State, Safaricom defied court to wrest licence from Tetra

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Safaricom CEO Bob Collymore (left) and Kenya Alliance of Resident Association (kara) chair Richard Nyaga engaging with one of the Walkie talkies that is going to be used by Safaricom in offering surveillance during a Safaricom - Kara forum on security at the Stanely hotel on July 24, 2014. JENNIFER MUIRURI (NAIROBI)
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By George Kegoro

Amid questions surrounding the award by the government of a contract to mobile telephone company Safaricom to install a communication system for the police, it transpires that there is an ongoing court case relating to the same matter, and the High Court issued orders reserving frequencies that Safaricom now wants to use to roll out this contested contact.

The story dates back to 2002 when the Communication Commission of Kenya (CCK), with current Ainabkoi MP, Samuel Chepkonga, as the Director-General, issued an international tender for the provision of services for a national trunked network. The tender sought to migrate all analogue walkie-talkie-type services to a new digital platform, to better utilise the available frequency spectrum. Analogue users such as the police, army, airports, hospitals, fire department, emergency medical services and courier companies were to be migrated to this new system.

Court records show that a bid for $5.2 million (Sh521 million) submitted by a company known as Tetra Radio Limited, whose Managing Director is indicated as Jacqueline Mwai, was awarded the tender for trunking services on the UHF band. The bid incorporated Aircom Limited, a London-based company, and LS, a German firm, which carried out network mapping for the whole country for purposes of identifying the locations for the placing of masts and microwave connections.

Court documents also show that Motorola of Israel were to be the equipment and contract suppliers. The documents further reveal that Tetra entered into a relationship with a South African company, Grintek (said to be involved in the manufacturer of the European Saab Jet Fighter), to test the integrity of its rollout.

In the records, Tetra then engaged the intended end users of the system, including the army and police, as well as emergency and security agencies. The technical bid submitted by Tetra, and accepted by CCK, was to cover all these emergency and security agencies, and the business plan developed by Grintek was based on a system in which all emergency and security operators would be on the new trunking services network, said to be a best practice.

The account shows that Tetra arranged foreign trips to Belgium, United Kingdom, and South Africa for members of the Police Service, as end users of the service, to experience the use of this technology in those countries. The purpose of the trips was to enable users to suggest features to be built into the trunk radio from an informed position.

A local demonstration of the proposed system was arranged in Nairobi, facilitated by experts from Israel, South Africa and the United Kingdom, during which there was participation from high level personnel from the police and the military. Tetra claims it spent Sh350 million of its own money in this preparatory phase. Thereafter, there was internal communication within the government to clarify issues regarding the tender with a view to having the National Treasury sign a contract with Tetra on behalf of government.

Correspondence between a Ms Bernadette Njoroge, on behalf of the Attorney-General, and the Permanent Secretary in the ministry of Provincial Administration, raised issues that needed to be understood before the contract could be issued.

The draft contract, which was subsequently approved by the AG and forwarded to the Office of the President for approval was, according to Tetra, deliberately frustrated, and was not signed.

In relation to the contract, it is not clear what transpired between 2003 and 2007. It appears that discussions continued intermittently during this period. Tetra claims that after the General Election in 2002, the officials of the new government were reluctant to work with the company, and instead singled out aspects of the contract which they awarded to Anglo Leasing companies.

Outside of the court documents, it is known that none of the Anglo Leasing contracts was ever competitively awarded. Whatever the case, no services were performed by Anglo Leasing when they were substituted for Tetra.

In 2007, Tetra wrote to the CCK seeking a confirmation that the contract was still in place, permission to pay the tender bid in instalments and to roll out a limited network. It explained that this was necessary because, without a contract from the government, Tetra would have to assume the entire risk of rolling out the system and that this mode of payment would allow the security services to afford the services of Tetra.  However, CCK replied that “according to our records, this matter is considered closed” and then explained that “this followed your inability to fulfil your obligations.”

The CCK letter triggered a suit by Tetra in the High Court. In the suit, Tetra claimed that, with the knowledge and encouragement of the CCK, it had embarked on a national feasibility study to determine the effective demand and billing parameters of the intended service, as the fee of $5.2 million would necessarily impact the emergency service consumers if the entire amount was to be factored into the billing process.  Tetra also asserted that CCK had acquiesced in the Anglo Leasing contracts which were signed to provide the very same services that CCK had tendered out to Tetra. Tetra sought orders to vacate the decision of the CCK as arbitrary and reached without considering that Tetra had acquired a legitimate expectation that it would obtain a licence.

Filed in 2008, judgment in the suit was only entered in June 2011. Justice Jean Gacheche invalidated the decision by the CCK purporting to cancel the Tetra licence. The court also prohibited the utilisation of the frequency range 370 to 470 MHz, which CCK had issued to Tetra. This order is still in force and is the basis for the assertion by Tetra that since, through a court order, these frequencies are not available, no public authority can use them for purposes that would defeat its claim against the CCK.

In February 2012, the Office of the President issued a tender for the provision of services similar to those in the tender won by Tetra in 2002, an act which triggered a letter from the company’s lawyers to the Permanent Secretary, asserting the reservation of frequencies 370 to 470 MHz to itself, and threatening contempt proceedings if the tender was issued.

The government nevertheless went ahead and awarded the tender which was based on a loan for $100 million (Sh10 billion) negotiated between the governments of Kenya and China, and restricted to Chinese companies. A Chinese company, ZTE, was declared the winner of the tender at a bid price of Sh17 billion. Another Chinese company, Huawei, which lost the bid, contested the decision to award ZTE on the basis that its Sh14 billion bid was superior to that of ZTE.

The bids by the two Chinese companies substantially reproduced the content of the Tetra bid ten years earlier. Of interest, the two Chinese companies fought over which, between them, had the right to be associated with Motorola Israel as their equipment and service provider. Motorola Israel had been the equipment and service provider of Tetra in its bid documents. Tetra asserts that the two Chinese companies used its information, and that this second round of bidding merely recycled its own bid ten years earlier.

Tetra intervened in the court proceedings between ZTE and Huawei, asserting that their battle was in contempt of court as there was already in existence a court order on the subject. The intervention by Tetra forced the two Chinese companies to withdraw their court case.

In the wake of terrorist incidents experienced in the country, television stations ran adverts in 2014, featuring the President announcing the signing of a contract between the government and Safaricom for the supply of state-of-the-art technologies that would assist the country to fight terrorism. It was not disclosed when the contract was signed, what its terms were, and what processes preceded its signing.

Public confusion about these questions led to an investigation by the Parliament’s Security and Administration Committee at whose sessions representatives of CCK and Safaricom appeared. When he was questioned, Safaricom CEO Bob Collymore revealed that the contract would be performed by Huawei. Huawei is already a main supplier of Safaricom.
In 2012, Huawei had lost in a competitive government bid encompassing the substance of the Safaricom contract and, together with the winner of that bid, ZTE, had been railroaded by Tetra, out of a fight in court over the spoils of the contract. By partnering with Safaricom, a company that found a way of obtaining a government contract without competitive bidding, Huawei was now in business with government to roll out a contract for which it had made an unsuccessful bid a year earlier. On its part, having attempted to award this contract after competitive bidding, the government seems to have changed its mind and now single-sourced the contract to Safaricom.

1 COMMENT

  1. Comment: Another TNLM article, “Bones and Structure of Sh 45 billion Safarigate scandal” implies the tender was issued awarded to Tetra in 2001 but here it is stated that these activities took place in 2002. Please clarify, thank you.

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