract.
Findings show that one of the
companies openly complained about the procedure of granting the contract to
Mujtaba Ali firm. Five days later, Shinvari issued another letter with serial
number 598, dated July 16, 2018, asking the companies for an evaluation
meeting. However, Shinvari did not justify the flaws of the two companies that
were dropped out of the bidding procedure.
On June 27, 2018, the
evaluation Committee reviewed the proposal submitted by the Mujtaba Ali firm.
“As the quotation offered by the bidder gives a 15.77 percent discount for the
third lot, we introduce the bidder, Mujtaba Ali firm, as the one to have won
the contract,” the Evaluation Committee wrote to the office of acting defense
minister on the very same day.
On January 18, 2019, the Ministry of Defense awarded a contract, worth 340,313,938 afghanis, to Mujtaba Ali Technical and Construction Company. With the Financial and Economy Commission of the Parliament reviewing the contract, the NPA, chaired by President Ashraf Ghani, in session no 174, approved the contract, awarding it to Mujtaba Ali firm.
Double price offer by Mujtaba Ali firm
On February 4, 2018, Mujtaba Ali Technical and Construction Company had made an offer worth 293,954,862 afghanis while in the Single Source Procurement, on July 9, 2018, it made an offer worth 420,216,678 afghanis, a charge double that of the first quotation given by the very same firm.
Findings show that in the Single Source Procurement, Mujtaba Ali firm has doubled the prices of pieces of generator required for repair. E.g., the firm made a long list of 156 pieces of KVA 13.5 generator that were required to be repaired, and it noted that repairing all 156 pieces of a KVA 13.5 would cost 1046453 afghanis, while a new KVA. 14 with one year warranty is available in 464,440 afghanis in market. In another case, the firm proposed that as many as 145 pieces of KVA18 and KVA22 generators, worth of 10299841 afghanis, were required to get the generators repaired whilst one can buy a new KVA 17.6 or KVA22 in 560,000 afghanis from market. The firm proposed that repairing KVA 110 would cost 20,939,314 afghanis while one can buy a new KVA 110 in 1,104,000 afghanis.
High wages allocated to technicians
Findings show that in its proposal Mujtaba Ali Technical and Construction Company allocated a very high wage for technicians and engineers. In page number 104 of contract, the firm has allocated 2,899,429 afghanis as cost of installation by technicians.
In the contract, the firm proposed
that repairing Catter Pillar, a kind of generator, would cost 13,109,421
afghanis while one can buy a new Catter Pillar generator far cheaper than what
the firm charged for repair.
Findings indicate that the
Ministry of Defense along with Mujtaba Ali Technical and Construction Company
have deliberately concealed details about the exact numbers of power generators
required to be repaired. By concealing the exact numbers of generators, the two
parties have muddied the water in their interests. In the absence of detailed
information, however, it is not an easy task to find out the exact amount of
money embezzled by the parties who have signed this Single Source Procurement
Despite repeated calls, the
Ministry of Defense refused to talk on the case. Officials at the MoD denied to
give details about the contract.
Mujtaba Ali Technical and
Construction Company also refused to talk to Etilaat-e-Roz. In response to
repeated calls for interview, the executive director of Mujtaba Ali firm asked
Etilaat-e-Roz ‘to settle the issue in a brotherly atmosphere’.
The NPA, however, responded all
questions raised about the contract. NPA officials acknowledged that there has
been some sort of mishandling in the contract signed between the MoD and Mujtaba
Ali firm. According to the NPA, Finance and Economy Commission of the
Parliament along with the Ministry of Finance are accountable for mishandlings.