. . . as govt grapples with M38m debt
PRODUCTION of new passports for Basotho will stop next week unless the government pays about M38 million in “maintenance fees” to a shadowy Israeli company it awarded a contract to produce electronic passports two years back.
The company, Nikuv International Projects (NIP), has written to Home Affairs Minister Joang Molapo demanding payment of outstanding invoices said to be worth M38 million in “maintenance services” provided since February 2014.
“If such a payment is not met in the next 14 days. NIP will have no choice but to terminate the PKI solution programme application license (e-passport key management system) which NIP is required to pay to the supplier, which will lead to termination of the passport issuance (sic), all in accordance with the terms and conditions of the Agreement and the Maintenance Agreement with the Ministry,” read part of the Nikuv letter signed by its Chief Executive Officer (CEO), Ehud Lurie, of which the Lesotho Times has a copy.
The Lesotho Times is authoritatively informed that the government does not immediately have the money to pay Nikuv, meaning that all Basotho wanting to get new passports are in for a rough ride, if Nikuv implements its threats.
Nikuv was controversially awarded a lucrative contract to print electronic passports and IDs for Lesotho without an open public tender, in what probably ranks as the most corrupt deal shepherded by the previous government of Pakalitha Mosisili.
The government has thus far paid M300 million to Nikuv amid serious concerns that the company’s system to automate the border posts is brimming with problems and not functioning effectively as promised.
“This is a case of the proverbial chickens now coming home to roost,” said a senior source in the know speaking on condition of anonymity.
“From the onset, it was clear that this whole deal was rotten at the core and meant to benefit shamelessly corrupt officials of the previous regime who don’t care about this country. The only surprising thing is that it’s only Khetsi who has been prosecuted thus far.”
Retselisitsoe Khetsi is the Home Affairs Minister Joang Molapowho is now in court over allegations that he took M5 million in bribes from Nikuv in exchange of facilitating the contract for the Israeli firm.
Khetsi is in court with his co-accused, Motsotuoa Makoa, who acted as a Nikuv agent, and through whom the payment to Khetsi was allegedly facilitated.
Both face a raft of criminal violations under the Penal Code of 2010 and the Prevention of Corruption and Economic Offences Act of 1999. Khetsi is also accused of abusing his office in contravention of public procurement regulations.
Critics say the whole electronic passports and ID deal was replete with massive corruption as there was no justification of bypassing an open, competitive bidding process, as required by law, to choose the best player to implement the project.
It appears that those in charge of awarding the contract were so desperate to line their pockets that they were ready to let this impoverished Kingdom forfeit more than M100 million in funding from the Millenium Challenge Account (MCA) which was originally responsible for handling the ID component of the project.
The MCA had implemented a transparent and open tender process which attracted 10 reputable international firms interested in producing IDs for Lesotho. But using the argument that it was better to have both the production of passports and IDs handled by one company, the government withdrew the ID project from the MCA and combined it with the e-passports component under the Ministry of Home Affairs. By so doing, the government effectively forfeited sponsorship from the MCA.
The highly lucrative project, which also included the automation of the country’s border posts, was then surreptitiously awarded to Nikuv.
Critics say the fact that Nikuv was now holding the government to ransom was hardly surprising as the corruptly awarded deal was never in the interests of Lesotho in the first place.
While it made sense to bring the production of the e-passports and IDs under one supplier, this did not justify bypassing a competitive bidding process, which the MCA had already kick-started before the Mosisili government’s intervention.
A major blot of the Nikuv deal was that its entire e-passport management system was depended on Nikuv itself for maintenance and no local people were being trained to handle it. This meant that Nikuv would milk Lesotho indefinitely through massive maintenance costs, sources said.
“Nikuv is not training local people to handle the system. In fact they (Nikuv) say don’t touch our system to locals. Common sense demands that when a country buys such a system, the supplier should capacitate locals to run it. In this case, Nikuv are maintaining their own system and this means they will continue to milk this country dry…..,” said one source.
Moreover, the entire system was not working particularly well and in accordance with the manual provided by Nikuv. For instance, the sources said, the automated system installed at the border posts was failing to read the very e-passports produced by Nikuv with a “damaged chip” message being frequently returned during the swiping of passports.
The system also incorrectly read certain passports of some Commonwealth countries which do not require visas for Lesotho as if they required visas. It also did not reflect a proper “count-down function” to show remaining days for a visitor from their allocated days.
The system also wrongly showed that some holders of residents permits had overstayed when the actual permits stamped in their passports showed that they hadn’t. However, one source said, this could also be partly caused by the fact that the permits were issued manually and not electronically. A synchronization of the issuing of the permits to an electronic platform could help.
Overally, however, the Nikuv system was defective and not the best Lesotho could have achieved if a proper tender process had been followed and the best supplier chosen.
Minister Molapo could not be reached for comment last night as he dispatched a message saying “Can’t talk right now, I will call you later” when contacted on his mobile phone. His phone subsequently went unanswered and he had not called back when we went to press.
His ministry’s principal secretary Chief Ranthomeng Matete said it was not true that Nikuv had demanded payment amounting to close to M40 million. Chief Matete said his ministry and Nikuv were currently in discussions about aspects of the project and a review of Nikuv’s contract. He declined to give details.
His denial is nevertheless contrary to reality as the Lesotho Times is in possession of the letter from Nikuv to Molapo clearing stating that the company will withdraw services unless it is paid for its maintenance work.
Acting Director of Passports, Ntisa Ntsisa, said he was not aware that Nikuv had threatened to withdraw services.
He, nonetheless, said he was aware that Nikuv had written to Chief Molapo demanding payment for “maintenance services”.
“I am not sure about the exact amount the ministry owes the Israeli company. Whatever they have is directly with the Minister not me so I am not in a position to give any details about the letter…,” said Mr Ntsisa.
Mr Ntsisa said Nikuv was serving the ministry well and the company had never complained to him directly about any maintenance costs.
In the letter to Chief Molapo, Nikuv nevertheless makes it abundantly clear it will stop producing passports unless it is paid within 14 days of its letter dated 28 July 2014.
“Please note that invoices in ref. are on account of the maintenance services provided by NIP from February 2014 (following the end of the warranty period) and therefore already long past due.
“Note that according to Clause 8.3 of the Maintenance Agreement executed between the parties, NIP has the right to suspend any support and maintenance services in the event of non-payment for three months….Nevertheless, up until now, NIP has continued to provide the services and to fulfill its undertakings……
“Due to the non-payment of the invoices, NIP has had no choice but to finance the cost of our maintenance services from our own internal funds causing a financial burden to NIP. We have done this so as not to cause any interruption or discontinuance of our maintenance services to the Ministry…….
“Unfortunately we can no longer self-finance the provision of our maintenance services which includes licensing from third parties, and I therefore am compelled to write you in order to request, once again, that the above referenced invoices be paid without any further delay,” reads the Nikuv letter before it proceeds to threaten to withdraw services within 14 days unless paid.
Additional reporting by Keiso Mohloboli.