Kosovo Spurned Legal Advice On

Opinion: Media Freedom and Its Enemies in the Balkans May 20 - June 2, 2011 Issue No. 64 www.prishtinainsight.com Price € 1 NEWS Serbian Negotiator From Pushes Talks on 'Big Issues' Newborn > page 3 to the BUSINESS Frivolous Pimpsons Government Interview: In 2008, Fisnik Spending Under Ismaili created the NEW- Spotlight BORN monument, an icon > page 7 of hope. Today, he is the brains behind the NEIGHBOURHOOD Pimpsons, an acerbic look Albania Opposition at Kosovo's politics three Blocks Roads in years after independence. Protest See Pages 4-5 > page 9 INVESTIGATION Kosovo Spurned Legal Advice on The Bear Game “Dangerous” Highway Deal > page 14-15 Authorities ignored legal advice warning it strongly against signing a contract with Bechtel-Enka to construct the coun- INSIDE PRISHTINA try’s first highway, according to a leaked document Prishtina Insight has obtained. Curtain Rises The law firm pointed out numer- ences between the highlighted with Albania’s first highway, also By Lawrence Marzouk ous areas where the standard con- problematic clauses and the final built by Bechtel-Enka and finished on Stand-Up tract for major infrastructure proj- contract, released for the first time in 2009, to form a so-called “patri- he deal to build Kosovo’s ects, the Federation of Consulting this week by the opposition otic highway” running all the way Comedy first highway, worth at least Engineers’ Red Book, had been Vetevendosje party. from Pristina to Tirana. 700 million euro, is heavily in Prishtina T amended “in a completely one- Eversheds was paid 1.7 million From the start, Bechtel-Enka weighted in favour of the contrac- sided way”. euro to provide advice to the gov- was seen as the runaway favourite tor, Bechtel Enka, and broke the > page 18 terms of the tender, according to The company provided the ernment. to land the job in Kosovo, so there the government’s own legal advi- advice at the end of January 2010. was little surprise when the gov- sors. Although the final contract was Tender subject: ernment in January 2010 A document drafted by not signed until April 2010, announced that the US-Turkish Eversheds, a respected British law sources close to the negotiation A tender to build Kosovo’s first consortium had won. firm brought in by the government process admitted that many of highway, linking Morine on the The only other bidder, Strabag Kosovo’s only English-language to help with negotiations, which Eversheds’ suggested changes to Albanian border with Merdare on of Austria, had offered a set price newspaper is available: Prishtina Insight has obtained, the contract were not made. the Serbian border, was launched of 1.3 billion for the full highway. warned that signing the contract This is confirmed by Prishtina in September 2009. Delivered to would be “extremely dangerous”. Insight’s own analysis of differ- The road was devised to link up continues page 2 Your Door Willow Wands and Kosovo Customs Lose From Newsstands Slaughtered Sheep: Millions in Import Scam across Kosovo “It's Hederlezi, after all!” The head of Kosovo customs, Naim Sent To Huruglica, says criminals are stealing mil- Your Inbox “Lukas, get in! Where are you going?” lions of euro for the country as part of a asks curly-haired, 25-year-old Driton huge fraud scheme involving exports from through the tiny window of his tiny white Turkey to Kosovo. From car. Statistics obtained by Prishtina Insight our partners “To Plemetina, to the social housing,” I show a discrepancy of around answer, happy that someone... culture page 12-13 business 60 million euro a year... page 6 see page 16 for more info is supported by: 2 May 20 - June 2, 2011 investigation Kosovo Spurned Legal Advice on “Dangerous” Highway Deal from page 1 remains to be seen, and should be closely monitored,” he added. But according to a document A spokeswoman for Bechtel- obtained by this newspaper, Enka defended their bid, saying it Eversheds warned the government was a “compliant proposal that met that Bechtel’s offer broke the terms the requirements of the govern- of the tender and suggested that ment’s tender dossier. the procurement process might “Based on our innovative techni- have to be rerun. This advice cal solutions and competitive offer, appears to have been ignored. the GoK selected BEGP [Bechtel While the Kosovo government Enka General Partnership] as the had stipulated that bidders had to winning bidder in December 2009,” Eversheds warned the government it was being asked to take on too much risk compared to the contractor provide a fixed price for the work, she told Prishtina Insight. Bechtel-Enka proposed a “remea- “BEGP was proud to be the suc- build a key section of its highway also pay for customs duties of Until then, Hashim Thaci’s gov- sureable” offer - containing