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MARE CHICOSE COMMISSION OF INQUIRY

MARE CHICOSE LANDFILL
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REPORT OF THE COMMISSIONER

1.0 1.1

INTRODUCTION In June 1994, the Ministry of Environment and Quality of Life awarded the contract for the detailed design, tender preparation, appraisal and supervision of works of the Mare Chicose Landfill to Scott Wilson Kirkpatrick Co Ltd (the Consultants) for the contract price of about £160,000, then the equivalent of Rs 4.8 millions.

1.2

Tenders for the construction of the landfill were floated in July 1995. In January 1996 a contract for the sum of Rs 96, 221, 243 was awarded to Rehm Grinaker Construction Ltd.

1.3

The construction works started on 20 February, 1996 and were due to be completed in October 1996. They were however delayed and it is only in January 1997 that the Ministry of Environment and Quality of Life was able to take possession of the site and manage it temporarily until an operator was chosen, after tender exercise, for the Operation and Management of the plant (Contract No 2).

1.4

The tenders for Contract No 2 were scheduled to be floated in April 1996 to enable an award by August 1996 so that the Operator could be on the site of the Landfill well before the end of the first contract.

1.5

The finalisation of the tender documents were however delayed and the tenders could not be launched before November 1996 with the closing

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date fixed to the 30 January, 1997. Four bids were received from the following tenderers :. Compagnie Générale d’Entreprises Automobile for...Rs 729,360,000 . WasteTech(Pty)/Gamma Civic for……………….……Rs 310,768,791 . Securiclean/Enviroserv for……………………………. Rs 214,920,000 . SITA (Société Industrielle des Transports Automobiles) for…………………………………Rs 187,685,945 1.6 The bids were submitted to a Technical Appraisal Committee, (TAC), composed of five officers of the Ministry of Environment and Quality of Life. 1.7 On 17 March, 1997 Mr Henri Jeanne who was a member of the TAC, wrote, on behalf of the Permanent Secretary of the Ministry, to Mr Patrick Leonard, Director of Group SITA, in Paris, for clarifications on certain points of that Group’s bid. The SITA and who signed “for SITA”. 1.8 On 8 May, 1997 the TAC recommended that the contract be awarded to the lowest bidder, which it designated as SITA/STAM, for the contract amount of Rs 187,685,945, a sum which, in terms of the tender documents, was based on the assumption that the tonnage of waste to be received in the landfill would be 400 tons per day or 12,000 tons per month. 1.9 On 12 May, 1997 the Permanent Secretary of the Ministry informed the Central Tender Board (CTB) of TAC’s recommendation in favour of the bid of SITA/STAM and one week later, the Secretary of the CTB conveyed the Board’s approval of the TAC’s recommendation to award “the operation contract of Messrs. SITA/STAM for the sum of Rs answer came from M. Jacques d’Unienville who wrote from Cassis, on paper bearing the letter head of

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187,685,945 subject to the conditions specified in their report and the Ministry’s concurrence with the above recommendation of TAC “ 1.10 On 2 June, 1997 the Permanent Secretary informed Mr J. d’Unienville, as “ Assistant Director, SITA/STAM, c/o IBL Engineering ” of the Government’s intention “to award you the contract for the operation of the Mare Chicose Landfill at the rates contained in your tender submission of 30 January, 1997…” but made no mention of the conditions specified in TAC’s Report. 1.11 The Ministry’s letter was this time acknowledged by Mr d’Unienville signing as Managing Director for SITA/STAM, on paper bearing the letter head of STAM only. 1.12 On 18 July, 1997 the Permanent Secretary of the Ministry of Local Government and Environment, the new Ministry responsible for the subject of Waste, and Mr d’Unienville, again posing as Managing Director of SITA/STAM, signed a formal Agreement in which, the Contractor was designated as SITA/STAM. 1.13 Finally, on 15 August, 1997 the Permanent Secretary addressed the letter of commencement to the same Mr d’Unienville, this time described as Managing Director of STAM. No reference was made to SITA, the French Société which had put in the successful bid. As from that date everybody seems to have been perfectly happy to deal with STAM and only STAM, as Contractor. Even the payments effected under the contract were made to STAM and, the very first paragraph of the otherwise very complete brief prepared for the Commission by the ex Permanent Secretary of the Ministry of Local Government and Rodrigues, starts by saying that the contract for the operation and management of the Mare Chicose Landfill was awarded to STAM, without any reference to SITA. As will be seen later, the French Société, with world wide experience, never bothered to cause itself to

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be registered as a foreign company under the provisions of the Companies Act and left it to STAM to furnish to the Government of Mauritius the Performance Bond which the successful bidder had to furnish in terms of the tender documents. 1.14 The contract of Scott Wilson Kirpatrick Co Ltd, as Consultants for the supervision on the Mare Chicose Landfill, ended in February 1999. They were replaced, for the period April 1999 to 31January 2003, by a Project Management Team consisting of Mr Laulloo, Dr Allybaccus, Dr Mohee and Mr Abraham. 1.15 On 20 January, 2003, following a tender launched in May 2002 the CTB approved the recommendation to award to GIBB (Mauritius) Ltd the Contract for Consultancy services for the supervision of the Mare Chicose Landfill as from 1 February, 2003 for a monthly fee of USD 10,654 and MUR 140,348 inclusive of VAT for a period of 54 months. 1.16 The Scope of Service of the Consultant included three major elements(a) (b) (c) 1.17 site development; site operation; and contract management.

As per paragraph 2.3.22 of the Tender Documents the Consultant was to “provide pre-award services” which were to include, inter alia –  the preparation of tender documents for appointing Contractor for all forthcoming works;  launching of tenders;  evaluation of proposals;  negotiation;  recommending the best evaluation offer to the Ministry.

1.18

Paragraph 2.3.22 further drew the Contractor’s attention to the fact that Contract No 2 was to expire in September 2003 and that the final

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tender documents for Contract No 3 were to be ready by the 15 March, 2003 at latest. 1.19 Although the tenders for the supervision were launched on 31 May, 2002 with a closing date fixed to 17 July, 2002 it was only at the end of August 2002 that an Evaluation Committee was set up under the Chairmanship of the then Principal Assistant Secretary of the same Ministry of Local Government and Rodrigues, the very Ministry responsible for the project. 1.20 It was in January 2003 that the Evaluation Committee recommended that the Contract be awarded to the lower bidder, GIBB (Mauritius) Ltd to whom a letter of award was issued on the 29 January, 2003. 1.21 With their late appointment, GIBB (Mauritius) Ltd could not possibly be ready with the final tender documents by the 15 March, 2003 and It was only on 23 May, 2003 that the draft tender documents for the construction, Operation and Post Closure Management of the Mare Chicose Landfill could be submitted for vetting to the CTB which, on 29 May, 2003 informed the Ministry of Local Government and Rodrigues by which name the Ministry responsible for the subject of Waste Disposal became known, that certain clarifications were required “to enable the Board take an informal decision regarding especially eligibility of bidders and procedure to be adopted for the project”. 1.22 An exchange of correspondence followed and on 4 July, 2003 the Permanent Secretary of the Ministry thought it necessary to insist on the urgency of approving the launching of the tender so that the Ministry should be able to award the Contract by the end of September 2003. He stressed that – (i) it is not proposed to consider extending the existing contract as this would have heavy financial implications in view of the

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provision for construction of an additional liner on site in October 2003. Should the new contract be delayed, a variation order will have to be issued to the existing contractor and this will substantially modify the forthcoming contract thereby involving additional financial implications; and (ii) there will also be social and political implications as following consultations with the “Forces Vives” of Mare Chicose, Government has already agreed that a number of the problems faced by the inhabitants would be addressed in the forthcoming tender as from October 2003. It is thus of prime importance that the new contract be awarded as scheduled. 1.23 At a meeting held at the CTB’s Offices on the 11 June, 2003 it was noted that the award for Contract No 3 could not possibly be effected before the 15 September, 2003 the date on which the contract No 2 was to expire. 1.24 On 14 July, 2003 the Ministry sought the CTB’s approval to ask, by way of a Variation Order, quotations from STAM for the construction of Cell No 4, which was originally planned to be built in the course of Contract No 3. The CTB gave its green light the next day. 1.25 In a letter of 15 August, 2003 the Permanent Secretary, after referring to the discussions held at the CTB on 11 June, 2003 reminded the Board that the new Contract could not possibly be awarded before the end of October 2003 and proposed that the contract of STAM should be extended on a month to month basis, until the award of the new contract. The CTB signified its approval on 26 August, 2003. 1.26 It is only on 21 July, 2003 that tenders could be launched for Contract No. 3 with a tendering period of only 8 weeks instead of 10 weeks. The Instruction to Tenderers provided –

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As an alternative to flaring the gas, the Ministry of Local Government may require that power be generated from the landfill gas should this be found to be financially viable. Tenderers must, as part of their tender, submit all technical and financial details in that respect to enable a comprehensive economic analysis to be undertaken 1.27 PSG1 of Section 7 of the Project Specification dealing with the Landfill Gas Management provided – The Mare Chicose site is expected to generate approximately 51 x 106 Nm3 of landfill gas during its life. Gas extraction and flaring has been carried out since 2001 and will probably be required for 30 – 35 years after closure. A summary of the predicted gas production, collectable gas and potential energy is presented in Table 7.1. The table should be used as a guideline only for the power generation predictions. The Contractor should calculate his own power generation figures. Landfill gas needs to be extracted from the site in a safe and professional manner to reduce the risk on the environment, human health and safety. It is the intention of the Employer to establish landfill gas powered generators to supply electricity to the local energy grid… 1.28 PSG8, Power Generation further provided – During the course of the Contract, (emphasis added) the Ministry of Local Government may opt for the implementation of power generation from landfill gas. Therefore the Contractor has to quote in the schedule of quantities, the cost of production of power per KWh. The Contractor will be required to carry out a feasibility study and an Environmental Impact Assessment (EIA) for the power generation. The feasibility study would have to

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specify the duration and amount of power which can be generated from the landfill gas including the number of hours/day that the power would be available. The total investment for all equipment to be supplied should also be submitted. An EIA licence will have to be obtained from the relevant authorities. The Contractor will have to supply, install, operate and maintain all equipment necessary for the power generation until the end of the Contract Period of 120 months. ……………………………………………………………… The Contractor is also required to submit with the power generation of 2,3 and 4 MW the technical details on the associated volume of gas required to be pumped through the system to obtain the corresponding power, volume of which would have been flared if power generation was not to be considered. 1.29 On 11 September, 2003 bids were received from four bidders and were immediately submitted to the Ministry of Local Government and Rodrigues for evaluation. 1.30 After the launching of the tenders, requests were made by some prospective tenderers so that the rather short period of eight weeks allowed for the submission of bids should be extended. The requests were turned down by the Ministry on the ground that it was urgent to proceed with the award of Contract No 3. At the time these requests were so turned down, it had already been decided to proceed with the construction of Cell 4, by way of Variation Order, under Contract No 2 and it had further been decided to extend STAM’s contract on a month to month basis. In the circumstances, there would, at first sight, have been no great peril had the delay for submission of the bids been extended by a further two or even three weeks.

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1.31

In spite of the fact that the task of evaluation of proposals and recommending the best evaluation offer to the Ministry were included in the Terms of Reference of the Consultants appointed in January 2003 (see paragraph 1.17 above), an Evaluation Committee was set up under the Chairmanship of Dr A Suddhoo, Executive Director of the Mauritius Research Council to analyse the bids and make recommendations. It was the then Minister of Local Government and Rodrigues, himself, who approached Dr Suddhoo and asked that he should preside the said Evaluation Committee. The matter was mentioned in Cabinet by the Minister by way of a note for mention. According to Mr Young Ten of GIBB (Mauritius) Ltd, his firm was, on the other hand, informed that it would have an Observer status, which status was later changed to one of full membership.

1.32

On the 4 November 2003, the Honourable Leader of the Opposition, by way of a Private Notice Question, asked the Minister of Local Government and Rodrigues and Minister of Housing and Lands, yet another change in the name of the Ministry responsible for the subject of Waste, whether in regard to the contract for solid waste management and landfill operations at Mare Chicose, he would state – (a) (b) (c) (d) the total sum paid for the last three financial years; the expiry date of the contract and the amount being paid

since then, to whom and on what basis; whether additional work, outside the contract was carried out and, if so, by whom and for what amount; and the respective bids of each of the four tenderers for the new contract. 1.33 The Minister answered the questions relating to the various amounts paid to STAM with relative ease and precision. He further explained why-

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(a) it became necessary to ask STAM to construct, as a variation order, a cell No. 4 which was originally to form part of Contract No. 3; (b) the contract for the operation of the landfill was extended on a month to month basis until such time as Contract No 3 would be awarded to a new operator. 1.34 The Minister strongly denied allegations that the delay in the award of the proposed new contract was calculated to favour the existing contactor STAM and further assured the House that the bids received were still in the process of being evaluated by the independent Committee chaired by Dr Suddhoo, whose recommendations would be submitted to the CTB for approval. He was confident that the new contract would be awarded in the course of the month of December 2003. 1.35 At the same sitting of 4 November, 2003 questions were asked about one M Sallustro, a French Adviser of the Minister, reported to be a member of the Evaluation Committee. The Minister confirmed that his said Adviser was a member of the Committee but added that he only sat as an Observer, whereupon another Member questioned the propriety of the Minister’s Adviser sitting, even as an observer, on the Evaluation Committee, 1.36 In the beginning of the month of February, 2004 while the National Assembly was in vacation and persistent rumours concerning the eventual award of Contract No 3 were afloat, it was officially announced that Government had decided that the whole tender exercise in respect of Contract No 3 should be cancelled and that a new invitation to bid would be launched. 1.37 On 16 March, 2004 at the first sitting of the National Assembly after the end of the year vacations, the Leader of the Opposition, by way of a Private

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Notice Question, asked the new Minister of Local Government and Rodrigues “ whether, in regard to solid waste management and landfill operations at Mare Chicose, he will state – (a) (b) (c) (d) 1.38 the amount paid since the expiry of the contract in if the scope of the works has been altered and after if his Ministry has made recommendations to the Central why the contract has not yet been awarded.”

September 2003 and to whom; tender submissions and if so, when and why; Board and, if so, when and which ones; and

The Honourable Auroomooga Putten, who had just been appointed Minister of Local Government and Rodrigues, in replacement of the Honourable Georges Pierre Lesjongard, started by thanking the Leader of the Opposition for his Private Notice Question which, he said, would give him the opportunity to clarify matters regarding the contract for the Mare Chicose Landfill.

