US embassy cable - 01ABUJA1679

NIGERIA: MOTOROLA'S BID FOR GSM EQUIPMENT CONTRACT: AMBASSADOR DISCUSSES COMMERCIAL ADVOCACY CASES WITH VICE PRESIDENT ABUBAKAR

Identifier: 01ABUJA1679
Wikileaks: View 01ABUJA1679 at Wikileaks.org
Origin: Embassy Abuja
Created: 2001-07-16 16:53:00
Classification: CONFIDENTIAL
Tags: EINV PREL ETRD BEXP ECON NI
Redacted: This cable was not redacted by Wikileaks.
This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 02 ABUJA 001679 
 
SIPDIS 
 
 
COMMERCE FOR ADVOCACY CENTER 
 
 
E.O. 12958: DECL: 07/16/2011 
TAGS: EINV, PREL, ETRD, BEXP, ECON, NI 
SUBJECT: NIGERIA: MOTOROLA'S BID FOR GSM EQUIPMENT 
CONTRACT: AMBASSADOR DISCUSSES COMMERCIAL ADVOCACY CASES 
WITH VICE PRESIDENT ABUBAKAR 
 
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Summary 
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1. (SBU) Summary.  Following up from his meeting with 
Motorola representatives on July 9 (following septel from 
Lagos), Ambassador Jeter met the Principal Secretary to 
President Obasanjo, Stephen Oronsaye, on July 10 and with 
Vice President Atiku Abubakar on July 11.  The Vice President 
confirmed that the technical evaluation committee had 
recommended the Motorola bid because it was better qualified 
on all aspects including price, project financing, technical 
qualifications, and delivery time.  However, the Vice 
President said, alleged improprieties between Motorola and 
Director-General Nasir El-Rufai, who chaired the Financial 
Restructuring Committee, invalidated the evaluation 
committee's recommendation and caused the President to decide 
in favor of Ericsson.  Both Motorola and Nasir El-Rufai 
dispute these allegations and claim they are completely 
unfounded.  El-Rufai is threatening to take the issue to 
court.  End Summary. 
 
 
----------- 
Background 
----------- 
 
 
2. (SBU) In May 2001, the GON established the Financial 
Restructuring Committee (FRC) mandated with refinancing NITEL 
debts and seeking long-term financing for the GSM roll-out 
and transmission network expansion.  To conduct the actual 
tendering process, the FRC established a five-man technical 
committee comprised of representatives from NITEL 
(state-owned telecommunications monopoly) and the Bureau of 
Public Enterprises.  There were two rounds of bidding and a 
third round of reassessment to include prices for all omitted 
items according to standard World Bank methodology.  After 
the final reassessment, the evaluation committee submitted 
its report, which recommended Motorola be awarded the 
contract, to the President and Vice President for the final 
decision. 
 
 
3. (SBU) On July 5, Embassy advocacy assistance was requested 
on behalf of Motorola in its USD 39.3 million bid for the 
NITEL GSM equipment contract.  The other companies competing 
for the bid are Swedish company Ericsson whose final bid was 
USD 49 million and Shangai Bell of China bidding USD 39 
million.  On July 6, the Department of Commerce informed the 
Embassy that Ericsson, not Motorola, had been awarded the 
contract.  End Background. 
 
 
4. (C) On July 10, Ambassador Jeter met with the Principal 
Secretary to the President Stephen Oronsaye and, on July 11, 
 
SIPDIS 
with Vice President Atiku Abubakar to discuss Motorola's bid 
for the GSM equipment contract.  In the meeting with 
Oronsaye, Ambassador Jeter emphasized that it was hard to 
understand how Ericsson could have won the bid given 
Motorola's lower bid price, best technical specifications, 
and fastest delivery time.  While Oronsaye was not clear on 
all the details of the tendering, he was comfortable that the 
decisions made were in line with the desired transparency and 
integrity of the process.  Oronsaye did mention a possible 
conflict of interest between Bureau of Public Enterprises 
Director-General Nasir El-Rufai, who chaired the Financial 
Restructuring Committee, and Motorola.  This point was 
further elaborated on by the Vice President. 
 
 
5. (C) From the outset of the July 11 meeting, the Vice 
President made it clear that he felt no obligation to explain 
the reasons behind the Presidency's decision to award the 
contract to Ericsson, but that he would explain in the 
interest of transparency and fairness.  In considering the 
contract award, the Vice President said, he and the President 
looked at the credibility of the exercise, the petitions and 
their desire for Western technology.  Based on these 
considerations they decided to offer the bid to Ericsson. 
Vice President Abubakar confirmed that Ericsson had been 
awarded the contract under the condition that it deliver the 
services at Motorola's lower bid price and within 4 months, 
not 5 months as it had proposed. 
 
