China Eximbank provides RMB 300 million government concessional loan for Modern Customs Scanning Equipment Acquisition Project (Linked to Record ID#1314)

Project narrative

In December 2007, China Eximbank and the Government of Namibia signed an RMB 1 billion concessional loan framework (recorded in the linked Record ID#1314), which identified several projects that would be funded according to a consistent set of terms and conditions. One of these projects was the Modern Customs Scanning Equipment Acquisition Project. This agreement was signed by China’s Ambassador to Namibia Ren Xiaoping and Nambia’s Minister of Finance Saara Kuugongelwa-Amadhila. Then, in 2008, China Eximbank and the Government of Namibia signed an RMB 300 million government concessional loan (GCL) agreement for the Modern Customs Scanning Equipment Acquisition Project. The GCL carries the following terms: 20 year maturity, 5 year grace period, and 2% interest rate. The final loan maturity date, according to "Summary Report of the Auditor-General on the Account of the Government of Namibia for the Financial Year Ended 31 March 2014," is March 21, 2028. In May 2008, the Permanent Secretary of Finance (Mr. Carl Schlettwein) of the Government of Namibia signed a $55,348,800.00 contract with Nuctech Company Ltd for the purchase of 10 x-ray container scanners capable of detecting contraband at security crossings around the country. The Government of Namibia agreed to pay $12,828,800 up-front through an advance payment to Nuctech Company Ltd. The balance of the contract price ($42,520,000.00) was to be funded with the RMB 300 million loan from China Eximbank. The Modern Customs Scanning Equipment Acquisition Project has been plagued by domestic political controversy and a criminal investigation regarding a possible kickback scheme involving the $12,828,800 advance payment. Anti-corruption investigators allege that, five days after the May 2008 contract was signed, Nuctech Company Ltd. secretly entered into a $12.8 million contract with Teko Trading CC (“Teko”), which is a company owned by two Namibians (Teckla Lameck and Jerobeam Kongo Mokaxwa). Teko was allegedly tasked with pushing for a higher price for the scanners and using their political access to “expedite prompt payments”, according to a copy of the contract submitted to a court in Namibia. Shortly after the securing the contract with Nuctech Company Ltd., Teckla Lameck (a former chairperson of Namibia’s Public Service Commission), Jerobeam Kongo Mokaxwa and a Chinese co-conspirator (Yang Fan) allegedly went on a spending spree, purchasing houses, farms, and cars. The pending criminal case is political and diplomatically sensitive because, at the time that these contracts were signed, Hu Haifeng (to son of President Hu Jintao) was the head of the Nuctech Company Ltd.