AUDIT REPORT CASTIGATES ETC IN ETHIOPIA

Mergers, Acquisitions and Financial Results

The audit report of the Ethiopian Telecommunications (ETC) revealed that there were several flaws with different procurements made by the corporation. The purchases of broadband internet, CBAC data network, and mobile network expansion were marred by corruption. The report identified officials of the corporation who should be held accountable for the malpractice. The report presented to the chief executive officer indicated that eight companies participated in the tender put up for the procurement of CBAC data network.

A company called Telard was awarded the supply of 58 switchboards while Ericsson was awarded the supply of 21 switchboards. The report said it was unable to confirm if the tender process was conducted on the basis of the principles of the corporation. The procurement documents were not presented to the auditors. The report said the documents were not available. It said there was an urgent need to recover the documents or to take legal action.

According to the audit report, 41.4 million dollars were paid for the projects and nine agreements were signed. Payments were made before work on the project was finalized. ETC paid over 25 million dollars for the installation of switchboards. However, the report said the switches were incomplete.

The report said the CBAC network system failed to provide billing data. While Telrad's project did not achieve its objective, the company signed eight more agreements with ETC. Officials of the corporation, including former CEO, mobile expansion department head, made the payment before work on the project was finalized, says the report.

The report said steel structures valued at 40,000 dollars were bought from Telrad without considering the legal procurement procedure. The report said ETC bought broadband internet system from a South African company, Dimension Data, at a cost of US$6,679,000. The report disclosed that the preparation of the bid document, the evaluation and selection of the winning company were full of flaws.

Eleven companies submitted proposals to ETC. But only three of them passed the technical evaluation. The audit report said that while two South African companies, Dimension Data and Comparakes, participated in the tender, another South African company, Daedan, was assigned to evaluate the tender.

Ericsson, which is undertaking the mobile expansion work in regional towns, was supposed to finalize the project in July 2005. However, the company achieved only 44 percent of the project. Engineers of ETC estimate that the corporation lost 1.14 billion dollars revenue due to the delay on the project.

The Reporter