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How Chinese Companies are defrauding African Countries

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How Chinese Companies are defrauding African Countries 1AFRICANGLOBE – From Nigeria to Uganda and Kenya, Chinese companies are hurting the African economy through a culture of bribery and corruption that has seen them salt away millions of dollars, proceeds frominflated contracts sums and other untoward deals that border on sleaze and bribery.

This is aside the harsh reality that the Chinese, against all known business and corporate ethics, have flooded the African market with low-quality goods which are passed off as original. China is clawing deeper into the African market to the dismay of the West, but most of the deals are tainted with bribery and corruption.

In Nigeria, the concern now is that like several projects initiated in the country that were never followed through after the contracts were awarded, the $470 million Public Security Communications System (PSCS) project which the Chinese contractor, ZTE Corporation, claims it had completed and handed over to government since 2012 and was subsequently certified by the relevant government agencies, appears not very functional to detect or prevent crime, and is almost abandoned.

How Chinese Companies are defrauding African Countries 2Findings show that this project has been shabbily handled and that some people are already scheming to re-award the already completed contract, instead of building on the structures the earlier contractor, ZTE, already provided and making sure it works optimally. The presidency is said to be under pressure from loyalists to re-award the contract.

A source close to the project revealed that “many people are now pressuring the presidency to re-award the contract, instead of looking at how to make the infrastructure on ground work”.

There have been several reports raising concerns that the PCSC project which could secure Abuja and indeed the entire nation, was poorly handled, and therefore cannot deliver results, due to massive corruption in the execution of the project. Yet Nigerian authorities are yet to be seen or heard raise protest against such allegations, or even address mounting concerns.

Initiated by the late President Umaru Yar’Adua administration, the Public Security Communications System (PSCS) is a $470 million project funded through a finance agreement between the Nigerian government and the China Export-Import Bank, but implemented by a Chinese telecom equipment company, ZTE.

We learnt that the PSCS project was not merely to install CCTV cameras in Lagos and Abuja, but a major project which is meant to provide modern infrastructure for public security and e-policing in Nigeria.

Now it is the turn of Tanzania, as former head of the Tanzania Ports Authority and his deputy were charged with fraudulently awarding a bloated contract worth more than $523 million to a Chinese company to help expand a city’s main port.

The port expansion was abandoned earlier this year, after officials said costs billed by China Communication Construction were double those for similar port projects, the Thomson Reuters Foundation has reported.

Last year, the Zambia government terminated a $210 million closed circuit television camera contract with China’s ZTE because of alleged corruption.

A government source said if the contract for traffic control had continued, Zambia could have lost $100 million through inflated billings.

The contract had been awarded “without an open tender procedure, raising suspicions of corruption,” reports said.

In Tanzania, the former chief of the Ports Authority, Efraim Mgawe, and his deputy, Hamid Koshuma, were charged with awarding the mega-contract to the Chinese company in December 2011 without obtaining competitive bids.

Mgawe and Koshuma denied the charges and were released on bail.

In 2012, ZTE and Huawei Technologies were convicted of corruption in Algeria. The companies were banned for state telecoms tenders there for two years for bribing executives at state-owned Algérie Télécom.

In that case, three Chinese executives were sentenced by an Algeria court to ten years in prison in absentia for paying $10 million in bribes through offshore accounts in Luxembourg.

Authorities in Tanzania discovered the fraud, they said, when they saw the inal price of the contract compared with earlier cost estimates for the port project.

Tanzania transport minister, Harrison Mwakyembe, said, “We also discovered that so many other things were not included in the contractor’s plan, which made us realise that the contractor had no good intention.”

In 2011, Uganda blocked a $106 million fiber-optic cable funded by a loan from the Import and Export Bank of China. It was stopped because of alleged inflated costs and the use of incorrect cabling.

China’s foreign investment in Tanzania rose from $700 million in 2011 to $2.17 billion last year.

Most of the investments are in infrastructure — railways, ports, buildings, road construction, gas pipelines and wind power farms.

In Kenya, opposition lawmakers accused the government in 2011 of ignoring tender procedures when it awarded Pan African Network Group of China a contract for the country’s digital TV signal distribution.”

Western companies and their governments complain that China turns a blind eye to bribery of foreign officials to garner international business.


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