TRA rejects 'loaded' bid for 6bn/- tender By Alvar Mwakyusa 24th November 2009 THE Tanzania Revenue Authority (TRA) has rejected a bid from a controversial company linked to the son of Chinese president Hu Jintao, which was eyeing a multi-billion shilling contract in the country. Nuctech Company Limited is owned by the Chinese government, and is under the control of Hu Haifeng, the low-profile 38-year-old son of China's leader. The Chinese firm was among 11 companies that applied for a tender to supply two heavy-duty mobile scanners to TRA. In Europe, Nuctech has been accused of plying customers with "soft loans" from the Chinese government to pay for its machines, effectively reducing their price and undercutting its main competitors in the supply of x-ray scanners for airports and ports. The European Union launched an investigation into the Chinese firm in March this year, coinciding with another investigation into alleged corruption in Namibia which also reportedly received a soft loan from China to buy Nuctech machines. TRA tender board chairman Placidus Luoga confirmed to THISDAY that Nuctech's bid for the contract with the revenue authority has been rejected. M/S Nuctech Company Ltd of China was not responsive to detailed evaluation, said Luoga, who is also TRA deputy commissioner-general. He said the contract worth 3.18 million euros (approx. 6.4bn/-) was this month awarded to Smiths Heimann of France. The stated value of the project includes training of TRA staff on how to operate the scanners, plus on-site inspection costs. A bid for the same contract from another short-listed firm, Rapid Scan Systems Limited of the UK, was also unsuccessful. Delivery period is within nine months from the signing of the contract. The contract was signed in November 2009 (this month), Luoga said. Until last year, Hu Haifeng was president of Nuctech, a Beijing-based maker of advanced security scanners for use in airports, customs warehouses, and other traffic points. The younger Hu has since been elevated to Communist Party secretary of Tsinghua Holdings, the state-controlled Chinese firm that runs Nuctech and about 30 other businesses. Namibian prosecutors accuse Nuctechs Africa representative Yang Fan (a Chinese national) and two Namibians of joining in a bribery scheme that secured a $55.3m contract in May 2008 to install Nuctech scanners at customs inspection points across Namibia. Most of the cost was to be borne by a so-called soft loan usually a loan at below market rates or with other favourable terms that Chinas government granted Namibia on condition that it purchase scanners from Nuctech. The Namibian government paid about $12.8m to Nuctech in February. But prosecutors allege that most of that money was quickly transferred to a Namibian company listed as a Nuctech consultant, and then split between Yang and the two Namibians. The case came to light because of a new law against money-laundering, that requires Namibian banks to routinely report large money transfers to investigators. Prosecutors said the three defendants in the Nuctech case appear to have spent much of the money on what officials called an enormous spending spree. Nuctech has offered to send officials to Namibia to help in the investigation, but has not commented publicly. Nuctech was created in 1997 as an offshoot of Tsinghua University, a Beijing campus with a heavy emphasis on technology where both President Hu and, later, his son were engineering graduates. The company has risen rapidly to become one of the worlds top providers of security scanning equipment, supplying about 50 nations, including the United States. In late 2006, the company won a contract to install advanced scanners at all 147 of Chinas airports to detect potentially dangerous liquids. While the companys products have won praise from users in places as diverse as Australia and Norway, Nuctechs business practices have come under increasing scrutiny abroad. The EU is investigating whether the company has used soft loan deals from the Chinese government to effectively lower its prices and undercut competitors. South Africas Mail & Guardian newspaper reported that Nuctechs agent in a $380m scanner sale there was a company implicated in corrupt contracts involving the nations scandal-plagued parliament. In the Philippines, legislators charged that the governments customs agency overpaid in 2006 and 2007 when it reached a $150m no-bid agreement, also financed by a soft loan, to install Nuctech scanners at transit points there. Namibian critics also contend that their government grossly overpaid for the scanning equipment, and that much of the excess payments ended up in private hands, including those of some Namibian politicians. Namibias inquiry into the deal is ongoing.