Case 11/2009- Abuse of function by former Managing Director of CDCL

This case pertains to corrupt conduct of former Managing Director of Construction Development Corporation (CDCL) and his Senior Procurement Officer in connection to their role in tendering of tyres and mechanical spare parts between 2005 to 2008. CDCL used to be a Mechanical Division under the Department of Roads (DoR) before it was corporatized in 2010 and deals with hiring and maintenance of construction equipment all over the country. 

Since 2007, the Commission received several complaints against the Managing Director about his abuse of power, mismanagement of resources, fictitious travel claims, and solicitation of commission. The Commission launched the investigation in 2009 after CDCL who was then headed by the same accused failed to do anything with the complaint referred to the CDCL and the concerned government ministry.

The investigation revealed that sometime in July 2005, CDCL floated an open tender for the supply of Off-The-Road Tyres (OTR), Tubes and Flaps. Three bidders submitted bids but were declared unresponsive on the basis of the note sheet wherein reasons for disqualification of all three bidders and proposal for retendering had been made. During the second bidding, six bidders participated and the contract was awarded to the lowest evaluated bidder M/s Yangzom Tyres and Spare Parts/Batteries (who was not in the list of three bidders). Purchase order of US$ 121,518 (equivalent to Nu.5.365 million) was placed to this firm. The investigation discovered that behind the scene, the Managing Director was deeply involved in a conspiracy designed to obtain the contract using a front and corruptly enrich from his position. He had discreetly contacted a dealer in Kolkata, West Bengal seeking assistance to introduce a tyre manufacturing company in Israel to obtain quotes. At the same time, he also processed a trade license M/s Yangzom Tyres and Spare Parts/Batteries in the name of his wife’s relative which was used to submit the bid by adding margin of US$.17,098 (equivalent to Nu.754,876.70). Apart from profiting from the rate difference, he had also solicited and received an illicit commission of 5% amounting to US$5205 on the order placed to the company in Israel. The accused used the same modus operandi in the 2007 tender but failed to obtain the contract.Evidence showed that he forged documents to misrepresent and used his employees to run errands for him in the process of submitting bids.

In 2008 tender, about 95% of the contract was awarded to M/s Druk Trading Equipment which was found to be operated by a procurement staff of CDCL and had connection with the same dealer in Kolkata. The accused had solicited 7.5% illicit commission (Nu.290,683) against the OTR supply order and 5% commission on ordinary vehicle tyre supply (Nu.11,824). It was found that, since 2007, the accused also received 7.5% commission from a Mumbai based company against foreign spare parts procurement.

The investigation discovered that one Senior Procurement Officer had also been receiving illicit commission from the dealer in Kolkata and the Mumbai based company. On various occasions between 2006 to 2009, he received Nu.712,289 from the Kolkata dealer on account of 5% commission on orders related to OTR tyres and 0.5% on equipment purchases. From spare parts tender, he and the Managing Director helped steer the orders to the Mumbai party through bid rigging. Their corrupt modus operandi involved first inviting quotes from the Mumbai party and a dealer in Singapore. After the receipt of rates from Singapore, the procurement officer would fax it to the Mumbai party who would then submit quotes slightly lower in every item thereby securing the order every time. In this way, the Mumbai party was placed seven orders with gross value of Nu.10.301 million between late 2007 to early 2010. The commission to the procurement officer and the Managing Director worked out to Nu.515,089.49 and Nu.772,634,23 respectively. The procurement officer was later found to have absconded from the country before being tried in the court.

The Commission forwarded the case to the Office of the Attorney General on 8 November 2011 implicating six individuals for offences including bribery, forgery, reporting of false information, official misconduct and obstruction to lawful authority.

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