Republic of Alkonia
Government Information Services (GIS) INTENTIONALLY BLANK
The World Bank Anti-­‐Corruption CASES Simulation Evidence (Alkonia Module 1) Republic of Alkonia
Level Anti-­‐Corruption Agency INTENTIONALLY BLANK
The World Bank Anti-­‐Corruption CASES Simulation Evidence (Alkonia Module 1) 1 Republic of Alkonia
National Police Service INVESTIGATIVE REPORT Case No. ACA 204/IR-­‐PO/32/2009 Subject of Investigation: BUSINESS Name: PEM Inc. Nature of Business: Armaments and Security Equipment and Services Established: 1958 Address: 131 Avenue Thiers, 69006 Lyon, France Business Registration Number: 3443RM213345T PEM Inc. is a registered limited liability company under the laws of France. It is a supplier of sensitive security equipment including armaments. Background of the Case: Pursuant to a lead from the media and secret information received to the effect that monies have been embezzled from a government account (DONTOP) maintained at a foreign branch of the National Bank of Alkonia, investigation was started. Since the case involved significant financial transactions and money laundering operations, therefore, the FIU Alkonia was contacted to provide their technical support. A joint team was constituted under the supervision of Mr. Toolani Papa to investigate into the matter. Facts of the Case: 1. A registered limited liability company under the laws of France. It is a supplier of sensitive security equipment including armaments. 2. PEM Inc. entered into contract with the National Intelligence Service (NIS) of the Government of ALKONIA for the purchase of arms and security equipment. (see attached contract) 3. According to the government records a huge amount of money was spent on the purchase of the arms and installation of the security equipment. This amount in total is US$ 160 Million out of which reportedly US$ 40 Million were spent on the purchase of arms from Italy. When the stocks of these arms were examined it transpired that there is huge discrepancy in terms of quantity description and quality. The number of items in stores was much less than actually purchased. The description of many items was entirely different form what was actually mentioned in the arms deal. Most importantly whatever was available most of it was simply unusable. It was too old, rusty and damaged. The price charged for many items was even much more than the best quality available in the market. The documents available in the record, however were showing the equipment as per actual deal. The officers who signed these deals were interrogated and it was found that two of them actually never signed those receiving documents. Their fake signatures were The World Bank Anti-­‐Corruption CASES Simulation Evidence (Alkonia Module 1) Republic of Alkonia
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affixed on the papers. The writing experts were contacted who confirmed that the handwriting in which those signatures were done was that of Mr. Yunda, a personal staff officer of Mr. JOHNSON, former head of the ALKONIA National Intelligence Service. The process of awarding the contract to PEM was highly flawed as official procedures were not followed. Proper bidding was not held on the pretext of sensitive matter of national security although there is a certain procedure available for such type of contracts which was not adhered to by the NIS on whose recommendation MOF finalized the contract. One of the other companies competing for the same contract was contacted to divulge some information about any misconduct or cheating by the NIS officials in awarding the contract to PEM but they refused to provide anything on record. However, on condition of anonymity a senior executive of that company informed that their company actually planned to lodge a formal complaint regarding the misconduct of NIS officials but PEM approached the company and paid a heavy amount for not lodging the complaint. One of the major suppliers of security equipment filed a complaint before the MOF against perceived illegalities or inappropriate influence committed by then Head of the NIS, Mr. JOHNSON and his associates, in awarding the contract for supply and installation of the security equipment to PEM. According to normal procedures such complaints should be disposed of within a period of 6 to 9 months but in this case Mr. EDDY, permanent secretary of the ALKONIA Ministry of Finance, referred the complaint to the NIS for comments and their replies to the allegations leveled against them but no response was received by the MOF from the NIS. Ironically the MOF never pressed for it despite the lapse of more than the stipulated time period. Further, the contract was granted without recourse to a proper bidding process which is a legal requirement in awarding such contracts. The total contract, based on open market value is estimated at US$ 100 Million, much less than the $160 Million paid. The World Bank Anti-­‐Corruption CASES Simulation Evidence (Alkonia Module 1) Agreement for the Supply of Security Equipment Republic of Alkonia and PEM Inc Agreement for the provision of security equipment between the Republic of Alkonia and PEM Inc This Agreement is made this day of 21 February 2006 between the Republic of Alkonia (the Republic) of the one part and PEM Inc (PEM), whose France office is 131 Avenue Thiers, 69006 Lyon, France, of the other part. WHEREAS – PEM is a company specializing in the supply of sensitive security equipment including armaments, only for and on behalf of recognized Governments, in accordance with international law. The Republic requires such external security expertise to support its national security agencies including but not limited to the National Intelligence Service, in the protection of its sovereign territory. In particular, PEM is contracted to provide personnel and related services and equipment to the Republic to: • Gather intelligence to support effective deployment and operations; • Provide reliable armaments to the Republic’s national security forces; • Installing security equipment at national security agencies buildings; and • Generally provide follow-­‐up operational support, to be further specified and agreed between the parties and subject to separate service provision levels and fee negotiations. IT IS THEREFORE AGREED AS FOLLOWS: The Republic hereby agrees to contract, utilize and employ the services of PEM to provide all required and necessary services as are more particularly described hereafter. 1. Duration and Continuation: • The duration of this contract shall be effective from the date of receipt of the payment, as defined in paragraph 6 below, for a maximum initial period of 48 calendar months (the initial contract period) or achievement of the primary objective, being the rendering of the aforementioned equipment and follow up services. • The Republic shall have the option of renewing this agreement either in part or in whole for further periods as may be required. 2. Notice of renewal: • Termination or proposed variation of this agreement is to be served on PEM in writing by the Republic for at least 45 days before the expiry of the current period. • Non-­‐communication by the Republic shall be regarded by PEM as automatic renewal of the relevant parts of this agreement for a further 12 months period on the same terms, and this precedent shall continue to apply hereafter. The World Bank Anti-­‐Corruption CASES Simulation Evidence (Alkonia Module 1) 3. Service Provision: PEM shall provide the sensitive security equipment, weapons, ammunition and related equipment. 4. Responsibilities of PEM: • PEM shall supply all services and equipment as indicated in paragraph 3 above to the appropriate standards of proficiency and operational levels. • PEM shall ensure that the contents of this agreement shall strictly remain confidential and shall not be disclosed to any third party. 5. Responsibilities of the Republic: • The Republic will ensure that full cooperation is provided from within its national security agencies, with the main counterpart being the National Intelligence Service. • The head of the National Intelligence Service shall be the main liaison to coordinate the effective and efficient implementation of this agreement. • The Republic shall pay or cause to be paid the fees and expenses relating to this agreement as set out in paragraph 6 below. • All payments are to be made in US Dollars. 6. Fees and payments: • PEMs inclusive fee for provision of its services and equipment as specified above for the initial contract period is US$160million. • Payment terms will be made in the form of electronic fund transfers. • All fees for services rendered shall be paid in advance for the period for which they relate. 7. Applicable law: This agreement shall be construed and governed in accordance with the laws of England and the language of communication shall be English. 8. Amendments: This agreement may only be altered, amended, or modified by the parties hereto provided the alteration, amendment, or modification is in writing and signed by both parties. IN WITNESS WHEREOF the parties hereto have set their hands on the day and year first written above. SIGNED BY: For the Republic of Alkonia Eddy Permanent Secretary Ministry of Finance _____________________________ For PEM Inc Jean Napoleon Chief Executive Officer ______________________________ The World Bank Anti-­‐Corruption CASES Simulation Evidence (Alkonia Module 1)