Canadian multinational Bombardier drew up a sleazy “capture plan” to win over decision-makers and gained inside information on its competitor’s bid while campaigning to win the R26-billion Gautrain contract. The plan included details of the personal lives and interests of key politicians and officials, such as former Gauteng premier Mbhazima Shilowa’s “interest in wines, cigars, jazz, cars” and recommended cutting in third parties close to them. Bombardier is the lead partner in the Bombela consortium, which won the bid in 2005 to build and operate the rapid-rail system. The Mail & Guardian revealed last week how Bombardier paid $35-million (about R300-million) to a shadowy Tunisian fixer for helping it land the contract. Bombardier was concerned about being more expensive than the opposition. The size of the payment and the fact it was an offshore “success fee” raises suspicion that some of it may have flowed as bribes to South African politicians and officials. Both the Tunisian fixer, Youssef Zarrouk, and Bombardier have denied this, the latter claiming to “maintain the highest standards of ethical behaviour in all of our dealings worldwide”. Now, documents obtained by the M&G show that Bombardier personnel and campaigners engaged by Bombardier and Zarrouk did not let the company’s ethics get in the way of:
- Seeking and obtaining detailed intelligence on the offer submitted by its competitor, the Gauliwe consortium.
- Drawing up a “capture plan” detailing strategies to lobby decision makers outside the formal tender process, including contracting with third parties “close to” them; and
- Focusing on these decision makers’ personal circumstances and tastes.
A Bombardier spokesperson this week responded: “Any suggestion of ‘untoward’ attempts to influence decision makers and using questionable means to obtain competitor information are without merit and vigorously denied.” Corrupt regime Bombardier engaged Zarrouk, then influential in the notoriously corrupt Ben Ali regime of Tunisia, as its “marketing representative” in August 2003, shortly before Bombela and Gauliwe had to submit second-round bids in the drawn-out tender process. Zarrouk in turn roped in — although whether it was at Bombardier’s behest is disputed — individuals associated with local arms company Advanced Technologies & Engineering (ATE). They included the company’s French owner, Jean-Marc Pizano, and former Robben Island prisoner Peter-Paul Ngwenya, its deputy chair. In November 2004, when the deadline loomed to submit a “best and final offer”, the campaign revved up. Pizano proposed a “plan of action” to Bombardier, which included Ngwenya’s lobbying of then national transport minister Jeff Radebe, to whom he was close. Both Ngwenya and Radebe have denied actual lobbying. Intelligence Following a meeting early that December, a senior Bombardier executive wrote to Ngwenya and Pizano, summarising “agreed actions”. Issues related to Bombardier’s industrial offset and empowerment plans were addressed, but also: “ATE to obtain additional intelligence on competitor”, including its structure. A week later, the Bombardier executive, Ngwenya and an ATE executive met. Notes of their meeting indicate that, indeed, some details of Gauliwe’s black economic empowerment structure had been sourced. In mid-December, Pizano, the Bombardier executive and senior colleagues of the latter met in London, where the agenda included competitor “strengths and weaknesses”. Two weeks later, the executive sent a “competitive intelligence report” to the ATE men for their comment. The report included detailed information on Gauliwe’s bid, including percentages held by consortium members and their contractual relationship, the model of train offered, Gauliwe’s financing strategy, and precise details on the economic benefits Gauliwe was “emphasising”. “Molly Bongwe” Also included was an exhaustive list of Gauliwe’s empowerment partners. But in an indication that Bombardier’s informants might have obtained the information verbally, there were transliteration errors, such as that Malibongwe, a company associated with the ANC Women’s League, became “Molly Bongwe”. Both consortia submitted their best and final offers to the Gauteng government evaluation team in late January 2005. The Bombardier executive wrote to the ATE men soon after, asking whether they had “any indication on where we stand on price”, presumably compared to Gauliwe’s bid. It would be useful for an impending meeting with the provincial government, he indicated. He said: “Surely the first thing the client would have done when opening [the tender] boxes would have been to go to the finance section.” Ngwenya replied: “I have made contact and I shall be seeing somebody once his office has given me an appointment.” In an indication that the “somebody” might not have been authorised to give him such information, he added: “I am uncomfortable with this sensitive information being included in an email. In future, let us maybe SMS such requirements.” On February 9, the day before the presentation, three senior Bombardier executives met three ATE men, including Ngwenya. The requested information appears to have been sourced, as the minutes include: “It was stated that price-wise we are on par and in one case of the evaluation, slightly more expensive, but [there] is not a major price difference anymore.” Both Ngwenya and Pizano have denied obtaining sensitive competitor intelligence for the campaign. Pizano told the M&G last week: “No no, not us, not me, not us … I hardly knew anything about the competition myself.” Collecting competitor information in large tenders is not unusual, although obtaining it from decision makers or from competitor employees through inappropriate means would be wrong. Bombardier’s published code of ethics forbids using “unethical or illegal practices to collect competitive intelligence”. The company this week denied using “questionable means” in this case. Capture plan After the submission of the formal offers and further structured engagements between the bidders and the province, the evaluation team was to weigh the bids and send a recommendation to a provincial “political committee” to decide on the preferred bidder. The campaign kicked into a different gear, with the Bombardier executive telling Pizano: “We need to prepare a capture plan, i.e. what do we need to do between now and announcement of preferred bidder to be selected.” Two weeks later, in March 2005, the Bombardier official sent the ATE men just such a “capture plan”, marked “strictly confidential!” The plan included discussion on how to answer further formal technical, financial and