1.39

After reminding that the contract for the operation of the landfill had, in September 1997, been awarded to SITA/STAM for the sum of Rs 187,685,945, the Minister explained that the amount payable over the years had considerably increased in view of the fact that the landfill was receiving about 1,200 tonnes of waste per day instead of the 400 tonnes for which it was designed. He further recalled that the Contract awarded to SITA/STAM, in 1997, expired on 15 September, 2003 before the award for the new Contract No 3 could be finalised. Hence the Ministry’s decision, with the approval of the CTB, to extend the contract of SITA/STAM on a month to month basis for an average price of Rs 8.4 millions per month, a statement which prompted the Leader of the Opposition to remark that “STAM Ltd, represented by IBL here in this country has already pocketed nearly Rs 14 m without tendering

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procedure and that STAM Ltd would continue to pocket Rs 8.4 m per month for twelve months without any tendering procedure”. 1.40 The Minister proceeded to inform the House that the Evaluation Committee having expressed certain doubts on the judiciousness of awarding a contract providing for the possible construction of a power plant, without a proper and independent feasibility study having previously been carried out to demonstrate its viability, the Ministry had sought the views of the State Law Office which had advised that it would be legally in order to proceed with the evaluation of the bids with and without power generation. 1.41 The Minister added that(a) (b) the advice of the State Law Office had duly been communicated to the Evaluation Committee and the Central Tender Board; in a report of 16 December, 2003 the Evaluation Committee had recommended that the tender be awarded with power generation to Sotravic subject to satisfaction being obtained on a number of conditions; (c) the recommendation of the Evaluation Committee was examined by the Government which “in view of ambiguities in the tender documents relating to the Clause on power generation, decided, on 26 December, 2003 that tenders be evaluated without power generation in order to avoid all difficulties/ambiguities when the contract will be awarded”.

1.42

The Minister further disclosed that – (a) following Government decision that the tenders should be

evaluated “without power generation”, the Evaluation Committee

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had, on 30 December, 2003 recommended the award of the Contract to JV STAM/SUEZ Environment; (b) the Evaluation Committee’s recommendation of 30

December, 2003 had been forwarded to the CTB which, on 23 January, 2004 informed the Ministry that it considered the offer of the JV STAM/SUEZ Environment to be non responsive in view of major deviations and suggested that the Ministry should reconsider its recommendation; (c) the views of the CTB were immediately forwarded to the

Evaluation Committee which, on the 6 February, 2004 had “substantiated the rationale behind its recommendation and maintained that the contract be awarded to JV STAM/SUEZ Environment as it considered that the deviations were not major ones”. 1.43 The Minister concluded by saying that, in the circumstances, “Government had, on 6 February, 2004 decided that in a spirit of transparency and fairness the Central Tender Board be requested to annul the tender exercise and invite fresh tenders on the basis of a well prepared tender document so as to clear all ambiguities in the tender documents”. Asked to particularise the alleged “ambiguity”, the Minister replied that it rested “on the power generator, because with power generation, the award will be given to the contractor subject to a feasibility report being made by the successful bidder which is not correct”. The Minister heavily insisted on the fact that each and every initiative taken by the Ministry had been done in absolute transparency, after seeking the approval of the CTB. 1.44 The answers of the Minister did not appease the qualms of the members of the Opposition parties who, after recalling various parts of the previous Minister’s answers in November, 2003, particularly that part in which

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he said that “much time had been taken for the preparation of the tender documents in order to make provision for the conversion of the gas obtained into electricity, if that was viable”, kept suggesting that the whole tender exercise “smacked of corrupt practices”, that the specifications had been changed after submission of the bids to advantage STAM/SUEZ Environment the most costly bidder. The Leader of the Opposition even suggested that “ STAM Ltd represented by IBL here in this country” who had “already pocketed nearly Rs 14 m without tendering procedure” would “pocket Rs 8.4 m per month for 12 months without any tendering procedure” and “would be getting the contract by hook or by crook”, before asking the Minister whether he would be agreeable to start the procedure for a full fledged Commission of Inquiry if he “had nothing to fear, nothing to hide”. It was at that point that the Minister took the House by surprise when he announced “ if the Members of the Opposition insist, I will tell them that the Prime Minister has informed me that he is prepared to have a Commission of Inquiry”. 1.45 In the afternoon of the 16 March, 2004 the President of the Republic appointed me to chair a Commission of Inquiry whose Terms of Reference were published in an Extraordinary issue of the Government Gazette of the same day, in General Notice No 422 of 2004.

2.0

TERMS OF REFERENCE

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2.1

The Terms of Reference approved by the President of the Republic provide that the Commission should enquire into – (a) 1997; (b) any extension of the contract, referred to in paragraph (a), pending the award for a new contract for the operation and management of the Mare Chicose Landfill; and (c)any incidental to paragraphs (a) and (b); and to report whether there has been any malpractice in relation thereto. the award and execution of the contract for the operation

and management of the Mare Chicose Landfill since September

2.2

The Commission caused notices to be published in the media, the press as well as radios and television, inviting members of the public who wished to depone before the Commission to make themselves known by the 7 April, 2004. Only one written communication was received.. It was from Professor Chan who expressed the wish to depone on certain matters which were, however, clearly outside the Terms of Reference. Given that he was the only person who had volunteered to come forward and play his role as a responsible citizen, I decided to call him as the first witness at the Commission’s first sitting of 14 April, 2004 to thank him and explain that the Commission could not go outside the Terms of Reference approved by the President of the Republic.

2.3

Me Maxime Sauzier, P. Balgobin-Bhoyrul and

V. Bunwaree, Bar at Law,

instructed by Me Thierry Koenig were authorised to represent the interests of STAM. Me Iqbal Maghooa, Principal State Counsel, represented the Ministère Public. I have, on the other hand, refused to the Leader of the Opposition, his request that he should, as a witness, be allowed to be represented by Counsel.

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2.4

On Monday 19 April, 2004 the Secretary of the Commission and myself had the opportunity to effect, in the company of Messrs. D’Unienville, Seguin and Ramlugun of STAM; Messrs Young Ten and Canakiah of GIBB (Mauritius) Ltd and Mr P. Kowlesser, Programme Coordinator of the Ministry of Local Government and Rodrigues, a guided visit of the Mare Chicose Landfill where we were briefly explained the operation and management of the landfill and were able to see operations of waste being compacted in a cell, the flaring of gas, the collection of leachate, the weighing of lorries at the weighbridge, the rinsing of lorries before being allowed to go back the streets, after discharging their loads of waste etc..

2.5

After the guided visit of the Mare Chicose Landfill, the Commission held twelve more public sittings at the Electoral Commissioner’s Office, at the 9th Floor of the Max City Building, at corner Remy Ollier/Louis Pasteur streets, Port Louis. I wish to express my thanks to the Electoral Commissioner and the Electoral Supervisory Commission for having kindly consented that the Commission should use part of their offices.

2.6

The

Commission

heard

twenty

two

different

witnesses

(see

Annexure 1) some of whom had to be recalled on more than one occasion. I have also been provided with a mass of documents (see Annexure 2) relating to the various tenders and awards for three different contracts concerning the Mare Chicose Landfill, over the past six years and with different bulky files, including confidential ones. 2.7 On 5 May, 2004 I heard two Members of Parliament who, at the National Assembly, had levelled criticism and accusations concerning the matter in issue. Although it was soon apparent that they had no personal knowledge of the facts on which they intervened in the House, I allowed their testimony, quantum valeat, in as much as same

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could give an indication of certain “points d’ombre” which could, afterwards, be looked into. On the other hand, I made it abundantly clear that I could not, under the Terms of Reference approved by the President in March 2004, inquire into the reasons relating to the decision to annul the tender exercise concerning Contract No. 3. 2.8 Dr the Honourable N. Ramgoolam, Leader of the Opposition, who had been summoned to appear at the subsequent sitting of the 7 May, 2004 was allowed to make a statement in which, after referring to my previous ruling about the lack of jurisdiction to inquire into the reasons which led Cabinet to decide that the tenders for Contract No. 3 should be annulled, prayed that his deposition be postponed to another sitting to give him time to approach the President of the Republic for a possible extension of the Terms of Reference of the Commission. 2.9 I acceded to his request and, on 18 May, 2004 the President of the Republic, acting under section 3(4) of the Commission of Inquiry Act, altered the Terms of Reference already published to include the following – To also enquire into – (a) the circumstances of, and the reasons for the cancellation of the tender exercise in relation to the award of a new contract for the operation and management of the Mare Chicose Landfill; and (b) 2.10 any matter incidental to the above.

The alteration to the Terms of Reference was published in an Extraordinary issue of the Government Gazette of 18 May, 2004 in General Notice No. 787 of 2004.

2.11

On 11 June, the Commission acceded to a request of the Honourable Georges Pierre Lesjongard who, after taking cognizance of an allegation that while he was Minister of Local Government and

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Rodrigues, he had approached the then Prime Minister in order that Contract No 3 should be awarded to STAM without going through tender procedures, wanted to deny, in public and under oath, that he had ever discussed anything of the sort with the former Prime Minister or any other person. 2.12 On 23 July and 4 August, 2004, the Commission held two last hearings to clear certain points on which I felt it necessary to be further enlightened.

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3.0

AWARD OF THE OPERATION AND MAINTENANCE CONTRACT OF THE MARE CHICOSE LANDFILL (CONTRACT No 2), TO SITA/STAM.

3.1

As indicated in paragraph 6 of this Report, it was the French Société SITA, whose siège social is at 94, rue de Provence, 75002, Paris, which put in the lowest bid for Contract No 2.

3.2

In a letter dated 30 January, 1997 and which formed part of the bid documents of that Société, its Director, M. Patrick Léonard, recalled that SITA was an international company with world wide activities before saying that it was present in Mauritius through its “associate company STAM (Société de Traitement et d’Assainissement des Mascareignes Ltée) whose other shareholders were Ireland Blyth Ltd and Compagnie de Beau Vallon”. Amongst the other documents submitted by Société SITA, there was an undated Commitment Letter signed by M. Léonard, the material part of which read – I….Patrick LEONARD acting as a director of SITA company limited….certify, in respect of the authority given to me, the intention of SITA to submit a bid concerning the operation of the Mare Chicose Landfill in Mauritius. In case of SITA obtaining the contract, our Mauritian subsidiary STAM, would be responsible for the project.

3.3

The performance security of Rs 2 m was provided by way of Bank Guarantee, by the Crédit Lyonnais, Paris, in favour of SITA.

3.4

On the day the bids were opened, in public, representatives of the bidders present at the opening exercise, were asked to write their names and that of their respective firm on a CTB document on which the amount of each of the bids was recorded before being signed by a CTB official. Messrs Léonard, Mirande and d’Unienville entered their names on the

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document in question on which they recorded the name of the bidder they represented as SITA/STAM, (see Annexure 3). Notwithstanding the fact that the Pouvoir or Power of Attorney signed by M. Dominique PIN, Directeur Général of Société SITA, in Paris, on 22 January, 1997 and in virtue of which they acted, only gave them power to sign “ tout acte d’engagement et pièces contractuelles” in the name of SITA, whose “Statuts” had also been communicated with the bid documents, the official letter by which the Secretary transmitted to the Permanent Secretary of the Ministry of Environment and Quality of Life the bid documents, referred to the fourth bidder as SITA-STAM. 3.5 It apparently struck nobody that the bid being in the name of SITA, which put forward its considerable experience in the field of waste collection, the “commitment letter” of M. Léonard that SITA’s subsidiary would be responsible for the project, could not have for effect to make of SITA/STAM, an “association” which, prima facie had no legal personality and capacity, the official and lowest bidder to which the contract was later to be awarded. Nobody questioned the word of M. Léonard and the then Permanent Secretary of the Ministry of Local Government and Environment who signed the official contract in the name of the Government of Mauritius could not say whether same had ever been legally vetted. Nor did he know who filled the document on which he contented himself to affix his signature to bind the Government of Mauritius! 3.6 In the first page of the evaluation report dated 8 May, 1997 the members of the Technical Appraisal Committee (TAC) noted that two of the bidders were foreign companies which proposed, if successful, to set up companies in Mauritius for the operation of the contract. As far as SITA was concerned, they contented themselves to record that it was “already represented In Mauritius through the associate company STAM (Société de Traitement et d’Assainissement des Mascareignes Ltée) for which the other shareholders are Ireland Blyth Limited and

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Compagnie de Beau Vallon”, clearly contenting themselves to repeat what M. Léonard had asserted in his covering letter. 3.7 Notwithstanding its description of Bidder No 4 as SITA, in the first paragraph of its report, the same TAC, after noting the overall compliance of SITA/STAM with the bid conditions, recommended “that the contract be awarded to this bidder which has also submitted the lowest priced bid amounting to Rs 187,685,945”. 3.8 Again, nobody seems to have reacted, when in August 1997, the Performance Bond which the bidder was supposed to provide to the Employer was given by STAM and the Hongkong and Shanghai Banking Corporation Ltd (HSBC) of Port Louis, whereas the Security Bond accompanying the bidder’s documents had been given by SITA and the Crédit Lyonnais in Paris. 3.9 Had any official of the Ministry of Local Government and Environment, TAC or the CTB taken the trouble to check the assertions of M. Léonard, it would have been realised that STAM was not the subsidiary of SITA and that neither SITA nor STAR was a shareholder of the Mauritian company Société de Traitement et d’Assainissement des Mascareignes Ltée, at the time SITA made its bid or even, in May 1997, when the contract was awarded to the ghost bidder SITA/STAM. The document signed by the Government of Mauritius with SITA/STAM in July, 1997 was signed with a party having no legal status and capacity. I however hasten to record that STAM, the Mauritian company, has done its best to honour the obligations of SITA/STAM under the terms of the so called “contract”. 3.10 It is also surprising that it never crossed the mind of the experienced Officers of the TAC that the SITA/STAM “association” could at least suggest some form of joint venture between the French Société, with undisputed experience in waste treatment, and the Mauritian firm,

