Norconsult, a prominent consultant firm in the Norwegian aid market, will no longer bid for contracts managed by local authorities in Tanzania due to widespread corruption.
The findings of a new audit, revealing irregular payments to several projects, have made the company decide to close down its local subsidiary Norconsult Tanzania Ltd (NTZ), and to fire the Managing Director.
The new audit is the company’s follow up of an on-going World Bank investigation launched more than a year ago in connection with an irregegular USD 146,500 cash payment in the Dar es Salaam Water Supply and Sanitation Project. The Bank discovered that Norconsult employees had deleted important emails related to the matter.
Norconsult has finalised a similar report on activities in Mozambique, but no misconduct was revealed in that country, and is now preparing a full review of all its international activities.
NTZ was established with local ownership in an attempt to adjust to the new era of untied aid and local bidding processes. Norconsult’s President John Nyheim said he was now sceptical about untying aid. “Giving budget support has its challenges when the internal control systems are not in place,” he said. It is important for donors to have strong control mechanisms to follow up local authorities.
Early in 2007, Norconsult applied for membership in the Bank’s Voluntary Disclosure Programme (VDP), which gives amnesty to companies that agree to open their books to World Bank scrutiny. However, Norconsult did not qualify for the project since the firm was already under investigation for corruption in Tanzania.
The World Bank investigation has dragged on for almost two years, partly due to the backlog in cases being handled by their anti-corruption unit, following the implementation of a new sanctions regime. Only one firm was sanctioned in 2007 compared to 133, three years earlier.