News and Analysis

Government loses Shs107.8b in inflated Internet deal

Taxpayers have lost $41.8 million (more than Shs107.8billion) in an internet deal awarded to a Chinese company without competitive bidding.

Public Accounts Committee investigating the scam found that corruption and negligence on the part of the technical people bungled the $106.5 million (about Shs274b) National Data Transmission Backbone Infrastructure Project meant to promote e-governance in the country.

PAC yesterday opened investigations into the allegations of corruption in the deal. “The technocrats let down the taxpayers and approved the inflated costs from the Chinese firm,” Mr Wadri said. “Those who facilitated this fraud are going to pay back the taxpayer money.”

Although the deal was awarded to Huawei in June 2006, the latest forensic investigation by the Auditor General (dated July 2013) has found that the contract price was inflated by more than Shs107.8 billion.

The government did not review the bills of quantities submitted by Huawei in order to ascertain the fairness of the unit prices prior to signing the contract to ensure that the [deal] is not over-costed,” the Audit report reads in part.

Investigation has also revealed that the Task force set by ICT ministry did not conduct a market comparison of the prices, instead they carried out a feasibility study and simply rubber stumped the proposal from Huawei.

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