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abusively described as its subsidiary, and which at that time, could not have the required experience to qualify even as a partner in a joint venture for the proposed contract. 3.11 Clause 5.3 (a) and 5.4 of the document Instruction to Bidders provided that (a) bidders had to have an annual turnover in landfill operation, construction and waste management work of 2 million US$ equivalent for the past five years; and (b) in order for a joint venture to qualify, each of its partners had to meet at least 25 % of the minimum criteria provided in sub Clause 3(a), viz a minimum turnover of 500,000 $. 3.12 In Annex B.4 of their Report the TAC stressed that the information requirement for joint venture was not applicable to the SITA/STAM bid as it was not a joint venture. 3.13 Had the SITA bid been considered as a possible Joint Venture, it would necessarily have been disqualified as non responsive because of STAM’s then lack of qualifications. But, as stated earlier, nobody found it necessary to question the representations of the Director of SITA, the Société with world wide experience which may thus have succeeded to “assign” its rights to the contract to STAM, the Mauritian Company of which STAR, its filiale, a Société with its siège social in Réunion Island, was to become a minority shareholder on 11 July 1997, after the award of Contract No 2. 3.14 Indeed, after an Officer of the World Bank had apparently questioned the performance bond in the exclusive name of STAM, M. Léonard , in January, 1998 to the Permanent Secretary of the Ministry of Local Government and Environment to reconfirm that SITA’s operations in Mauritius were carried out by their “sister company STAM” for which they “have had Prime Minister’s approval to invest”. He further

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requested that all payments in relation to the Mare Chicose Landfill operation should be effected through STAM. 3.15 Again, there was apparently no reaction before September 1998, when the Permanent Secretary of the Ministry of Local Government and Environment wrote to the Solicitor-General to ask – (a) (b) “whether it is in order to allow STAM to execute the contract as proposed by SITA; and whether it is in order for the Ministry to accept a performance bond issued by STAM instead of SITA”. Questioned as to the reasons which prompted that rather belated reaction of the Ministry, Mr Henri Jeanne, then a Principal Assistant Secretary at the relevant Ministry, said there was no particular reason and that he had one day decided to do if to have, so to say, “ le coeur net”. 3.16 On 30 December, 1998 a State Counsel advised the Ministry that it would be appropriate to have the performance bond signed by SITA and STAM since the executing contract had been signed by both of them but that there was no need to have the executing agreement signed by SITA only, adding that “ by signing the agreement by SITA/STAM the government is in a more advantageous position”. 3.17 The State Counsel may have failed to realise that what he called the “executing contract” was not signed by both SITA and STAM but by SITA/STAM, a body which, at first sight, had no corporate status and no contractual capacity. As far as the alleged “more advantageous position” of the Government is concerned, this is no doubt a matter of opinion with which I am not asked to agree.

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3.18

Following a request that the performance bond be signed by SITA and STAM, as suggested by the State Counsel, the Ministry was informed by STAM that SITA which was not incorporated in Mauritius and which was not operating under its own name but through a subsidiary (STAM), mandated for the purpose of the contract, could not be guaranteed for the performance of a contract which was under the responsibility of its subsidiary !

3.19

The whole matter was again referred to the State Law Office which contented itself to address the following minute to the Ministry – “Since STAM is performing the work stipulated in the contract between the Government and SITA and has also entered into a performance bond for the sum of Rs 18,768,594.50 as guarantee for any default under the contract and also as stipulated by your Ministry on 30.9.98 that “STAM is giving value for money” it is advisable not to press on a second performance bond from SITA”.

3.20

I need only say that SITA’s prima facie unlawful assignment to STAM of Contract No 2, a Contract which had all the characteristics of a contract intuitus personae inasmuch as it could only be awarded to parties having the required experience and other essential credentials, may have thus received the official blessing of even the State Law Office.

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4.0

STAM - SOCIETE DE TRAITEMENT ET D’ASSAINISSEMENT DES MASCAREIGNES LTEE

4.1

In spite of the assurances given by the Minister of Local Government and Rodrigues in the National Assembly, in March, 2004 that the new Contract in replacement of the annulled Contract No 3 – Construction, Operation and Post Closure Management of the Mare Chicose Landfill would be awarded by the end of October this year, the tenders for the said contract have not yet been floated.

4.2

The chances that a contract of such importance may be awarded before January 2005 now appear quite remote. It is more than probable that the Ministry will indeed have no choice but to continue, for some more time, with the present arrangements, already approved by the CTB, of entrusting the management of the Mare Chicose Landfill to STAM, on a month to month basis. The Leader of the Opposition may have been partly right when, on 16 March, 2004 he expressed the fear that STAM might “pocket Rs 8,4 m per month for twelve months without any tendering procedure”. In fact, he only underestimated the period during which STAM’s services, as Contractor, may continue to be paid from public funds.

4.3

It may therefore be necessary that the record concerning STAM should be put straight : STAM is not and has never been a subsidiary company of SITA or its filiale STAR of Réunion Island, as abusively represented by M. Léonard in various documents submitted to the CTB and the Ministry, in January 1997 and afterwards, for the purpose of Contract No 2. Nor is it a foreign company “represented in Mauritius by IBL Ltd” as averred by the Leader of the Opposition, in March this year, when he must have completely forgotten that he was the very Minister who, in July 1997, had, what seems to have been long inquiries and with the

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public interest in mind, authorised the participation of STAR, as a minority shareholder, in the equity of the Mauritian company STAM. 4.4 The Société de Traitement et d’Assainissement des Mascareignes Ltée (STAM) was constituted by authentic deed on 23 August, 1995 with an authorised share capital of Rs 5,000,000 divided into 500,000 shares of Rs 10 each, under the provisions of the Companies Act 1984 It was incorporated on 6 September, 1995 with two shareholders, namely . Ireland Blyth Ltd (IBL Ltd) with 2499 shares of Rs 10 each; . Blyth Brothers Co Ltd with 1 share of Rs 10. 4.5 On 26 January, 1996 Maxime Leclézio, Secretary of IBL Ltd, applied to the then Prime Minister, in order that – (a) (b) Compagnie de Beau Vallon (“CBV”) a Mauritian company

controlled by non citizens; and Société de Transport et d’Assainissement de la Réunion (“STAR”), a foreign société under whose name Société SITA, a foreign société said to be specialised in all aspects of pollution control and recycling of waste, was said to trade in Réunion Island, should respectively be allowed to subscribe 640,000 and 195,000 shares out of a total of 1,600,000 shares which STAM proposed to issue. 4.6 In his covering letter to the then Prime Minister, Mr Leclézio stressed that since there was very little experience in Mauritius in the lines of waste collection and treatment of recycling waste his company had “looked for foreign partners with all the necessary knowledge and expertise to come and join us so as to fully develop the activities of STAM..”

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4.7

It was only on 9 July, 1997 that the then Prime Minister, acting under section 3 of the Non Citizens (Property Restriction) Act, gave his consent to the proposed holding of shares by the non citizens, with, inter alia, the following conditions that total foreign investment should not exceed 49% of the share capital of the company; that STAM should obtain an EIA Licence from the Ministry of Environment and Quality of Life; that the shares should not in any manner be disposed of without the Prime Minister’s prior approval and such conditions he might impose.

4.8

The shares in question were issued on 11 July, 1997. On the same day, the Company issued another 637,500 shares to IBL Ltd and 176,000 shares to Société d 'Investissement de Saint Aubin (SISA), another Mauritian corporation.

4.9

There is no evidence that the condition concerning the EIA Licence was respected before the issue of shares to the non-citizens. One may of course ask oneself whether there was any rationale in the imposition of such a condition to an existing company before it could issue part of its shares to a foreign shareholder. Dura lex sed lex. A condition precedent imposed by the then Prime Minister was not complied with…

4.10

As hinted earlier, in Chapter 3.0 of this Report, well before the then Prime Minister approved the application made on behalf of the foreign Sociétés, M. Léonard, the Director of SITA did not hesitate to include in one of the documents accompanying SITA’s bid, false and misleading representation that STAM was the associate Company of SITA.

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4.11

On 22 July, 1997 the only share belonging to Blyth Brothers Co Ltd was transferred to IBL Ltd. As from that date, IBL Ltd and STAR each owned 40% of the shares of the Company while CBV and SISA held the remaining 20%.

4.12

On 16 August, 1999 the Secretary of IBL Ltd made a new application to the then Prime Minister for the issue of another 632,437 and 142,298 new shares to STAR and CBV respectively out of a total number of 1,581,092 newly created shares it was proposed to issue to the four existing shareholders.

4.13

It was only on 7 January, 2000 that the then Prime Minister gave his consent on condition that the shares were not to be disposed of in any manner without his prior approval and such conditions he might impose. The certificate further provided that “ before the expiry of three months time limit (which shall under no circumstances be extended) the locally-incorporated company STAM shall submit documentary evidence to the effect that the shares have been issued to the two abovenamed non-citizens failing which this authorisation will be considered as being null and void” as well as the following formal warning “ This authorisation may be cancelled if (a) or
(b)

any or all of the above conditions are not complied with; the non-citizens or local company has provided

information or document in relation to the applicant which is false or misleading.” 4.14 The shares were issued on 11 January 2000 but there is again no trace of any documentary evidence to inform the Prime Minister’s Office the shares had been issued. I was told, is not in the habit of the Office to

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control whether the conditions imposed by the Prime Minister are adhered, strictly, partly or not at all. 4.15 According to the documents filed at the office of the Registrar of Companies, a new issue of shares was effected on the 30 September, 2000 with a further 1,200,000 and 270,000 shares issued to STAR and CBV, the two non citizen shareholders, without any authority from the Prime Minister being sought or obtained. With the new issue, even if done without the Prime Minister’s consent, the shareholding of the Company was, prima facie, as followsIBL Ltd……….. 2,472,437 shares STAR………….2,472,437 shares SISA……………..679,920 shares CBV…………… 556,258 shares

    4.16

On 11 June, 2003 the shares belonging to STAR were transferred to a Company registered under the name of Waste Alliance Ltd, a corporation holding a Category 1 Global Business Licence.

4.17

Notwithstanding the fact that all information concerning a company holding such a Category 1 Global Business Licence is confidential, Mr Maxime Sauzier, learned Counsel who appeared for STAM, has with the authority of his Client, unhesitatingly communicated to the Commission a document showing the shareholding of Waste Alliance Ltd.

4.18

There is again no trace that the consent of the Prime Minister was sought and even less obtained for the transfer, by STAR, of those shares which it had been authorised to buy on the express condition that they would not be disposed of without the prior approval of the Prime Minister and such conditions he might think fit to impose.

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4.19

According to section 19(2) of the Financial Services and Development Act, 2001 a corporation holding a Category 1 Business Licence is supposed to be a corporation doing business or activity “specified in the Second Schedule to the Act and which is carried on from within Mauritius with persons all of whom are resident outside Mauritius and which is conducted in a currency other than the currency of Mauritius”.

4.20

By virtue of section 21(1)(b) & (2) of the Act, a corporation which, as Waste Alliance Ltd, holds a Category 1 Global Business Licence cannot hold shares in a company other than one which itself holds a Category 1 or Category 2 Business Licence or a company which is listed on the Stock Exchange, which is indisputably not the case for STAM.

4.21

Section 21(3) of the Act, however, provides that “ notwithstanding any provisions of this section (viz section 21) and any other enactment, the Commission may authorise a holder of a Category 1 Global Business Licence to deal or transact with residents in Mauritius on such terms and conditions as it thinks fit”.

4.22

The Management Company of Waste Alliance Ltd applied to the Commission for a derogation under section 21(3) of the Act and, on 6 June, 2002 the Financial Services Commission wrote to the Director of the Management Company to say “ that the application for permission to deal with residents, that is, the Company acquiring from Société de Transport et d’Assainissement de la Réunion (STAR Réunion) 40% of the share capital of Société de Traitement et d’Assainissement des Mascareignes Ltée (STAM Mauritius), has been approved”. The approval was however subject to the “necessary approval being obtained from the Prime Minister’s Office under the provisions of the Non Citizens (Property Restriction) Act.”

4.23

There is again no trace that the approval of the Prime Minister was ever sought. Yet, 5 days later, the shares of STAR were disposed of in

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favour of Waste Alliance Ltd which thus became a shareholder of STAM. 4.24 The Financial Services Commission has apparently considered that the powers conferred upon it by section 21 (3) of the Act, viz to authorise a Global 1 Company to deal or transact with residents, were wide enough to give it the power to authorise a Company holding a Global 1 Business Licence to buy shares of Mauritian companies, not listed on the Stock Market. This seems to be in the teeth of the provisions of section 21 (1)(b) of the Act which are said to be subject to subsection (2) of the same section 21 but not to subsection (3) . One may therefore doubt whether the Financial Services Commission may, under the cloak of the powers granted to it by section 21(3), authorise precisely what the Legislator thought fit to prohibit in section 21(1). 4.25 It is no part of this Commission of Inquiry’s mission to pronounce on what may, after all, be difficult questions of law. I shall, therefore, content myself to invite the attention of the Authorities as to whether the Curator of Vacant Estates should not intervene, as provided by section 5(2) of the Non Citizens (Property Restriction) Act, in respect of the shares which may have been issued, held and finally transferred in breach of the provisions of the laws of this Country.