socio-economic questions from the evaluation team, but also recommended informal lobbying, among other means by participating in “events where decision makers will be present” such as the then upcoming Cape Town Jazz Festival. And in what appears to reveal an intention to cut politicians’ cronies into the commercial benefits flowing from the project as a means of buying influence, it also recommended: “Conclude agreements with third parties close to decision makers.” Tables identifying key decision makers and their personal circumstances were included, together with a column prescribing, in sometimes cryptic terms, a Bombardier or Bombela response. Among those was then Gauteng premier Shilowa, who was said to be “charismatic, flamboyant, [with an] interest in wines, cigars, jazz, cars”. He was to be lobbied through a “representative” — presumably Zarrouk or the ATE men — and “special events”. Shilowa responded to the M&G: “I do not know any of the gentlemen mentioned, nor their plan. I have never been approached by anyone to influence any tender. If anyone did, I would have disqualified them as they had signed an anti-bribery code of conduct.” Paul Mashatile, then Gauteng economic minister and the head of the political committee deciding the tender, was described as “positive” to Bombela and to be lobbied through “events”. There was no response to messages left with his assistant. Trevor Manuel, then national finance minister, was described as having a limited role in the selection, but the one to give the “final go” was to be lobbied through Brian Bruce, then chief executive of construction group Murray & Roberts, a member of the Bombela consortium. Manuel told the M&G that he knew Bruce from when he (Manuel) worked for Murray & Roberts in the 1970s, but that he “can say without fear of contradiction that I was not lobbied by Brian Bruce on the Bombela matter, or on any other”. He emphasised he was far from Gautrain decision making, saying: “I can confirm that I must have been considered not worth the effort!” Bruce confirmed Manuel’s version, saying: “From what I experienced, the Gautrain bidding process was competitive, fair and transparent.” The capture plan entry on Jack van der Merwe, then head of the evaluation team and now of the Gautrain Management Agency which oversees Bombela’s performance of the contract, strangely included the information that his son was supposedly studying in London and his wife supposedly worked at the American embassy. Following the M&G’s exposé last week, Van der Merwe has demanded answers from Bombardier (see ). Bombardier this week insisted a lobbying strategy, even of politicians outside of formal tender process, was not untoward. A spokesperson said: “The capture plan you have is a typical document that was generated in order to understand our potential customers and the competitive landscape. The one you have obtained is no exception and contains no inappropriate information… “The purpose of a capture plan is to gather as much information as possible about the competitive landscape and to understand the customer so as to be able to respond with a bid that is attractive to the customer, meets their needs, reflects value for money and is commercially and technically sound.“ Regarding the personal information on Van der Merwe and Shilowa, the spokesperson said: “Information about key decision-makers’ characteristics and profiles can be helpful in mapping product strategies, for instance, as an individual known to have a keen interests in the arts, for example, may be more receptive to a product with avant-garde design than someone with more of an engineering background.” Shilowa announced the Bombela consortium as preferred bidder in July 2005. The contract was finalised the following year.
Bombela in the hot seat
The Gautrain Management Agency has sent cutting questions to the Bombela consortium after the Mail & Guardian revealed last week that consortium lead partner Bombardier had paid a R300-million “commission” to a Tunisian fixer. The agency, which oversees Bombela’s performance of the Gautrain contract on behalf of the Gauteng provincial government, confirmed that a letter from its chief executive, Jack van der Merwe, had reached Bombela on Tuesday. The letter points out that the original tender document required bidders to undertake “that everything possible would be done to avoid irregularities, bribery and corruption”, that the contract between the parties barred any gratification of decision makers and that the provincial government had the right to appoint an independent “probity auditor”. “Given the serious nature of the allegations made against Bombardier”, Van der Merwe demanded:
- Clarification of the relationship between Bombardier, fixer Youssef Zarrouk and others including Jean-Marc Pizano and Peter-Paul Ngwenya and the role played by each in the campaign to win the contract;
- Agreements between Bombardier and these men;
- Copies of reports submitted by Zarrouk or his company to Bombardier; and
- Details of any payments made to Zarrouk, Pizano and Ngwenya. Bombardier said it would “co-operate fully”.
Canadian firms feel the heat
Fallout from the Mail & Guardian’s revelation of a massive payment to a fixer on the multibillion-rand Gautrain contract rained more heavily on Canada than South Africa this week. In the wake of a separate but eerily similar corporate scandal unfolding there, Montreal-based Bombardier Transport took heat from the Canadian media. Almost mirroring the M&G’s story on how Bombardier had paid Tunisian fixer Youssef Zarrouk R300-million, another Montreal firm — engineering giant SNC-Lavalin — is currently embroiled in controversy after allegations that it paid $33.5-million and $22.5-million to agents to secure two contracts in North Africa. Reports suggest the agents were based in Tunisia and Libya, but SNC has said it does not know to whom the money was paid. A Tunisian-born SNC executive was arrested in Switzerland in April and accused of corruption, fraud and money laundering related to the payments. Speaking on CBC Radio in Canada this week, Bombardier spokesperson John Paul Macdonald said that using agents was quite common for companies going into unfamiliar markets.” That Zarrouk was based in Tunisia was irrelevant, he said. “He had a track record in major African projects including some in South Africa.” * Got a tip-off for us about this story? Email [email protected] 
The M&G Centre for Investigative Journalism, supported by M&G Media and the Open Society Foundation for South Africa, produced this story. All views are ours. See our funding sources here: www.amabhungane.co.za/page/sponsors.