Probing the dragon: China Inc runs into ethics barrier

With China-linked projects showing a penchant for attracting controversy, the Chinese way of doing business in Africa is on trial. TEA Graphic  Nation Media Group

By WASHINGTON AKUMU The EastAfrican

In Summary

• With the rising number of China-linked projects in the region showing a penchant for attracting controversy and accusations of “not playing by the rules,” several questions are inevitable: Is the open partiality governments have shown for Chinese contractors wise?
• For China, these projects are seen not just as providing a market for Chinese labour but materials such as steel and cement. Increasingly, they are also paid for with the region’s natural resources like oil, gas and coal.
• A key feature of the Chinese approach is the practice of offering a “full solution,” something almost akin to a one-stop-shop.

• China Inc must learn to play by the rules

With a sensational claims being made against a key Chinese-funded project in a parliamentary probe in Kenya, the former country’s dominance in the battle for regional infrastructure contracts now faces a severe integrity test.

While the probe has centred on the propriety and legality of the procurement process for the standard gauge railway line from Mombasa to Nairobi, its cost and whether Kenyan taxpayers will be getting value for their money if the project goes ahead, what is really on trial is the Chinese way of doing business in Africa.

And with the rising number of China-linked projects in the region showing a penchant for attracting controversy and accusations of “not playing by the rules,” several questions are inevitable: Is the open partiality governments have shown for Chinese contractors wise?

Are citizens getting value for money in these mega infrastructure projects, or are the projects merely creating new frontiers for Chinese labour, capital and construction materials, in the process opening avenues to exploit the region’s natural resources? What is the level of complicity of the ruling elite and other rent-seekers in all this?

In the case of Kenya’s biggest ever infrastructure job, the government handed the SGR contract to China Road and Bridge Corporation in what the bureaucrats describe as a “government to government” deal, awarded without competitive bidding.

READ: Kenya railway project starts amid controversy

Even then, Attorney-General Githu Muigai has differed with his colleagues, Transport and Infrastructure Cabinet Secretary Michael Kamau and Principal Secretary Nduva Muli, echoing critics’ views that even in the case of government-to-government transactions, the Public Procurement and Disposal Act, which calls for open tendering, still applies.

Firm blacklisted

It will be interesting to see what direction the project takes at the end of the probe by the Public Investment Committee, considering that some preliminary works have already started.

However, the deals signed between Kenya Railways and CRBC — which is a subsidiary of CCCC (China Communications Construction Company), a firm blacklisted by the World Bank in 2009 over fraud in a project in the Philippines — are subject to the AG’s approval.

The other major point of contention in the Kenyan SGR project is the cost, which critics say has been inflated without justification, ostensibly due to variations to the original design.

It does not help the government’s case that its officials have erected a virtual Tower of Babel over the issue before the PIC, quoting different figures.

While Mr Kamau and Mr Muli have stuck to Ksh327 billion ($3.27 billion) as the total cost of the project, Treasury Cabinet Secretary Henry Rotich has introduced a new figure into the discussion, Ksh447 billion ($5.13 billion), after factoring in elements such as interest, compensation for land, insurance, management and commitment fees.

Uganda must be watching the events in Kenya keenly. Its own recent dalliance with Chinese contractors, who seem to be snapping up all the big infrastructure jobs in Kampala, has not been without controversy.

The high-stakes battle for the SGR project in Uganda saw at least three different Chinese companies sign separate memoranda with different arms of government