5.0

EXECUTION OF THE CONTRACT : PAYMENTS EFFECTED RE WASTE TRANSFERRED TO LANDFILL

5.1

The Mare Chicose Landfill project was a component of the National Solid Waste Management Plan established in 1993, when it was decided to

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operate two landfills in Mauritius, one at Mare Chicose and the other one at Mare d’Australia. 5.2 Works on the project were substantially completed in January 1997 and the Landfill became operational in September 1997 when the contract for its operation and management was, in circumstances referred to earlier, awarded to SITA/STAM. 5.3 On the other hand, in 1996, following protests from various quarters and the so called “forces vives” of the region, Government decided to abandon the Mare d’Australia project. 5.4 The non implementation of the Mare d’Australia project as well as the government’s decision to close all the open dumps which represented a threat to the environment and strict measures to combat illegal dumping, have resulted in all the waste generated in Mauritius having to be disposed of at the Mare Chicose Landfill conceived to receive only 400 tons of waste per day or 12,000 tons per month, the tonnage which bidders for Contract No 2 were asked to assume for the purpose of their bids. 5.5 The evidence on record shows that the amount of waste received at the Landfill for the first six years of operation ending in September of each year was as follows1998…………… 45,066 tons

1999…………… 170,644 tons 2000…………… 245,682 tons 2001…………….. 302,045 tons 2002…………….. 346,345 tons 2003………………374,185 tons

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an average of more that 1.200 tons a day in the last year, a figure which an Honourable Member could not believe when, on 16 March this year, the Minister of Local Government and Rodrigues disclosed the above figures to the House. 5.6 I am satisfied that all the waste received at the landfill goes on a computerised weighbridge and is recorded by the Contractor under the supervision of the Consultants who certify same. There is no evidence which would warrant me to entertain any doubt on the correctness of the figures verified and certified by the Consultants for payment by the Ministry. There is indeed evidence that in February/March 2002, with the passage of Cyclone Dina, the incoming tonnage of waste even soared to a peak of about 40,000 tons. 5.7 As underlined before, SITA’s bid price for Rs 187,685.945 was based on the assumption that the amount of waste to be treated would be 12,000 tons per month. This is clearly stipulated in the Bill of Quantities where the bidder detailed the price for the landfill operations based on the waste input. The rates had to take into account all activities over the contract period of six years. They were offered by the Contractor and duly accepted by the Employer, as follows – 0 to 4500 tons per month….. Rs 1,566,265.05 4500 to 9000 tons per month….. Rs 106.28 per ton 9000 to 13500 tons per month…. Rs 187.40 per ton 13500 to 18000 tons per month… Rs 144.24 per ton above 18000 tons per month……. Rs 161.70 per ton 5.8 According to a document produced by Mr d’Unienville (Document 48), the actual incoming tonnage of waste for the year 2003 amounted to 372,441.67 tons instead of the assumed 144,000 tons and the monthly sum payable for the year was consequently Rs 82,723,364.24 instead of the estimated Rs 31,280,646, The Commission must pause here to

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say that the Contract also makes provision for a weighted increase of rates to compensate the Contractor for the increases in the Construction Price Index which, just as the better known Consumer Price Index, keeps increasing. 5.9 All the experts in the field of waste collection have noted an increasing trend in waste generation in Mauritius and there is now a definite effort, at all levels, to improve the collection all over the Island. Every item so collected, from the old toothbrush to the unserviceable PC, ultimately finds its way to Mare Chicose where the situation may soon become nightmarish with the arrival, everyday, of more and more waste. In the circumstances, one can hardly pretend to be surprised that the estimates made eight years ago, at a time when two landfills were envisaged, are, to-day, proving absolutely redundant. 5.10 It is of course true that the Government has, over the past six years, been paying millions more than the sum estimated under Contract No 2. The tender stipulated that the assumed quantity of 12,000 tons per month was “for the sole purpose of determining a total bid price and with no commitment concerning actual waste input rates”. With the rapid development of Mauritius, no person could possibly hope that the cost of the operation and maintenance of Mauritius’ only Landfill for the contract period of six years would cost only the 187 million rupees quoted by the successful bidder, as per tender instructions, for only 400 tons of waste per day. 5.11 Apart from the increases due under the Construction Price Index, the sums payable were further inflated by the addition, as from September 1998, of the Value Added Tax. The total sum paid for waste disposed at the Landfill for the period September 1997 to December 2003 reached a total of Rs 383,788,321 including a VAT component of Rs 40,147,255. All the sums paid were certified by the Supervising Consultants and were therefore contractually due.

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5.12

On the evidence on record, I have every reason to believe that – (a) the Contractor was paid in strict compliance with the provisions of the contract; and (b) he was entitled to every cent so paid to him, after certification of his claims by the Consultants.

6.0 6.1

CONTRACTOR’S MANAGEMENT PERFORMANCE On 05 May, 2004 the Commission convened Dr the Honourable A. Boolell, Member of Parliament for the constituency of Vieux Grand

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Port and Rose Belle, who, at the sittings of Parliament of the 4 November, 2003 and 16 March, 2004, had intervened to ask the Minister of Local Government and Rodrigues certain questions about the Mare Chicose Landfill and had made allegations concerning STAM’s management of the landfill operations. 6.2 Dr Boolell made it clear that his intervention in the House was based on information received. The Commission agreed to hear him, even on questions where his evidence would amount to hearsay, provided the information he conveyed was reasonably capable of being checked from other sources. 6.3 The Honourable Member deponed, inter alia, as to information he had received that GIBB (Mauritius) Ltd, the present Project Consultants for the Mare Chicose Landfill, had pointed out that the operations managed by STAM were not up to international standard. 6.4 I queried the Consultant who, in a letter dated 17 May, addressed to the Secretary of the Commission, said that their overseas specialists were of the opinion that the site was being operated to an acceptable standard and according to international norms and that the Contractor was using his best ability to operate the landfill site given the prevailing conditions and also the inherited equipment which was undersized and/or not to the required standards for a landfill site of its capacity and further submitted to the Commission Bi Annual Audit Reports prepared by GIBB (Mauritius) Ltd in April 2003 and October 2003. 6.5 Mr Young Ten, Senior Project Manager of GIBB (Mauritius) Ltd later swore to the correctness of the information contained in the said letter. 6.6 It would be childish to hope that the management of a contract spanning over six long years could have unfolded without any “incident de parcours”. There is all the same no evidence to justify any allegation that the site

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was managed in an amateurish way or even in a manner which was not up to international standard. 6.7 In the course of his deposition before me, Dr Boolell was allowed to produce a memorandum he had prepared and which highlights the points on which he asked himself questions, some of which quite pertinent. I again stressed that it was admitted quantum valeat. Most of the questions which are relevant as per the Terms of Reference of this Commission, will, I hope, be addressed in the succeeding Chapters of this Report, even his questions relating to the role of M. Jean Luc Sallustro, the French Adviser of the Minister of Local Government and his membership of the Evaluation Committee as well as the fact that the Evaluation Committee would have held its meetings at Le Domaine de Pailles.

7.0 7.1

ADDITIONAL WORKS ENTRUSTED TO SITA/STAM IN AUGUST 1997 On 10 July 1997, even before the signature of Contract No 2 between the Government of Mauritius and SITA/STAM, Mr d’Unienville, writing for STAM, addressed to the Permanent Secretary of the Ministry of

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Environment and Quality of Life what he called “notre proposition pour rendre le site exploitable et opérationnel dans les meilleurs délais”. He submitted a list of works to be effected at the cost of Rs 2,210,000 within a period of 2 months. 7.2 On 28 July, 1997 Scott Wilson Kirkpatrick Co Ltd, the Project Consultant, confirmed that they had, analysed the quotations given by SITA/STAM for various additional works at Mare Chicose and suggested that Government should negotiate with the Contractor for a reduction of price from Rs 2,210,000 to Rs 1,910,000. Their letter ended with the following : ”As was discussed before we wish to remind you that these additional works will be subject to a small contract separate to Contract 2 (Operation)”. 7.3 On 14 August, 1997 the Permanent Secretary of the Ministry informed the CTB that the Contractor had “proposed certain additional works that need to be carried out before the Mare Chicose Landfill site can become operational” and added that (a) “the matter has been referred to the Government and it has been decided that the works may be allocated to SITA/STAM outside the operation contract (Contract 2)”; and (b) the prices “would have to be reduced by Rs 300,000 as proposed by the Consultants Scott Wilson Kirkpatrick”, before seeking the CTB’s approval to instruct the Contractor to carry out the works for the sum of Rs 1,910,000 instead of Rs 2,210,000. 7.4 On 19 August, 1997 the Secretary of the CTB informed the Permanent Secretary that “there is no Central Tender Board objection to Messrs. SITA/STAM being entrusted with the additional works for the site to be operational for the sum of Rs 1,910.000”.

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7.5

The members of the CTB apparently took no objection also when they were told that the Government had decided that works be allocated to SITA/STAM outside the operation contract. On the contrary, they hurried to make it known that there was no CTB objection - for whatever this may suggest from a Board which, by law, is supposed to formally approve certain types of contract before they may be awarded.

7.6

The proposed contract for the additional works, far from being a “small contract”, as averred by the Consultants, was, a “major contract” under the then Central Tender Board Act, 1994. In order to comply with the provisions of section 6 of the Act, the CTB, therefore, had the duty to call for tenders, notwithstanding the Government’s alleged decision that it could be allocated to SITA/STAM.

7.7

The Tender Board Act 1994 was binding on the State. No Government could legally instruct or authorise the CTB to flout the strict provisions of a law of which they were supposed to be the watchdogs.

7.8

By accepting that a major contract should be awarded without the tendering procedures provided by law, the then members of the CTB may have committed an offence against Section 20 of the Central Tender Board Act, 1994.

7.9

When, on two different occasions, matters concerning the Mare Chicose Landfill were raised in the National Assembly by the Leader of the Opposition, no Honourable Member touched the subject of the contract which had, in the year 1997, prima facie, been awarded to SITA/STAM, in breach of the provisions of the then Central Board Act.

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8.0 8.1

CARTING AWAY OF 6000 m3 OF LEACHATE IN APRIL 1998 On 18 March, 1998 the Permanent Secretary of the Ministry of Local Government and Environment informed the Secretary of the CTB that as a result of the non-commissioning of the leachate treatment plant at the Landfill, there had been an accumulation of about 6000 m3 of leachate in two ponds which, on account of the rainy period, created a potential risk of the leachate overflowing into the nearby watercourse. 8.2 He further informed the CTB that the Project Consultants considered that the leachate so accumulated should be immediately carted away to the Saint Martin treatment plant pending the coming into operation of the Mare Chicose treatment plant. He sought CTB’s approval for payment of Rs 2000 per trip per lorry of 6 m3 capacity, for the proposed carting away exercise, as per the recommendation of the Project Consultants and the quotations received by STAM from three operators designated by the Project Consultants. 8.3 On 19 March, 1998 the Secretary of the CTB informed the Permanent Secretary that his request “as submitted, cannot be approved since proper tendering procedures were not followed ”. He added that in view of the urgency of the matter, the Board,however, considered that the works should, as suggested by the Consultants, be carried out under the responsibility of SITA/STAM and that the CTB had no objection to approve a variation to accommodate the works. He asked the Ministry to ensure that the rate of Rs 2000 per trip of 6 m 3 is fair and reasonable and further requested submission, in due course, of the cost incurred for record purposes. 8.4 The carting away of the leachate was thus done under the responsibility of STAM whose claim for the “variation of works” was submitted on 13

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July, 1998 for a sum of Rs 1,080,850 for transport, based on a rate of Rs 300 per cubic metre, plus various other administrative costs. 8.5 On 3 September, 1998 the then Project Consultant informed the Permanent Secretary that 50% of the volume of leachate removed from the site would not have had to be so removed if the site had been efficiently managed. He therefore certified only half of the sum claimed for transportation costs viz Rs 540,425 and considered that the claim for administrative costs required further substantiation. He reminded that the sum certified would, in terms of Clause 60.2 of the Contract, become due on 29 September, 1998. 8.6 It was only on 2 March, 1999 that the Permanent Secretary sought the approval of the CTB for the payment of the sum certified by the Project Consultant. The approval was given on 8 March, 1999. 8.7 STAM which was entitled to interests on the sum payable since September 1998 has chosen not to claim any. It would further seem that it has up to now not pressed for that part of its claim which was only differed until further substantiation. 8.8 There is again not a title of evidence to justify any suspicion of malpractice in the payment to STAM of the sum certified by the Consultant as payable for the carting away of leachate in the year 1998. The sum paid was clearly due.

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9.0 9.1

DISPOSAL OF LEACHATE AS FROM THE MONTH OF MAY 2001 Following the heavy rains in the first months of the year 2001, the Landfill experienced an excessive generation and accumulation of leachate which, apart from being capable of causing seepage and pollution of ground water, was also likely to increase odour problems for people in the vicinity.

9.2

Given the low capacity of the Leachate Treatment Plant which was then capable of treating only about 30% of its expected capacity and the need to keep the main leachate collection well at the allowable level of 1 metre, STAM took the initiative to cause the excess leachate to be transferred to Saint Martin Treatment Plant as from the month of May 2001 and bore the cost of such transfer.

9.3

There has, significantly, been no adverse comments on STAM’s assumption of its obligations without claiming any compensation for the extra costs it must have incurred.

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10. 10.1

CARTING AWAY OF LEACHATE AFTER CYCLONE DINA Following the heavy rainfall in the wake of cyclone Dina in January, 2002 a significant amount of leachate was generated at the Mare Chicose Landfill whose Treatment Plant, as indicated earlier, could not treat the amounts so generated. Again, immediate steps had to be taken to cart away the excess in order to reduce the level in the leachate pond and maintain it at the authorised level of 1 metre to reduce pressure on the liner system and abate the odour problem.

10.2

At the end of August, 2002, STAM submitted its invoice for the carting away of 29,144.2 m3 of leachate to the Saint Martin Treatment Plant. The claim was for a total of Rs 8,743,278 + VAT based on the rate of Rs 300 per m3, the rate which had previously been approved by the then Project Consultants for the leachate carted away in 1998. STAM explained that they were only claiming for the leachate in excess of 92 m3 per day which the Landfill Treatment Plant was supposed to treat and the cost of which had been built in the rates quoted by them in the Bill of Quantities. On 20 September, 2002 STAM gave a break down of their claim of Rs 300 per m3 of leachate so carted away.

10.3

STAM’s claim was submitted to the Project Management Team (PMT) which in a report dated 20 February, 2003 certified payment for the carting away of 24.144.26 m3 at the rate of Rs 175 per m3.

10.4

On 17 April, 2003, following advice from the State Law Office that the Ministry could, on the basis of the PMT’s recommendation, consider the claim for payment in respect of the carting away of 24.144.26 m3 of leachate, the Permanent Secretary sought CTB’s approval for payment to STAM of Rs 4,225,245.50 + VAT on the basis of the certification of the PMT.

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10.5

It is clear that everybody agreed that STAM should cart away the excess leachate generated following cyclone Dina. STAM was therefore fully entitled to be paid the costs for the carting of leachate in excess of the 92 m3 per day which it was its own responsibility to treat.

10.6

Further, once the amount of Rs 4,225,245.50 + VAT had been certified by the PMT, the sum became contractually due.

10.7

There is again no evidence to suggest any malpractice in the payment of the sum paid for carting away the excess leachate after cyclone Dina. Such works were no part of the initial Contract No. 2 and the Contractor was entitled to be reimbursed the extra costs incurred.

10.8

It may be apposite to point out that STAM’s claim for carting away leachate to Saint Martin, in 1998, at the rate of Rs 300 per m 3 having been accepted by the then Project Manager, that price was, prima facie, the price which should have been paid for subsequent carting away exercises. The PMT having only allowed Rs 175 per m 3 for leachate carted away for the period January to July 2002, STAM may have a reasonable case for payment of the sum so underpaid.

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11.

STAM’S CLAIM OF 4 MARCH, 2003 FOR A FURTHER SUM OF RS 26,335,500 FOR THE CARTING AWAY OF 87,785 m3 OF LEACHATE

11.1

As already indicated, the leachate generated at the Mare Chicose was meant to be treated at the Landfill Treatment Plant before being disposed of in the neighbouring water courses. It was estimated that the Plant would treat 92 m3 per day.