 
6. (C) The determining factor in the decision in favor of 
Ericsson appeared to be allegations, brought forth by 
Ericsson, against Motorola.  Vice President Abubakar 
commented that he had received two petitions from Ericsson 
that alleged Nasir El-Rufai was biased in favor of Motorola 
and questioned the validity of the tendering exercise. 
Specifically, Ericsson complained that El-Rufai had a 
conflict of interest because he had worked for Motorola in 
the past.  The Vice President also said that the petition 
claimed that El-Rufai's elder brother was a 10 
percent-shareholder in Motorola.  According to the Vice 
President, El-Rufai's failure to respond to these petitions 
in a timely fashion led the Presidency to award the contract 
to Ericsson. 
 
 
7. (SBU) Motorola Regional Sales Director Karen Johanson, who 
was in Nigeria seeking resolution of these issues, disputed 
Ericsson's allegations on July 12.  Johanson asserted that 
El-Rufai's brother does not hold Motorola stock, although he 
is part-owner of Intercellular Nigeria Ltd., a small fixed 
wireless company in Lagos that distributes Motorola 
equipment.  She said that although El-Rufai worked for 
Motorola for two years prior to his GON employment, he did 
not offer assistance to Motorola during the tendering 
process, "squeezing us just as much as the other companies." 
 
 
8. (C) Ambassador Jeter asked the Vice President 
hypothetically that even if El-Rufai were biased toward 
Motorola, given the technical committee's unanimous vote in 
favor of Motorola, how much influence could one man truly 
have on such a diverse collection of officials.  The Vice 
President argued that if you know El-Rufai personally, you 
would know that "he could sway an entire crowd to agree with 
him on almost any issue."  (Comment.  Since the meeting, 
Embassy has received a copy of El-Rufai's written reply to 
the President regarding Ericsson's allegations.  His letter 
clarifies that he was not, in fact, on the evaluation 
committee itself, but rather the chairman of the Financial 
Restructuring Committee that oversaw the three evaluation 
committees established for three separate contracts of which 
the GSM equipment contract was one.  End Comment.) 
 
 
9. (C) The Ambassador then raised the concern that, in light 
of irregularities surrounding Ocean Energy's and ABB Lummis' 
bid for government contracts, the GON's decision to go 
against the technical committee's recommendation would create 
the perception that the tendering process in Nigeria is not 
transparent, and, in fact, would be construed as a bias 
against companies from the United States.  Ambassador Jeter 
stressed to the Vice President how critical it is that the 
GON avoid sending a signal to U.S. companies that Nigeria is 
not a friendly place to conduct business.  The Vice President 
responded that he also is anxious not to create the 
impression that U.S. business investment is unwelcome in 
Nigeria.  As a compromise approach, Ambassador Jeter 
suggested that the contract be split regionally with Motorola 
providing equipment for the southern half of the country and 
Ericsson for the northern half.  The Vice President did not 
respond directly, but left the idea on the table for further 
consideration. 
 
 
10. (C) Vice President Abubakar claimed that the Minister of 
Communications had signed the contract with Ericsson on July 
10.  However, as of July 16, Motorola Nigeria representative 
Raphael Udeogu asserted that although the Minister had signed 
two related contracts with Siemens and Alcatel, the contract 
with Ericsson had not yet been signed.  Udeogu reported that 
Ericsson had not yet responded to the GON's contract offer at 
Motorola's significantly lower bid price of USD 39.3 million 
as compared with Ericsson's bid of USD 49 million. 
 
 
11. (C) Comment.  The fact that the President and Vice 
President would believe allegations of corruption brought to 
bear by Motorola's competitor without verifying their 
accuracy leaves us questioning the efficacy and transparency 
of the tendering process.  Nasir El-Rufai is a close Embassy 
contact and has a reputation for honesty, fairness and 
transparency, particularly in his official capacity as 
overseer of the GON privatization program.  The Vice 
President's claim that El-Rufai could have easily influenced 
the technical committee's evaluation seemed to ignore the 
fact that El-Rufai himself was not on the technical 
committee.  Moreover, in his letter to the President, 
El-Rufai strongly refuted Ericsson's allegations.  He also 
described the involvement of the Vice President's 
Aide-de-Campe who, El-Rufai says, attempted to influence the 
Vice President and him in favor of Ericsson.  The Embassy is 
unable to verify the accuracy of these statements. 
 
 
12. (C) Comment Continued.  Ambassador Jeter will send letter 
to President Obasanjo this week forwarding a Motorola 
statement addressing Ericsson's allegations of impropriety. 
The letter will request that the President reconsider 
Motorola's disqualification, which we believe was based on 
erroneous information.  Post will continue to advocate on 
behalf of Motorola.  End Comment. 
Jeter 

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