Appeals claim Malawi tax stamp tender was "unfair"

Some of the losing companies tendering to provide tax stamps to the government of Malawi have lodged appeals against the award, amid concerns that there may have been irregularities in the bidding process.

The original competitive tender from the Malawi Revenue Agency (MRA) – opened in April 2021 and extended through to the middle of 2022 – was for the supply of fiscal tax stamps and attracted several applications before being won by Swiss company SICPA, according to local media reports.

An article published in local newspaper the Nyasa Times last year makes the claim that there was inappropriate contact between the company and officials involved in the tender, and questions why a first tender round was abruptly dropped and a second round announced without any explanation.

Documents obtained by SecuringIndustry.com reveal that at least two of the companies that bid for the tender but lost out – De La Rue and the Kulinda Consortium – filed complaints to Malawi's Public Procurement and Disposal of Assets Authority (PPDA) in October on the grounds they felt they had been harmed by "unfair practice".

Responses to the appeals from the PPDA indicate that the tenders were rejected on technological grounds, and went to a preliminary hearing. It is understood that at least on of the groups has indicated it was unhappy with the preliminary response and requested elevation to a full administrative hearing.

The tender stated that the bidder with the lowest overall cost and maximum commission to the MRA would be accepted, as long as it was "substantially responsive" to the technical requirements of the project.

Publicly-available information from the bids shows a range of bids with an annual cost estimate in between $3.4m and $7.3m, with most coming in around the $4m mark.

Kulinda was the lowest with a cost of $3.4m and commission rate to the MRA of 30 per cent, and SICPA the highest at $7.3m with a commission of 10 per cent. De La Rue's annual cost came in at just under $5m, with a commission of 13 per cent.

In its appeal, De La Rue said that as its solution met technological requirements "we…opine that the result of this tender has been arrived at in an unfair manner" and "request your good office to review the submitted proposal and ensure the appropriate tender result is arrived at."

The PPDA is reportedly proceeding to a review of the complaints and will soon decide whether to order a new tender.

It is not the first time SICPA has been in the spotlight over allegations of irregularities in its efforts to secure national contracts. For example, it was investigated by Brazil's Office of the Comptroller-General (CGU) and Attorney General’s Office (AGU) over allegations of bribes paid to officials with the national mint, but settled the case with an agreement to pay CHF 133m (around $145m) over a 20-year period in 2021.

At the time, SICPA said it "acknowledged its strict liability for irregularities in relation to certain payments but did not make any admissions that the contracts at issue were obtained fraudulently."

In a new statement sent to SecuringIndustry,com, SICPA said:

"While it is not an opportune moment to comment on the choice of Malawian authorities for tax stamps provider, we can confirm that SICPA participated in the mentioned tender, and that this was undertaken:

• In full compliance with all applicable rules and regulations
• Notably in compliance with the eligibility criteria which was not changed in comparison to the prior tender to accommodate any bidder"

It also contends that "this allegation, among other deceitful and potentially defamatory statements, were part of a global smear campaign to undermine SICPA reputation."

Main image by jorono from Pixabay