11.2

It soon became apparent that the Treatment Plant built during the works for Contract no. 1 was not up to the required standards and could hardly treat more than 30% of the expected volume of 92 m3.

11.3

After cyclone Dina and the rainy months which followed, it was agreed that the only solution to cope with the situation that prevailed at the Landfill was to cart away the excess leachate generated to the Saint Martin Treatment Plant.

11.4

Following an audit of the Treatment Plant, Government decided that all treatment of leachate on site should stop and that all the leachate generated should, pending Contract No. 3, be carted away to the Saint Martin Treatment Plant.

11.5

As the amount of leachate generated varies from month to month, it was agreed that the Contractor who would be responsible for the carting away would, for reasons explained earlier, be paid the cost of transport incurred for everything over the daily first 92 m3.

11.6

In March 2003, STAM presented a claim for Rs 26,335,500 for the carting away of 87.785m3 of leachate, always at the rate of Rs 300 per m3, which it considered to be the agreed rate.

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11.7

The Consultants, GIBB (Mauritius) Ltd, calculated the actual volume of leachate carted away to be 65,635m3 and recommended an interim rate of Rs 175 per m3, the price last recommended by the PMT, or a total of Rs 11,486,125.

11.8

On 12 June, 2003, the Permanent Secretary of the Ministry of Local Government and Rodrigues sought CTB’s approval for the payment of Rs 11,486,125 to STAM.

11.9

The CTB queried the sum proposed on the ground that the volume of leachate for which payment approval was sought included a certain volume the carting of which had already been claimed and paid, for the period January to July, 2002 after the passage of cyclone Dina.

11.10 The Ministry reviewed its figures and made a new recommendation for only 36,496 m3 for a total of Rs 6,386,800.25 for the leachate carted away for period August, 2002 onwards. 11.12 On 6 October, 2003 the Secretary of the CTB conveyed the CTB’s approval for Rs 6,386,800.25 + VAT but made it a point to underline that had the CTB not queried the Ministry’s first recommendation, the Government would have overpaid Rs 6 million to STAM. 11.13 It is a matter for concern that when preparing its invoice for the leachate carted away for period January 2002 to April 2003, it escaped the attention of STAM that a claim had already been made for the leachate carted away after Dina up to July 2002 and that such claim had already been settled, although on the basis of only Rs 175 per m3 . 11.14 It is, indeed, a matter for even greater concern that nobody at the Consultant’s Office or at the Ministry of Local Government and Rodrigues noted that STAM’s claim of March 2003 in fact included works which had already been paid for.

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11.15

Be that as it may, the fact remains that thanks perhaps to the vigilance of the CTB, no overpayment was effected.

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12.

EXTRA PAYMENT FOR INSTALLATION OF ADDITIONAL TORCHERES FOR SURPLUS GAS FLARE

12.1

The Landfill of Mare Chicose was provided with a gas Treatment Plant built in the course of Contract No.1, with a maximum capacity of 1500Nm3/Hr for the flaring of gases (methane and carbon dioxide) produced by the biodegradation of waste at the landfill.

12.2

The maximum capacity of 1500 Nm3/Hr, calculated for a maximum input of 12,000 tons of waste per month, soon became insufficient with the dramatic increase in the volume of waste deposited at Mare Chicose.

12.3

In a memorandum addressed to the Minister of Local Government and Rodrigues, Mr Jean Luc Sallustro, the French expert who acted as adviser to the Minister, recommended that as an urgent temporary measure to abate the problems caused by increased generation of biogas, “ l’installation d’une ou de deux torchères supplémentaires sur la partie active de la zone d’enfouissement (sud)”

12.4

The recommendation of M. Sallustro was accepted and on 27 June, 2003 the Supervising Officer of the Ministry of Local Government and Rodrigues informed the CTB of the Ministry’s decision to take urgent interim measures to install 2 additional gas flares, each of a capacity of 500 m3/Hr. He further sought CTB’s approval for a quotation received from STAM for the sum of Rs 2,993,972 (excluding VAT) for installation of the gas flares and all ancillary works, which had been recommended by GIBB (Mauritius) Ltd.

12.5

The CTB approved the Ministry’s recommendation “to entrust the supply and installation of bio gas flares and all ancillary works to STAM for the amount of Rs 2,993,972 excluding VAT”, the works in question being

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again carried out as a Variation Order under Clause 51.1 of the Contract. 12.6 After certain clarifications, the final quotation was however reduced to Rs 2,395,177 or Rs 2,754,454.24 with VAT, the sum which was paid in October, 2003. 12.7 I am again satisfied that the “works” done by way of variation were justified and could not, under the terms of Contract No. 2, be entrusted to any person other than the Contractor whose quotation was certified reasonable by the Project Consultant before being approved by the Central Tender Board. 12.8 There is, in respect of this additional payment also, no evidence of any malpractice or anything which could suggest that STAM may have been conferred any sort of uncalled for advantage.

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13. 13.1

CONSTRUCTION OF CELL No 4 On 30 November, 2003 when, by way of Private Notice Question, the Leader of the Opposition first questioned the Minister of Local Government and Rodrigues on various points touching the Mare Chicose Landfill, the brunt of the criticism of the Opposition was in fact directed against what they called the award, “outside the main contract” of a further contract for the construction of Cell No 4, without the statutory tender procedures being followed. The Opposition feigned near apoplexy at the idea that “outside the management contract ” works had been ordered at the cost of some Rs 70 million rupees.

13.2

Even if the members of the Opposition were no doubt right when they said that no tenders had been floated for the works, they may however have been under a misapprehension when they suggested that the contract for the construction of Cell No 4 required tender procedures.

13.3

STAM was issued a Variation Order, under Clause 51.1 of the Contract No 2, for the construction of one additional cell No 4 in addition to the Cells No 2 and 3 which it had to build and did build, in the course of Contract No 2.

13.4

It is true that ever since the award of Contract No 2 to SITA/STAM, it was known that the contract was to expire on 15 September, 2003 and that a new contract would have had to be awarded for the management of the Landfill and the supervision of its closure after September 2003. On the other hand, the construction of Cell No 4 was scheduled to be carried out under Contract No 3, for which the Tender documents were to be prepared by Consultants who, in terms of the Central Tender Board Act, were themselves to be appointed following a tender exercise and the approval of the CTB.

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13.5

Bid documents for the services of a Consultant were prepared by the Ministry of Local Government and Rodrigues well in advance and were submitted in time to the CTB for approval of tenders for the Consultancy services to be launched at the end of May, 2002 with a closing date of 17 July, 2002. Two bids were received and forwarded to the Permanent Secretary of the relevant Ministry who, in August 2002 appointed a Committee chaired by a Principal Assistant Secretary of the same Ministry to evaluate the said bids.

13.6

Clause 2.3.22 of the Terms of Reference for the Consultancy services drew the attention of the Consultant to the fact “ that the present contract for Operation will expire by September 2003. Hence the Consultant shall prepare final tender documents for renewal of the contract, as described above, by 15 March at latest. “

13.7

Notwithstanding the deadline so fixed in the Tender documents for Consultancy Services, it was not before 15 January, 2003 that the Evaluation Committee appointed to evaluate the bids was able to make its final recommendation in favour of GIBB (Mauritius) Ltd, the lower bidder, who, as a result, could not be appointed before 1 February 2003, after obtention of the CTB’s approval.

13.8

At the sitting of 24 July, 2003 Mr Kowlesser, the Programme Coordinator who had been a Member of the Evaluation Committee, submitted a memorandum setting out the reasons for the delays which had a cascading effect on the pre award steps for contract No 3. (see Annexure 4)

13.9

As already indicated in paragraph 1. 22 of this Report, the Consultants who had only been appointed in early February, could not possibly have time to prepare the tender documents within the time frame fixed in their Terms of Reference. They submitted their first draft on 5 May, 2003 but were invited to reconsider certain parts thereof following

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observations and requests of the CTB. Their final tender documents could only be submitted on 21 May, 2003 for transmission to the CTB which, on 17 July, 2003 invited bids for Contract No. 3, the scope of which had to be amended to exclude the construction of Cell No. 4. 13.10 Meanwhile, with the continued increase in the volume of waste transferred to the Mare Chicose Landfill, it became obvious that the storage capacity in Cells 1 to 3 would be exhausted by the end of January/February 2004 and that Cell No 4 had to be ready by March 2004, at latest. Because of the climatic conditions which prevailed at the Landfill and the time required for the ordering of materials etc, it became apparent that the construction of Cell No 4 had to be started as from September 2003. 13.11 Indeed, as early as 7 April 2003, well before the tender documents for Contract No 3 were ready, GIBB (Mauritius) Ltd had drawn attention to the need for a variation order for the construction of Cell No 4. 13.12 On 4 May, 2003 the Consultants again reminded the Ministry that because of “the present anticipated time frame for the Award of Contract No 3, which will be most probably not before the next rainy season of November 2003 – March 2004, we consider that the void space which will be required for the landfilling Operations during this period would not be available at the required time “. 13.13 On 14 July, 2003 the Consultants repeated that “ the liner for Cell No 4 over which void space would be required for the landfill operation as from November would not be available unless its construction is carried out within the coming dry months of the year 2003 i.e August to October” and strongly recommended that a Variation Order be issued to SITA/STAM,

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13.14 Some ten days before, the Permanent Secretary of the Ministry of Local Government and Rodrigues was, as underlined in paragraph 1.24 of this Report, still trying to convince the CTB of the need for an early launching of the tenders for Contract No 3, so as to avoid the necessity of a Variation Order for Cell No 4. 13.15 There is evidence that in early July, 2003 the Minister of Local Government and Rodrigues informed Cabinet of the development regarding the tender exercise for the new contract for the operation, maintenance and post closure of the Mare Chicose Landfill and that he sought the agreement of Cabinet on the proposal to proceed with the construction of Cell No 4, as a Variation Order, to the then current Contract No 2. No Engineer would under the FIDIC contracts issue a Variation Order involving millions of rupees without the consent of the Employer, in this case the Government of Mauritius. Clearance from the Ministry of Finance was also obtained before instructions for a Variation Order was issued. 13.16 In a letter dated 11 July 2003, the Secretary of the CTB recalled that further to a meeting held on the same day, it had been agreed that, in connection with the Operation, Construction, Post Closure Measures for the Mare Chicose Landfill, the Ministry would – (i) revert to the Central Board with the amended documents on the basis of the discussions held and with reduced scope of works excluding the construction of Cell No 4; (II) seek the approval of the Board to call for quotation for the construction of Cell No 4 as a variation to the present contract; (iii) seek the approval of the Board for an extension of the operation and management contract, if necessary, on a month to month basis.

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The letter also mentioned that tenderers would be allowed a tendering period of eight weeks from launching of tenders for Contract No 3. 13.17 Following the CTB’s letter and various other correspondence, STAM was requested to submit a quotation for the construction of Cell No 4, as a Variation Order. 13.18 Before the Commission, Mr Young Ten, the Senior Project Manager of the Consultants explained that although it would have been technically possible to ask another Contractor to build Cell No 4, while STAM was still fulfilling its duties under Contract No 2 on site, the launching of another tender for the construction of Cell No 4 would have taken almost the same amount of time as the main tender for Contract No 3, with the result that the lack of void space at Mare Chicose would have had dramatic consequences. 13.19 After various exchanges of correspondence, STAM put in a bid which, after evaluation and further clarifications and negotiations, was brought down to Rs 69,490,426.50 compared to the Rs 75,303,202.40 quoted by the same Contractor for the Construction of Cell No 4 for the purpose of Contract No 3. After yet further negotiations and clarifications the final figure was again brought down to Rs 69,283,756.50. The Permanent Secretary, acting on the advice of the Consultants, sought the approval of the CTB which duly signified its formal approval for the Variation Order on 1 October, 2003 at a time when the original Contract No 2 had already been renewed on a month to month basis. 13.20 The evidence on record shows that as a result of the delay in the preparation of the tender documents for Contract No 3 and the fact that the date for the submission of bids could not be fixed earlier than four days before the expiration of Contact No 2, the construction of Cell No 4, by way of a variation order became essential in order that the whole Landfill

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operations could continue against all odds. It was further done for a price which, unlike the fears expressed by the Permanent Secretary and reported in paragraph 1.22, was even less than the price which the Contractor claimed for the same job in the course of Contract No 3 for which he was one of the only two possible successful bidders. 13.21 It was suggested that the delays encountered for the preparation of the tender documents and the other procedures which had to be followed before the new Contract No 3 could be awarded could have been the result of some machination in order to ensure that STAM should, as long as possible, continue to benefit of the terms of Contract No 2 without having to submit itself to the exigencies of a tender exercise. However much one must deplore that the tender exercise could not be completed in time, there is no evidence of such culpable laches, which could have justified the suggestion of some deliberate attempt to benefit STAM, the sitting Contractor on the site of Mare Chicose. Those who have experience of building contracts unfortunately know how delays are more often than not, simply unavoidable. 13.22 On the evidence available, I am satisfied that the price paid to STAM for the construction of Cell No 4, although no doubt consequent was all the same a reasonable one which had been certified by the Consultants who left no stone unturned to guarantee to the Employer value for money. Notwithstanding the regretted delays there is nothing to suggest that there was any malpractice in relation to the construction of Cell No 4.

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14.

EXTENSION OF CONTRACT NO. 2 ON A MONTH TO MONTH BASIS PENDING AWARD OF CONTRACT NO. 3

14.1

The decision of the Ministry of Local Government and Rodrigues to extend the duration of Contract No. 2, on a month to month basis, as from 15 September, 2003 the date on which the Contract was initially to terminate, was one of the main causes of concern and criticism of the Members of the Opposition when they intervened in the National Assembly and while deponing before the Commission.

14.2

On 16 March, 2004 in the National Assembly, the Leader of the Opposition, after suggesting that the whole procedure adopted in connection with the Mare Chicose Landfill smacked of corrupt practices, was particularly critical of the fact that STAM “represented by IBL here in this Country” would continue to pocket public funds “without tendering procedure” and went as far as to ask the Minister whether he would confirm that the whole tender exercise for Contract No. 3 had not been done diligently “so that the award could not be awarded on time”.

14.3

He had on 16 November, 2003, always in the National Assembly, averred that the previous Minister of Local Government and Rodrigues “had in fact tried to extend the Contract for three years for STAM without tendering procedures”, an allegation which he repeated before the Commission where he said that according to his information, the Minister had discussed the matter with the then Prime Minister who flatly refused.

