Adviser to Defense Minister lobbied for firm competing in huge tender

Take note – story published 5 years ago

Defense Ministry non-staff adviser Ģirts Kalniņš had lobbied on behalf of a South African company competing at a €200m tender by the National Armed Forces. Furthermore, when the tender had been issued, Kalniņš looked into ways of changing procedure, according to LTV's De Facto.

The tender concerns buying four-by-four vehicles with the goal of boosting the mobility of Latvia's armed forces. Just last week, however, it was stopped by the Procurement Monitoring Bureau, Latvia's procurement watchdog, which found fault in the methods used to find the winner. 

Lobbying for Paramount Group

Three years ago, Kalniņš tried to strike up contacts between Latvia's military officials and South Africa's Paramount Group. There was interest for the company to build a factory in Latvia, using both private and public funds. 

Despite the fact that Latvian representatives went to a factory in South Africa, the defense industry did not start doing business with the company. 

While not a member of the ministry's procurement committee, Kalniņš, as an adviser, did enjoy privileged access to information on the tender. 

Nevertheless outgoing Defense Minister Raimonds Bergmanis (Greens and Farmers Union) told De Facto that he doesn't have "any doubt about the people who implemented the tender". 

Trying to influence the procurement

During the time when the procurement committee was busy testing the competing vehicles, Kalniņš sought to influence the procurement.

For example, Kalniņš sought to cancel the process with a legal office, which, by mistake, sent a bill for their services to the procurement committee. 

"Well, they misunderstood it a little. It was my fault. They thought I came to them as concerned the procurement, but it wasn't so," Kalniņš said.

Last fall, Kalniņš visited the Procurement Monitoring Bureau for consultations on this exact tender. There, he had asked questions on the army procurement. The bureau's head Dace Gaile told De Facto that Kalniņš had specifically asked about the options of terminating the tender. 

Kalniņš himself however does not see a conflict of interest in the event, saying that he had not lobbied the firm directly after the tender had started. "I am not a member of the procurement committee and, in principle, my abilities to influence something are rather limited," he said.

New tender to be issued within three months

Finland's SISU Auto Ab won the tender, receiving first place in a points-based system with an offered price of about €181m, with the US' AM General LLC ranking second with €104m, and Otokar (Turkey) placing third with €152m. Paramount Group placed last and offered the highest price of about €235m. 

Nevertheless AM General and Paramount Group lodged complaints with the bureau, which has now given the ministry three months to clear up deficiencies in the tender, particularly as concerns with the methodology of choosing the best vehicles.

Furthermore, the criteria had been changed liberally during the tests, the bureau said. 

Neither SISU Auto, nor the companies that contested the tender were willing to offer comment to De Facto. According to LTV, after the competition concluded, Paramount Group prepared an alternative offer, asking Latvia's Defense Envoy to the US to forward it to the Defense Ministry.

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