per- cessful bidder from this open and from the port of Durres to Kosovo imported equipment, representing ernment had refused to make it unit prices for the materials but no transparent international tender, at a cost of 418 million euro. costs of 25 million euro and 10 mil- public, citing commercial confiden- total cost. which we won as a result of provid- As with the subsequent Kosovo lion euro respectively - despite tiality. “BEJV [Bechtel Enka Joint ing the lowest price and best tech- contract, the deal was remeasure- Eversheds’ suggestion that these Ahmeti told Prishtina Insight Venture]’s tender is not compliant nical solution,” she continued. able and the final cost for the work areas should be looked at. that Bechtel-Enka had outmanoeu- with the tender dossier,” Eversheds “We are now working with the came in at more than 1 billion The cost of the final deal signed vred the government. wrote. “BEJV have simply ignored government to deliver the motor- euro. with Bechtel Enka also climbed “On one side we have a govern- the requirement to provide a way in accordance with our agree- Concerns were raised when from 400 million to 660 million euro ment with weak institutions and on design and build solution (a fixed ment and complete the first sec- Kosovo entered into a similar deal after four months of negotiations. the other side we have a multi- price lump sum).” tions well ahead of the original pro- in 2010, but the government batted The Ministry of Economy of national and experienced company The original offer of 400 million gramme.” away criticism. Finance and the IMF have subse- that buys the best lawyers that can euro, Eversheds cautioned, was Minister of Economy Bedri Eversheds’ document reveals, quently placed the cost at 1 billion be affordable,” he said. “nothing more than a non-binding Hamza told Prishtina Insight that however, that it was extremely euro, a figure the Ministry of “The result is that the contract estimate”. completely favours the company Eversheds wrote that the deci- and is not favourable to the govern- sion to accept a remeasureable con- ment,” he added. tract had “procurement law impli- He said Bechtel was not to blame cations” and said “it may be neces- for trying to maximise its profits; sary to inform other tender- the government was to blame for ers/potential tenderers. not protecting the public interest. “The most important thing is “They may also want and be enti- The contract with Bechtel-Enka including a number of costs to the government beyond what it usually expected in such deals tled to tender on a remeasurement that this contract does not have a basis,” the law firm wrote. fixed price,” he added. “We don’t Andrea Capussela, until recently Bechtel-Enka had fulfilled all the worried that costs would balloon Transport disputes. know how much this project will one of the highest ranked diplo- tender criteria. as a result of the deal negotiated. Claims that expenditures have cost. mats working in Kosovo, a special- “If there was something wrong It warned that the overall cost of also been capped also appear ques- “The government says it will cost ist in economics, said he also found all other bidding companies had a the highway could be more than tionable. 700 million euro, the contract is the shifting standards for the ten- chance to meet the respective bod- double the 400 million euro fee on While the Kosovo government signed for 659 million euro, but der disturbing. He agreed that the ies to make a claim,” he said. the basis of which Bechtel Enka has the right to refuse the construc- there is space in the contract that deal was “seriously flawed” and to “Everything was within procure- was selected. tion of any section if the design allows Bechtel-Enka to exceed this the “detriment of Kosovo’s government rules.” Eversheds warned that this vari- costs provided by Bechtel are 20 per amount,” he explained. “In the end, ment. He added that it is normal that able type of contract offered no cent higher than those stipulated in we don’t know how much this proj- “The construction contract was changes to a project result in certainty about price and that the the contract, costs for each section ect will cost.” negotiated after the winning bidder revised costs. risk and responsibilities being can increase after construction is had been chosen, when the negoti- “Even in contracts worth less the shifted to the government from agreed due to a range of reasons. Get-out clause? ating power of the government was laws allows for deviations within Bechtel-Enka would result in These vary from unexpected lowest,” he told the Prishtina daily foreseen limits.” much higher costs. problems with the terrain to design Perhaps Eversheds greatest con- Koha Ditore last month.

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