14.4

In paragraph 2.11, I have already said that the then Minister of Local Government and Rodrigues thought it necessary to appear before the Commission to refute, in public and under oath, that allegation of the Leader of Opposition, exclusively based, as it was, on what had been reported to him.

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14.5

Before the Commission, the Leader of the Opposition revealed other information communicated to him, which, in his view, showed that there had been a scheme so that Contract No. 3 could not be awarded in time so as to benefit STAM whose contract could thus be extended or at least “tacitly renewed” without tendering procedures. He thus said that it had also been reported to him that M Jean Luc Sallustro, the adviser of the then Minister, had met Mr Vikram Cuttarree, Project Coordinator of the Public-Private Partnership “with a view to allocating the Contract to the present Contractor” but that Mr Cuttarree had turned down the idea. Mr Sallustro deponed to say in what circumstances he did meet Mr Cuttarree who is no more in Mauritius and has apparently taken up employment in the United States. In the same vein, the Leader of the Opposition said that according to information received by him, the CEO of STAM, whose name he did not know, had visited Mauritius, met “Mr Sallustro, who also sits on the Evaluation Committee held in or around September 2003, and just after his departure additional work for Cell No. 4 was given to STAM, as a variation of the contract”.

14.6

The Commission is satisfied that, as deponed to by M. Sallustro, he met Mr Cuttarree officially, in the company of other officers of the Ministry, including Mr P. Kowlesser, to discuss generally about the PPP principle and that at no time he did try to convince Mr Cuttarree that contract No 3 should be awarded to STAM under a PPP arrangement, since at the time the legislation about the PPP had not been enacted. After the draft tender documents of Contract No. 3 had been submitted to the CTB on 23 May, 2003, the CTB did, by letter dated 29 May, 2003 (copy of which is to be found at Annex 1 of Doc. 19 A ), ask the Ministry “whether consideration has been given to the fact that, in view of the ten year contract period, this project is not better suited for implementation as public-private partnership”.

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14.7

Indeed, on 3 June, 2003, the Permanent Secretary of the Ministry was able to inform the CTB that the new Public-Private Partnership (PPP) Bill had not yet been finalised and that in view of the urgency of the project its implementation under a PPP scheme was not retained. The Commission takes judicial notice that the Bill has always not been published and that, as to-day, the possibility of proceeding with a contract by way of Public-Private-Partnership is simply not realistic.

14.8

As far as the meeting between M. Sallustro and the CEO of STAM is concerned, M. Sallustro confirmed that he had officially met M. Léonard, the CEO of STAM, but denied that this conversation had anything to do with the additional works for Cell No. 4. It may be apposite to recall that ever since July 2003, the Minister of Local Government had sought Cabinet’s approval to proceed with the construction of Cell No. 4, as a Variation Order, to the then current Contract No. 2 and that by letter of 11 July, 2003 the CTB had given its approval to the Ministry’s recommendation for the construction of Cell No. 4 as a Variation Order.

14.9

After referring to his information about M. Sallustro, the Leader of the Opposition said – “Then the Ministry impressed upon GIBB Ltd, which was recruited after an international tender exercise – they were recruited in February 2003 – they asked GIBB Ltd to prepare the tender documents limiting the tender to only prospective bidders in Solid Waste Management. That limited it to two firms, that is, STAM Ltd., if I may call it STAM Ltd., and then Atics, because they were the only two qualified firms which could deal with Solid Waste Management. This attempt, however, failed because the CTB refused that and insisted that the eligibility criteria should be enlarged to all Grade A Contractors. So, it was only after that, after these three attempts had failed, did the

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Ministry start the exercise of launching the tenders itself, it was in July 2003. That information was published in L’Hebdo newspaper.” 14.10 It is true that according to the Ministry’s first instructions to GIBB (Mauritius) Ltd the tendering was to be restricted to local firms with experience in waste management, whose numbers, it is again true, is rather restricted but not limited to STAM and ATICS. But as will be seen later, this does not mean that only these two firms would be able to bid. 14.11 Far from rejecting as mere hearsay having no probative value the information which could have been reported to the Leader of the Opposition, I tried to obtain information from the consultants who, on 10 June, 2004 addressed to the Secretary the letter reproduced in Annexure 5. 14.12 In a letter of 28 April, 2003 the Consultants explained the delays which had affected their preparation of the tender documents they had been briefed to prepare and gave the guarantee that they were doing whatever they could to be ready with it as early as possible. 14.13 Indeed the first draft tender documents were submitted to the CTB on 23 May, 2003 and the Instructions to Tenderers provided the following on the question of local participation – Local Participation One of the main objectives of the Ministry of Local Government is to promote transfer of technology through local participation. In order to encourage such participation, a 7½ percent margin of preference in the comparison of bids will be applied to tenders meeting the following three criteria-

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(a)

Association

with

a

local

firm

with

proven

experience in the solid waste sector, whose participation in the consortium should not be less than 25%. (b) (c) Deployment of local staff must not be less than 25% in terms of man-months of key staff input. Evidence of a training programme for local staff must be provided. For the purpose of comparison of tenders only, an amount equal to 7½ percent of the lowest evaluated tender will be added to tenders not meeting the criteria set above. 14.14 It seems therefore exaggerated to suggest that the Ministry wanted to restrict the possibility of tendering to only two possible bidders, STAM and ATICS. Participation of foreign firms with or without Mauritian partners was in no way excluded. 14.15 It was partly because the CTB, as they were fully entitled to, kept seeking various clarifications that the final tender documents could not be submitted before the 14 July, 2003 with tenders being launched on 21 July, 2003 with a closing date fixed to 11 September, 2003. 14.16 In the brief which he submitted to the Commission on Contract No. 3 (Doc 19A), the Permanent Secretary of the Ministry of Local Government and Rodrigues, has referred to the various exchanges of correspondence between the CTB and the Ministry between the date of submission of the first draft tender documents and the date the final tender documents were approved by the CTB. The Commission considers it apposite to reproduce in Annexure 6, that part of the Permanent Secretary’s brief.

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14.17 It is also apposite to recall that while the question of time was starting to become desperate, the Permanent Secretary of the Ministry, as already indicated in paragraph 1.22 of this Report, kept insisting with the CTB on the urgency of approving the launching of the tender so that the Ministry should be able to award Contract No 3 by the end of September, 2003. The Ministry went to the point of telling the CTB that it was not proposed to consider extending the existing contract as this would have heavy financial implications. 14.18 Following the various exchanges between the CTB and the Ministry as referred to above, the Item Local Participation in the Instruction to Tenderers was amended to read as followsLocal Participation – One of the main objectives of the Ministry of Local Government is to promote transfer of technology through local participation. The Tenderers should meet the following three criteria(a) Association with a local firm with proven experience in the solid waste sector or a contractor duly registered with the Ministry of Public Infrastructure, Land Transport and Shipping as Grade A is mandatory and the local participation in the consortium should not be less than 25%. (b) (c) Deployment of local staff must not be less than 30% in terms of man-months of key staff input. Evidence of a training programme for local staff must be provided. 14.19 It is undoubtedly true that there have been certain unfortunate delays which have had for consequence to make it impossible to award contract no

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3 before 15 September, 2003 so as to allow a new contractor, whoever he would have been, to take over the operation and maintenance of the Landfill as from the 15 September 2003 or within days thereafter. 14.20 There is however simply no evidence to prove that this delay could have been deliberate and organised to benefit STAM, as it was regretfully suggested. 14.21 Once it was realised that, for whatever reason or reasons, it would not be possible to have a new contractor to take over from STAM as from 16 September, 2003 there was simply no alternative than to ask STAM to continue to operate the vital Mare Chicose Landfill until such time as a new contract could be awarded. Here, again, it is clear that the “reconduction” was done on exactly the same terms as those which have been prevailing since September 1996 when, despite its then lack of experience in the field of waste management, STAM was, with the possible help of obliging officials, substituted for SITA, the Société with world wide experience, for the management of a contract which, as already pointed out, one would have thought to be a contract intuitus personae. 14.22 In a letter of 11 July, 2003 the CTB, itself, more or less suggested the “reconduction” of STAM’s contract, on a month to month basis, a practice which, as confirmed by Mr Takoor of the CTB , was by no means something uncommon invented for the exclusive benefit of STAM. 14.23 Given the keen interest shown in knowing the sums which STAM would continue to obtain from public funds, without tendering procedure, even after the termination of Contract No 2 which was to expire on 15 September, 2003 I have thought it necessary to obtain from the representative of STAM as well as from the Project Consultants the

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various sums so paid to STAM . According to the figures produced, STAM’s claims for the period October 2003 to June 2004 are as followsWaste only Claim of 68,244,479 + Rs 10,236.672 VAT 23,908,692 + Rs 3,586,303 VAT

Leachate transport Claim of

Or a total of Rs 92,153,171 + Rs 13,822,975 VAT for the nine months 14.24 I am also in a position to say that the Construction Price Index which affects the price claimable for Waste only and which was at 137.30 in September 2003 had reached the index of 142.69 in June 2004, which implies that STAM is to-day entitled to a higher rate than the one quoted in 199 for every ton of waste received at the Landfill. The whole document showing payments from September 1997 to June 2004 and amounts certified by GIBB are reproduced in Annexures 7 & 8 respectively.

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15.

CIRCUMSTANCES & REASONS FOR THE CANCELLATION OF THE TENDER EXERCISE IN RELATION OF CONTRACT No 3

15.1

The amendment to the initial Terms of Reference of the Commission has been reproduced in paragraph 2.9 of this Report. It reads To also enquire into (a) the circumstances of and the reason for the cancellation of the exercise in relation to the award of (b) a new contract for the operation and management of the Mare Chicose Landfill; and any matter incidental thereto.

15.2

Given the circumstances in which the original Terms of Reference were amended, following the allegations of corruption made by the Leader of the Opposition and some of his colleagues of the Opposition, I have assumed that for that part of my mission concerning the cancellation of the tender exercise, I am also particularly expected to report whether there has been any malpractice in relation thereto.

15.3

I have, in the preceding Chapters of this Report, set out some of the interrogations of the Leader of the Opposition as to the reasons which according to him would have prompted the cancellation of the tender exercise and the consequent non award of the contract to the lower of the two complying bidders, Bilfinger Berger/Sotravic. He has kept repeating, with vigour, that the whole exercise smacked of corrupt practices and that the authorities had only one thing in mind, to advantage, “by hook or by crook”, STAM to the detriment of all others. He was joined by other Members of the Opposition, and particularly the Honourable Madun Dulloo who said -

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“The Tender Board saw that STAM/SUEZ Environment disqualified for many discrepancies, the Government through his Ministry ( the Minister of Local Government) insisted that the contract be awarded to STAM/SUEZ Environment represented by IBL” ; and “It was Government that insisted that the contract be awarded to STAM/SUEZ Environment after removing the power generation segment, which was the most important segment” 15.4 Both Honourable Members had no material proof of any particular act of corruption. They therefore tried to substantiate their accusations by referring to whatever word, act or attitude could, in their view, point to a possibility of malpractice which eventually led to the tender exercise being cancelled, and the bidder who, in their judgment, should have been awarded Contract No 3 seeing his expectations frustrated while STAM, on the other hand, was allowed to continue to operate the landfill and would so continue for quite some time. 15.5 The Tenders for Contract No 3, Construction, Operation and Post Closure Management of the Mare Chicose Landfill were floated on 21 July, 2003 with the closing date of 11 September 2003, when as indicated before, bids were received from – 1. Bhunjun & Sons Ltd/ Betonix Ltd/ DSW Durban; 2. STAM/SUEZ Environment, with a base bid and two alternatives 3. Rehm Grinaker Construction Co Ltd/Environment Waste Management (Pty); 4. Bilfinger Berger/Sotravic, with a base bid and two alternatives.

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15.6

The tender documents received by the CTB were immediately forwarded for evaluation, to the Ministry of Local Government and Rodrigues, the Ministry responsible for the subject of Waste, where, even before the closing date for the tenders, arrangements had been made for their evaluation by a special Inter Ministerial Committee to be chaired by Dr A Suddhoo, Chairman of the Mauritius Research Council, and composed of representatives of various Ministries, including the Ministry of Local Government itself, and a representative of the Project Consultants, Messrs GIBB (Mauritius) Ltd.

15.7

As indicated in paragraph 1.31, the TOR of the Consultant appointed in February 2003, before the drafting of the Invitations to Tender, comprised the tasks of both evaluating proposals and recommending the best evaluation to the Ministry. Mr Young Ten confirmed that he expected his firm to be asked to do the job for which it had been paid. Instead he had, in the beginning, been invited to take part in the Committee’s deliberations as an Observer only. That part of his evidence reads – “The Ministry called upon us to attend the Evaluation Committee and at the start of the Committee they even told us that we, GIBB, were not a full member of the Committee, we were only observers, and if advice was to be sought from us, we were to give them this advice, I mean the Committee. Subsequently, we were told that in fact we were a full member of the Evaluation Committee. But we had no choice than to attend the Committee, as requested by the Client. We cannot, like, not to attend the Committee, even though from the terms of reference, we, GIBB, were supposed to complete the evaluation of tenders.”

