From: Vincent W.J. van Gerven Oei
Public Procurement Continues Hand-Out to Government Favorites

Even after former chairman of the Public Procurement Commission (KPP) Gentian Keri and four former and current members of the KPP were officially charged by the Prosecution Office for abuse of office, including unjustly favoring certain companies, the Albanian public procurement system remains mired in what appears to be unfair competition and practices that seem to favor certain government-related companies.

The KPP members were indicted after the State Supreme Audit Institution (KLSh) investigated the 99-year lease of the Free Economic Zone near Durrës for €1 to a consortium containing the company Vëllezërit Hysa. The KLSh “found that the individual evaluations done by specialists in the field of specific criteria have not been taken into consideration by the Offer Evaluation Commission (KVO), unjustly changing the final result of the competing economic operators.” It now appears that Vëllezërit Hysa is again a key element in unfair competition practices.

One way in which such unfair competition is created, is through tenders in which multiple companies apply, but only one (the “preferred”) company provides a full budget. On paper there has been a competition, but in reality the winner of the tender was predetermined. In each case, the damage to public finances is considerable. The scandal at the KPP was calculated to have caused a damage of 248 million lekë (~€2 milllion).

The most recent an blatant instance of such illegal practices has been the controversial project for a flyover-tunnel-roundabout combination and extension the Tirana ring road.

According to the government, this project necessitates the demolition of 317 private properties, 123 of which are legalized, 22 disqualified, and 163 still in the process of legalization.  The demolition process, and the failure of the government to provide any proper information, consultation, and compensation for the inhabitants of the area, have recently led to protests and violent clashes with the police. Meanwhile, Tirana Mayor Erion Veliaj has rejected the protests as acts of shpellarë  “cavemen,” a racist epithet referring to northern Albanians.

The tender for the project was divided into three lots, with a total available budget of about 5 billion lekë (~€40 million). The project was tendered out by the Albanian Road Authority, which is controlled by the government, and is paid out of public funds.

In all lots there were two bidders: one who won and another – in all cases the above-mentioned company Vëllezërit Hysa – who participated but “failed” to provide a complete offer. The bids also show that the winning companies were confident no other bids would be placed. On lot 1, Biba X and DH Albania bid 2,246,450,000 lekë (~€18 million), or 100% of the maximum available budget; on lot 2, Salillari placed a slightly more modest bid of 1,568,794,185 lekë (~12.6 million), or 99.8% of the maximum available budget; and on lot 3, the consortium Victoria Invest Internacional and Victoria Invest offered a generous 1,170,134,220 lekë (~€9.4 million), or 99.1% of the maximum available budget. As we have argued also on other occasions, these consistently high percentages are a strong indicator for unfair competition practices.

This is, however, only the beginning. The winner of lot 3, Victoria Invest, has been banned for a year to participate in tenders for tenders of public–private partnerships. However, curiously this does not prevent that same company to bid on “regular” tenders, in this case a tender that is as profitable as any concession.

Furthermore, the consortium that profits most of this tender, Biba X and DH Albania are of questionable reputation. Biba X was registered in Kavaja in 2002 as a company dealing in construction materials. Two days before the tender procedure closed, on October 15, 2018, its sole owner, Barush Biba, added “road construction, civil construction, reconstruction” to the company’s objectives. In other words, Biba X has no experience in the main component of the project.

In another recent tender dated September 21, for the reconstruction of a government building in Shkodra, Biba X was disqualified, owing to a “considerable deficiency” in its documentation, which did not conform the requirements of the tender. In another tender of the Water Supply and Drainage Company of Tirana (UKT), it was noted that Biba X did not posses two properly accredited drivers for heavy machinery. The company was again disqualified. For yet another tender, dealing with construction materials in Mallakastra – Biba X’s original are of expertise – the company “withdrew” after “problems in securing the necessary materials.” The company’s main activity has been extracting inert construction materials from the riverbed of the Shkumbin. Since 2014, the company won a total of 3 public contracts to construct secondary roads and sidewalks in Tirana, Kavaja, and Pogradec.

From 2013 to October 2018, Biba X has been under sequestration as a result of unpaid bills to various contractors, who possessed court orders against the company until their bills were paid. Biba X was still sequestered at the time it entered the tender competition, thus competing illegally.

Its partner company, DH Albania, was registered only recently, on July 18, 2018, as a branch of a foreign company, Dunwel Haberman, with legal representative 26-year old Avdjol Dobi. Its parent company, Dunwel Haberman Ltd, is registered in a tax haven, Delaware, with no noticeable operations. According to the National Business Center (QKB), the legal representative of the parent company is Nesha Lynn Kumar, a citizen of the Seychelles, another known offshore tax haven. The website of Dunwel Haberman Ltd was created on July 2, 2018, two weeks before the company established its Albanian branch. It contains no information regarding it board of directors or its past activity.

The winner of lot 2, Salillari, is one of the largest players in Albania, having one the Rruga e Kombit concession and a recent concession for a new Tirana bus station. Not only have in both cases the procedures been remarkably opaque, they will also considerably increase the costs of traveling and public transportation for the coming 30 years, targeting mainly the poorest segments of the populations – those who live in the mountainous regions in around Kukës, and those who use public transportation.

Apart from the misery it inflicts on actual human lives, the public procurement of the prestige project on the Tirana ring shows how public tenders, under the watchful eye of the Albanian government, continue to be rigged in the favor of the most expensive option for the Albanian public. This is basically theft of public money on a massive and consistent scale, facilitated by and profitable for a small group of companies close to power. The loser, in every single aspect, is always the ordinary Albanian citizen.