15.8

In the course of his deposition before the Commission, Dr Suddhoo said that the list of the members of his Committee was communicated to him in his letter of appointment of 10 September, 2003. He could not

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remember whether the representative of the Project Consultants had a different status. He further informed the Commission that it was the Minister of Local Government and Rodrigues, himself, who had personally approached him to chair the said Committee which comprised seven other persons, including the representative of GIBB (Mauritius) Ltd, the Consulting Engineers, Mr P. Kowlesser, Programme Co-Ordinator of the Ministry of Local Government as well as M Jean Luc Sallustro, the French Adviser of the Minister, who, after joining the Committee as a full member, saw his status reduced to that of an Observer. 15.9 Dr Suddhoo’s evidence concerning M. Sallustro is also worth being reproduced verbatim“He (M. Sallustro) joined right from the start. You see again, I was meeting people for the first time at the first meeting and my assumption was that we had two representatives from the Ministry of Local Government, one was Mr Prakash Kowlesser and the other one was M. Sallustro. But then a few days later we heard that there was a Parliamentary Question, I think, whereby the answer given was that Mr Sallustro was an Observer. And from that day on, Mr Sallustro was treated just like an observer”. 15.10 I have come across an interesting minute dated 18 September, 2003 in Confidential File No SWM/18418/10/3/7/31 V.3, Mare Chicose, of the Ministry of Local Government, under the signature of Mr P. Kowlesser, the Programme Co-ordinator, and addressed to the Permanent Secretary. It reads – As agreed at the Ministry, Mr Sallustro and myself are sitting as members of the Evaluation Panel. We have had

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two sessions so far and it is expected that the evaluation exercise would require many more sessions. Upon your instructions, the members of the Committee were informed: (a) of the confidential nature of the exercise; and (b) GIBB would provide technical advice as and when requested without forming part of the Panel. and does, in my view, go far to establish(a) the truth of Mr Young Ten’s allegation that he initially did not form part of the Panel; and (b) that, on the other hand, M. Sallustro, the French Adviser of the Minister, was at least in the beginning of the evaluation exercise, not a mere Observer, but one of the two official representatives of the Ministry of Local Government, on the said Evaluation Committee. 15.11 Questioned about this note in the confidential file, Mr Veerasamy, the then Permanent Secretary, said that it did not reflect what had been agreed between himself and Mr Kowlesser, whose attention he had drawn on this matter. There is, however, nothing in the file to support Mr Veerasamy’s assertion on this question. 15.12 It is undisputed that the Committee started to sit before the 18 September, 2003 by which date it had already sat twice. It was on 4 November that, when questioned in Parliament about the presence of M. Sallustro on the Evaluation Committee, the Minister conceded that he was a Member but with only Observer status as opposed to what Dr Suddhoo had to say.

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15.13

On the 4 June 2004, before the Commission, the Leader of the Opposition laid great stress on certain facts whose sum total tended, according to him, to prove the allegations that everything had been done to favour STAM. Amongst other allegations, he said that(a) there was, in his view, no compelling reason why the evaluation of the bids had not been left to GIBB (Mauritius) Ltd who had been paid for that task ; (b) that Gibb had been excluded from the evaluation exercise for which they had been paid; (c) M. Sallustro, the Minister’s adviser, had been appointed to be a full member of the said Evaluation Committee; (d) a letter had been issued from the Prime Minister’s Office itself on 22 December, and addressed to the Chairman of the Evaluation Committee asking for a comprehensive list of documents in relation to the recommendation; (e) the power generation component had been removed to favour STAM; (f) the Evaluation Committee had said that of the two options, with and without power generation, the cheaper one was the one with Power Generation and that in the end the best overall solution would be to choose the option with power generation as proposed by Sotravic.

15.14

It seems that the Leader of the Opposition is indisputably right on the score that there was no compelling reason why the evaluation exercise had not been left to Gibb, the more so that, for reasons to which I shall allude later, the CTB may be the only body entitled to delegate to any body or person its statutory powers of evaluating bids,

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even if the evidence proves that it was in the habit of leaving it to the Ministry to exercise its power to evaluate. According to Mr Veerasamy, the then Permanent Secretary of the Ministry of Local Government and Rodrigues, the decision to entrust the evaluation to a special committee was prompted by the fact that the contract was a particularly important one worth more than 1 billion rupees and also the fact that in the course of the negotiations for the preparation of the tender documents in the course of the discussions, the Ministry realized the difficulty that was being faced by their technicians and Gibb and that they lastly wanted to tap competence from all other sectorial ministries concerned. No legal advice was taken concerning the powers of the Ministry to set up such a Committee. 15.15 As far as the letter of the 22 December is concerned, it is a fact that such a letter was issued but it was signed by Mr H. Ganoo, G.O.S.K., the Secretary to Cabinet and Head of the Civil Service, in his capacity of Supervising Officer of the Ministry of Local Government and Rodrigues in the absence from Mauritius of the Ministry’s Permanent Secretary and not really as Secretary to the Cabinet. 15.16 We shall see later that the Evaluation Committee’s opinion that of the two options “with or without power generation” the cheaper one was with the power generation was qualified and made subject to certain conditions. 15.17 We have on the other hand evidence about the participation of M Sallustro as a Member of the Committee. 15.18 The confidential file referred to earlier has also provided evidence that arrangements had indeed been made for the Evaluation Committee to meet at the Domaine Les Pailles’ Conference Room at Clos St Louis rented, for the occasion, for Rs 9000 per session. Always according to Mr Veerasamy, the decision to choose the Domaine les Pailles for

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venue was to ensure that the Committee should be seen to be independent of the Ministry as well as to ensure that the representatives of the Ministry should not be disturbed when in session of the Committee. 15.19 As already indicated, nobody ignored that a new contract would be needed to cater for the Contractor who, after September, 2003 would be called upon to take over from STAM until the closure of the Landfill around the year 2013. Moreover, the shortfalls of the equipment available at the Landfill, particularly the Leachate Treatment Plant as a result of which millions have had to be spent on the transportation of the leachate to Saint Martin, called for clear and drastic remedial measures which were to be addressed in the course of the execution of Contract No 3. 15.20 The services of the PMT which took over from Scott Wilson Kirkpatrick Co Ltd, as Consultants, were supposed to end with the appointment of the new Consultants who were again to be appointed following a tender exercise and an award after CTB’s approval. 15.21 The fact that the new Consultants’ appointment only took effect as from 1 February, 2003 whereas according to their Terms of Reference, they were supposed to prepare the Tender Documents for Contract No. 3 by the 15 March, 2003 at latest, has already been alluded to. 15.22 In Part 3 of GIBB’s letter of 28 April 2003, (Annexure 5) the Consultant’s Director sets out the various problems which they had to face following the delay in their appointment. Given the importance of Contract No. 3, which was to span over 10 years until the closure of the Mare Chicose Landfill, one cannot but agree with Mr Patté, the Director of GIBB (Mauritius) Ltd when he wrote-

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“This contract spans over several years, involving hundreds of millions of rupees and therefore needs to be documented with utmost care. We do not believe that saving a few weeks at the expenses of quality would be in the client’s best interests” 15.23 I have, earlier in this Report, alluded to the Scope of Services of the Project Consultants and to the pre-award services expected from them. While deponing before the Commission, Mr Young Ten was categorical that there was nothing in the Consultants’ TOR to suggest that they would have to include, in the Invitation to Tender, anything concerning the provision of a power generation plant. It is significant that whereas according to the Consultants’ TOR they were supposed to provide at least one specialist in various fields there is no reference to any specialist in power generation. Indeed, it was finally experts of the Central Electricity Board who were called upon to assist the Evaluation Committee on the question of the power plant. The Minister, when under fire in the National Assembly, on 4 November, 2003 conceded that the delay in the preparation of the tender documents for contract No 3 was partly due to the fact that they had had to address the question of the conversion of the gas into electricity, if this proved viable. 15.24 I accept Mr Young Ten’s evidence that the question of providing for power generation was raised at the time when the Consultants were already preparing the Tender Documents and that the Ministry’s insistence for the inclusion of power generation may have been prompted by the advice of M. Sallustro who made no secret about his views on the need to consider the use of the gas generated at the Landfill to produce electricity. Called as a witness, M. Sallustro, did not try to conceal the fact that he was the person who had advocated for the provision of a power generator. He even provided the Commission with a paper, written in July, 2002 wherein he strongly recommended “la valorisation énergétique indirecte (du gaz) par cogénération à objectif de

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production d’électricité“ although he hastened to note that the generation of the gas “ne peut être rapidement évaluée sans étude complémentaire sur les dix ans à venir”. 15.25 The Consultants, although not against the option of power generation, were of the view that it was necessary to have further feasibility studies before one could recommend power generation or not. Before the Commission, Mr Young Ten insisted on the fact that since Power Generation depended on the richness of the gas that could be extracted from the waste, the Consultants needed to monitor the gas produced for six to eight months before they could say how much power could be produced from the gas itself. In a letter written on 2 May, 2003 and reproduced in Annexure 9 the Consultants heavily insisted that – “a detailed feasibility study for the power generation has to be carried out in order to exactly identify the type and amount of investment required for the necessary generation. Prior to this study, gas wells should be drilled and pumping trials carried out 6-9months. This would enable the efficiency of the gas extraction to be determined more accurately. The CEB will require the study mentioned in (a) above for their necessary assessment. It will be only then that they will be able to guarantee a power purchasing price depending on the investment, technology, return period, production, current stabilisation etc proposed by the Contractor”. 15.26 I again accept Mr Young Ten’s evidence that the Consultant were all the same instructed by the Ministry to include the item for power generation in the Tender Documents. To protect the interest of the Client, the Consultant provided for that item as a provisional one, which

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implied that the rates for the power generation would not be carried to the cost of the total tender. 15.27 Indeed, in the Tender Documents submitted in the month of May, 2003 the Instructions to Tenderers clearly indicated the following – As an alternative, the Ministry of Local Government may require that power be generated from the landfill gas should this be found to be financially viable. Tenderers must, as part of their tender, submit all technical and financial details in that respect to enable a comprehensive economic analysis to be undertaken. This information will not be taken into consideration for the evaluation of the base tenders, but may be used as a basis for negotiations with the selected tenderer during the course of the Contract.(emphasis added) 15.28 When the May 2003 Tender Documents were amended, following certain observations of the CTB, the Ministry wrote to the Project Consultants to ask that the item for power generation should be included as Bill items with the result that they would have to be carried to the summary and considered for evaluation purposes. The Instructions to Tenderers of the final Tender Documents floated in July 2003 (see Annexure 9, and particularly the letter of 29 May 2003 under the signature of Mr P. Kowlesser) were like those of May 2003, except that the part underlined in paragraph 15.27 above was omitted while the item Power Generation under PSG 8 (See paragraph 1.28) was identical in the May and July Tender Documents. 15.29 In a letter of 1 December, 2003 addressed to the Permanent Secretary of the Ministry of Local Government and Rodrigues, the Evaluation Committee pointed out that -

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(a)

Clause PSG 8 of the tender document stipulated that the client could opt for the implementation of power generation and that the contractor had to quote in the schedule of quantities the cost of production of power.

(b)

In view of Clause PSG 8, the Committee viewed the acquisition of a power generator as optional and therefore proposed to evaluate the bids with and without the power generator. This approach could lead to a variation of the order of 40% in the overall cost of the project.

(c)

If the evaluation was carried out without the power generator, this would mean that the cost associated with the power generator could be removed from the schedule of quantities without affecting the costing of the remaining items.

(d) (e)

Evaluation of the bids with and without the power generator would significantly impact the final choice of the client. As per the tender document, an award which included a power generator could only be effected after a proper feasibility study had been carried out to demonstrate its viability.

15.30 The issue raised by the Evaluation Committee called for an answer as to whether the Committee could ignore the amount quoted by the Tenderers in the Schedule of Quantities in relation to the item power generation and evaluate the tenders as if the power generation option had already been set aside. 15.31 This was apparently how the State Law Office understood the issue when he considered a request from the Permanent Secretary (see Annexure 10) for an opinion. After discussions with representatives of the Ministry, including Mr Kowlesser, the Programme Co-ordinator and member of the Evaluation Committee, the State Law Office expressed the view that the “Ministry may award the contract for a price which excludes the component of the quoted price relating to the implementation of power generation”. (See Annexure 11)

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15.32

By letter of 11 December 2003, the Permanent Secretary informed the Evaluation Committee that the Solicitor General had been consulted and that he had advised as follows:“(i) As the Instructions to Tenderers at Page [i] and paragraph PSG8 of the Project Specification make it clear that it is open to the Ministry “during the course of the contract …… to opt for the implementation of power generation from landfill gas”, the Ministry may award the contract on the basis that it has opted not to require the generation of power from landfill gas. The Ministry may accordingly award the contract for a price which excludes the component of the quoted price relating to the implementation of power generation. This should be made very clear both in the evaluation report and in the letter of award. (ii) It would be legally in order to proceed as recommended by the Evaluation Committee, that is, to evaluate the bids with and without the power generation”.

15.33 In their Evaluation Report dated 16 December, 2003 (Annexure 12) the Committee, comforted by the opinion of the State Law Office that the Ministry could award the contract on the basis that it had opted not to require the generation of power from landfill gas, proceeded to undertake two different modes of evaluation of the bids of the two complying bidders, Sotravic and STAM. The first mode was on the basis of a “with power generation” while the second one was on the basis of a “without power generation”. 15.34 In paragraph 12.4.1.1.1 of the Report, the Committee considered that “should the Client choose the option to generate power from the emitted gas, Base Bid 1 of Sotravic is the best evaluated offer since it is the only one of the three proposals which is generating a profit to the Client”

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whereas in paragraph 12.4.1.2 they concluded that “should the Client choose the option not to generate power from the emitted gas, alternative Bid 2 from STAM is the best evaluated offer “. The Committee was careful to leave the responsibility of the choice between the two modes to the Client even if, in Clause 14 of their Report, when they were supposed to make a final recommendation, they wroteIn the light of the above, the technical evaluation committee therefore recommends that the award for “Contract 3: Construction and Operations of Mare Chicose Sanitary Landfill” be made to JV Bilfinger Berger / Sotravic at the corrected tender price of Rs 1,166,934,166.00 (exclusive of VAT), subject to : (i) a positive conclusion of a detailed study to demonstrate and confirm the technological viability and economic feasibility of generating electricity, as provided for in Clause PSG8 of the Tender Document; (ii) a power purchase agreement (PPA) be

successfully negotiated by the Client with the CEB at a price that will sustain the viability of the project; and (iii) other conditions which need to be addressed at the Letter of Intent stage as at Annex 13 (Annexure 13). 15.35 Again, one must bear in mind that the recommendation contained in Clause 14 of the Committee’s Report came after their finding that STAM’s offer “without the power option” was the best without power offer and that they had repeatedly made it known that they considered that “as per

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the tender document, an award which included a power generator could only be effected after a proper feasibility study had been carried out to demonstrate its viability”, a view which they had even expressed in a letter to the Central Tender Board in October 2003, well before the legal opinion of the concerning the possibility of considering the two options had been expressed. 15.36 When the Evaluation Committee says in clause 14 of its Report that its recommendation is, inter alia, subject to “ a positive conclusion of a detailed study to demonstrate and confirm the technological viability and economic feasibility of generating electricity, as provided for in PSG8 of the Tender Document”, there can, in my view, be no doubt that the words “subject to” were again meant to convey that an award could only be effected after a positive conclusion of a detailed study etc… No such detailed study had been undertaken. 15.37 It is therefore not exact to say that the Committee’s recommendation of 16 December was in favour of the bid of Sotravic. One cannot overstress the fact that the recommendation, given after the opinion expressed by the State Law Office, was conditional on a proper feasibility study being effected and proving the viability of the project. 15.38 Mr Young Ten considered that given the contents of the Instructions to Tenderers and the fact that the price for the power generation was one of the items in the Bill of Quantities, the power generation option could not be excluded for the purpose of evaluation of the bids. Mr Kowlesser, the officer who by letter of 29 May 2003, had instructed GIBB to specifically include the power generation item in the Schedule of Quantities, also agreed that, at least from a technical point of view, the rates for the power plant having been so included in the Schedule of Quantities, the evaluation of the bids could not be done without power generation. Dr Sudhoo did not disagree with that opinion. After explaining the difficulties which had led his Committee to seek the

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views of the Ministry on the question whether they could make an evaluation with the two options, he stressed that his Committee’s only recommendation had all the same been in favour of the Sotravic’s (with power option) offer, the best evaluated with power bid. When deponing before me on 4 August, 2004, Mr Veerasamy confirmed that when, in the company of Mr Kowlesser, he went to see the Ag. Assistant Solicitor-General for advice on the points raised in the Evaluation Committee’s letter of 1 December 2003, he knew that from the technical point of view, the power option had to be taken into account for evaluation purposes but that he still wanted to have the views of the State Law Office as to whether the bids could, from a legal point of view, be evaluated without the power option given the provisions of the clause PSG8, reproduced in paragraph 1.28. 15.39 Dr Suddhoo explained what he considered had unjustly been called the Committee’s second recommendation in favour of STAM, already referred in paragraph 1.42, as follows – In the report, it is clear that we said that should the client go ”without power”, then STAM is the best. Should you go “with power”, then it is Sotravic. But we could not sit on the fence – as a Committee. We said that this is a better value for money during the ten year life cycle of the Project. That was our recommendation sent to Government, but Government came back, for whatever reasons, we were never told, they said, no they preferred the option “Without power”, which was STAM. So that recommendation was already built-in in the report. 15.40 Be that as it may, on 26 December, 2003 after reception of the Evaluation Committee’s Report of 16 December, 2003 the Permanent Secretary informed the Committee that Government had, on the same day, decided to opt for the proposal “without power generation” as proposed in paragraph 14.4.1.2.1 of its Report and invited the Committee to work

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out the issues to be discussed and finalised with the contractor at the Letter of Intent stage. 15.41 The decision referred to in the previous paragraph was in fact a decision of the Cabinet after it had, no doubt, been apprised of the last developments as set out earlier in this Report. 15.42 In his reply of 30 December, 2003 to the Permanent Secretary’s letter of 26 December (see Annexure 14), the Chairman of the Evaluation Committee, did, for the first time, draw attention to the fact that the total price of Rs 934,984,770 given as the quoted price for alternative 2 of JV STAM/SUEZ Environment, in the relevant part of the Committee’s Report, was considered as inclusive of the “capping liner items” but that “in the event that the bidder JV STAM/SUEZ Environment claims that capping liner items which amount to Rs 107,290,900 in their basic bid, should be added on top of the Rs 934,984,770.77, then the alternative 2 bid would have a total bid price of Rs 1,042,275,670.77” and that in such a case Sotravic bid, even when excluding power generation, would be lower than that of STAM/SUEZ. 15.43 On 9 January, 2004 the Permanent Secretary communicated to the CTB the Evaluation Report of 16 December, 2003 as well as the Evaluation Committee’s letter of 30 December, 2003 (see Annexure 15) and sought CTB’s approval for the award of the contract to STAM/SUEZ . 15.44 On 23 January, 2003 the CTB replied to say why it could not accept the recommendation in favour of STAM/SUEZ and invited the Ministry to review its recommendations. (see Annexure 16). It considered, inter alia, that the bid of STAM/SUEZ was not responsive, that the cost of capping liner item had to be added to the sum of Rs 934,984,770.77 and that the STAM bid was therefore not the lowest evaluated bid. It consequently invited the Ministry to review its recommendation.

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15.45 The CTB’s reply was itself forwarded to the Evaluation Committee which was requested to consider all the points raised by the Board and submit fresh recommendations. (see Annexure 17) 15.46 On the 6 February 2004, the Evaluation Committee wrote back to answer to the CTB’s objections and maintain their recommendation in favour of STAM/SUEZ. (see Annexure 18) 15.47 By some strange coincidence, on the very same day, 6 February, 2004 but before the letter of the Chairman of the Evaluation Committee could have reached the Permanent Secretary, Cabinet, at its weekly meeting, decided that the Central Tender Board should be asked to annul the tender exercise in respect of Contract No 3. 15.48 It must be remembered that after Government had been legally advised that there was no legal objection to separate evaluations being carried out on the basis of the two different options, an exercise had been carried out by the Evaluation Committee which in fact made two different recommendations, one with power and another one wihout power. It must again be remembered that the final recommendation in favour of Sotravic with the “with power generation”, provided certain conditions, and important ones, which had to be satisfied before an award could be made. 15.49 It was after receipt of the Evaluation Report, that, Government decided to opt for the without power generation which appeared to be the one which did not necessitate further feasibility studies, obtention of EIA licence, successful negotiation of a Purchase Power Agreement with the Central Electricity Board etc., before the award of the contract could be effected . 15.50 Then came the Evaluation Committee’s reply of end of December, referred to in paragraph 15.42 when it was realised that the recommendation in

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favour of the offer of STAM/SUEZ for the “no power generation” option was not necessarily the cheaper of the two without power options. This was followed by the CTB’s “réquisitoire” (Annexure 14) against the proposal which had been submitted for approval, described as non responsive because of some major deviations and which the CTB did not consider to be the cheaper option. But the last nail in the coffin was probably the CTB’s strong views that since the capping liner was an essential and necessary component of the project, the alternative recommended did not comply with tender requirements and (was) therefore not acceptable. 15.51 Time was pressing and it would then have been exceedingly difficult for the Government to decide who, between the CTB and the Evaluation Committee, was right in its approach. 15.52 It must be remembered that although awards are made by the Employer, they can only be made if previously approved by the Central Tender Board. Similarly, whereas the CTB can refuse to approve any recommendation, it cannot impose on the Employer a Contract which the Employer does not approve. On the other hand, nobody disputes that where there is failure to reach agreement as to who should be awarded a contract or for any other reason, the Employer may, at any time, before award, annul any tender exercise. 15.53 I have already alluded to the fact that the Evaluation Committee has forcefully replied to the CTB’s criticism and maintained their stand. Yet, since their letter apparently reached the Ministry after the decision to annul the tender exercise had officially been taken, I do not think that it bears any relevance, even if it can, ex post facto, comfort the Government. 15.54 As pointed out by the Minister of Local Government and Rodrigues in the National Assembly, at its sitting of 16 March, 2003 the Government was in presence of what the Minister called “ambiguities”, namely

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conflicting opinions on a subject of great importance where any “faux pas” could have had disastrous consequences, financial or otherwise and was further faced with a situation where no award could be made for the with power bid of Sotravic before a feasibility study had been made. 15.55 These were the circumstances in which the decision to annul the tender exercise, based on what proved to be a set of improperly and not well thought tender documents, for which the Consultant may not have been at fault. The Government found itself before conflicting opinions which could hardly be reconciled. 15.56 I may here say that I am personally unable to agree with the opinion of the State Law Office. The bidders having, as requested in the Instructions to Tenderers, included the cost of the generation of power in the Schedule of Quantities, it seems that the evaluation of the bids, however illogical and contrary to common sense that could be, could not be done while ignoring the power generation option. It would, of course, have been different if the final Instructions to Tenderers had been drafted as those forming part of the May 2003 version reproduced in paragraph 15.22 above. The fact remains that, at the material time, the only legal opinion by which Government could stand advised was that given by the State Law Office, and can hardly be blamed for having considered itself bound by such advice. 15.57 The circumstances highlighted above certainly point to quite a number of errors, mistakes and unjudicious decisions, such as the one to instruct the Consultants to include the power generation element in the tender documents, as per the May 2003 instructions against the advice of the Consultant. An accumulation of such mistakes, errors of judgement, tardiness in the taking of certain decisions etc were certainly the cause of the problems which had to be faced in February, this year, when

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Cabinet, in its wisdom, considered that it had no choice but to annul the whole exercise. The circumstances were such that, at first sight, the decision cannot be said to have been an unjustified one. I must here recall that in view of the provisions of the Official Secrets Act, even a Commissioner appointed under the Commission of Inquiry Act, has any right to call for evidence as to what may have been said in Cabinet in support of any decision. We have no choice but to note a decision of Cabinet. 15.58 There is no evidence which would allow me to conclude that that there has been any malpractice on the part of Government in its handling of this delicate and difficult project or that any of the possible errors or mistakes which have delayed the possibility of an award for Contract No 3 may have been calculated to favour and benefit the bidder STAM/SUEZ or even to ensure that STAM should continue in the management of the Landfill under the present arrangements. 15.59 I owe it to the Members of the Opposition and particularly to the Leader of the Opposition, to say that given certain reports which had been made to them and certain “apparences” that STAM would, in one way or the other, benefit from any tardiness in the award of Contract No 3, they cannot be blamed for having, in the National Assembly, raised matters which, in their considered judgement, necessitated explanations from the Minister on what was clearly a matter of public interest. It may, however, be a matter for regret that some of them may have, in the heat of the debates, allowed themselves to be carried by passion rather than by reason. 15.60 I must unfortunately close this Chapter by recording that the technical officers of the Ministry of Local Government as well as the then Permanent

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Secretary have, before the Commission, accepted that they were perfectly aware that following the amendment of the tender documents to include the rates concerning the power plant in the Schedule of Quantities, the bids received could not, at least technically, be evaluated while ignoring the power generation requirements. One of these Officers was the very Programme Co-ordinator who had personally signed the letter of 29 May, 2003 to which reference has already been made in paragraph 15.28. Instead of putting their experience in the matter at the service of the Client, their Employer, they agreed to do as if they ignored that the legal opinion expressed by the State Law Office on what was, in fact, more of a technical problem than a purely legal matter, could be open to doubt. Had they assumed their responsibilities, a lot of time and money would have been saved.

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16 16.1

APPOINTMENT OF EVALUATION COMMITTEES There is no need to stress that the Central Tender Board is considered, in the public, as an independent body having the invidious responsibility of seeing to it that all public transactions in respect of major contracts are carried out according to accepted norms of transparency so as to achieve high standards of equity. 16.2 By virtue of the Central Tender Board Act (the “Act”), no Supervising Officer or Chief Executive of a public body may call or invite tenders for a major contract unless the tender documents have first been vetted and approved by the Central Tender Board which is the authority which does ,in fact, call for tenders for any major contract. Again Section 7 of the Act provides that no public body may award a major contract unless the award has been approved by the Board. 16.3 Section 8 of the Act imposes on the Board, in respect of major contracts, the duty of vetting tender documents and notices;  inviting tenders locally or internationally;  receiving and opening tenders;  examining and evaluating tenders; and  approving the award of such contracts 16.4 The evidence adduced in respect of the three tender exercises carried out in respect of the Mare Chicose Landfill from year 1997 to year 2003, under both the Central Tender Board Act 1994 and the present Act, unfortunately shows that once tenders are opened on the closing date for bids, all the documents so received are handed over to the Client Ministry which has the responsibility of carrying out the most crucial part of the whole exercise, namely the evaluation of the bids without any

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control by the Board. The Mare Chicose experiment has shown that in the case of Contract No 2 as well as in the case of the Contract for Consultancy Services, the evaluation was done by the Officers of the very Ministry involved with the Project, some of whom had also been involved in the drafting of the tender documents. 16.5 In the case of Contract No 3, even though the Project Consultant’s Terms of Reference, approved by the Central Tender Board, included the evaluation of bids received and the recommendation of the best offer to the Client, the evaluation was entrusted to an Inter-Ministerial Committee appointed by the Ministry and of whose composition the Central Tender Board was not even informed. 16.6 I do of course appreciate that it would be simply impossible for the members of the Central Tender to examine and evaluate, themselves, the tenders received. They would have neither the time nor the competence required for such exercises. This may be the reason why the Legislator has, in section 9 of the Act, provided that in the discharge of its functions, the Board may commission any studies relevant to the determination of an award;  request any professional or technical assistance from any appropriate body or person in Mauritius or abroad. 16.7 While he was deponing before the Commission, on 11 June 2004, the Chairman of the Central Tender Board was asked why the evaluation of Contract No 3 was not done by the Board itself. I reproduce, verbatim, what he had to say on the question“Mr Baguant- Well it is the normal practice at the Tender Board, since we do not have all the expertise required for all kinds of

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tenders, be it in medicine or for medical equipment. Well for building we have some expertise, I mean one member at least of the Board knows Civil Engineering, but otherwise, you may take anything, the treatment plant, or you take waste water or for domestic supply, all these things, or irrigation, if we were to handle the evaluation ourselves, then, it would be practically impossible to have all the expertise. If we were to go and appoint Evaluation Committees for each tender, for each project that we handle, that also, we would be overtaken by all things. So it has always been the practice that when we get all these, since more expertise is found at the client Ministry itself, the one handling the project, we ask the Ministry itself to make arrangements to evaluate the tenders. There is more expertise at the Ministry than at the Central Tender Board. When we are asking the Ministry to go, to have it evaluated and submit recommendations, it is a sort of delegation, It’s not formalised, but it is at our request that they have it evaluated. Commissioner – Did you have any say on the persons who were to sit on that evaluation Committee? Mr Baguant – Normally, we don’t. We also consider that it woud not be proper for the Central Tender Board to evaluate and then impose that on the Ministry concerned. We discuss and we reach consensus. Up to now, whenever we have differed from recommendations and so on, we have never taken a unilateral decision and imposed it on the Ministry…..”

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16.8

I have no doubt that the Authorities will wish to consider whether the Central Tender Board should not be given the necessary means to discharge the mandate which the Legislator has entrusted to it Mauritius may have a price to pay for its Central Tender board to be really independent and capable of assuring transparency.

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17. 17.1

ACKNOWLEDGEMENT It is my privilege to place on record my very sincere thanks to the Staff of the Commission, particularly the indefatigable Secretary, Ms Maheswaree Madhub, Mr Poorundass Cunniah from the Electoral Commissioner’s Office, Mr S. Sobrun who has been of so great assistance with filing, keeping of documents and photocopies, Mrs M.T.A. Henry, Senior Shorthand Writer and all the other supporting staff who have not only done everything to be of assistance to me but have further always done so with a smile.

L ROBERT AHNEE, C.S.K. Commissioner, Port Louis, this 5th day of August, 2004

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