Poly Technologies Inc. provides $12.2 million supplier credit for the purchase and maintenance of 100 buses

Project narrative

On May 12, 2014, Poly Technologies Inc. — a Chinese state-owned company — signed a $12,291,920 supplier credit agreement (ID#14PLEX0320) with the Government of Sierra Leone’s Ministry of Transport and Aviation (MTA). The loan carried a 2 year maturity and a 6% interest rate. Sinosure provided export credit insurance at a cost of $593,239.00. The proceeds from the supplier’s credit were used by MTA to acquire 100 new buses and obtain maintenance equipment, spare parts, and the training of mechanics from Poly Technologies Inc. In issuing a certificate of approval for the Government of Sierra Leone to finance the purchase of the buses with the supplier’s credit from Poly Technologies Inc., the Ministry of Finance and Economic Development (MoFED) outlined several conditions: (1) MoFED would sign an on-lending agreement with Sierra Leone Road Transport Corporation (SLRTC) for the amount of $12,291,920 payable over 3-4 years; (2) MTA would establish a Project Steering Committee to monitor and supervise the operation of the buses; authorize expenditure relating to operations, maintenance, services and personnel costs for staff assigned to the running of these buses; and ensure repayment of the facility; (3) an escrow account, with double signatories of the Accountant General’s Department in MoFED and SLRTC, would be opened into which all revenues earned from the operations of the 100 buses would be paid; (4) disbursements for the repayment of the loan and operational costs would be as approved by the Project Steering Committee; (and (5) action would be taken to enhance the efficiency of SLRTC management. The buses were shipped from Qingdao Port in China on May 3, 2015 and received at the Queen Elizabeth II Quay in Freetown, Sierra Leone on July 6, 2015 (under a duty waiver granted to the MTA). The buses immediately went into service in July 2015. They included 50 city buses (having 19 seats each), 30 city buses (30 seats each), and 20 provincial buses (48 seats each). However, allegations soon emerged that the cost of the commercial contract and supplier’s credit with Poly Technologies Inc. was artificially inflated. The Parliament of Sierra Leone was urged to intervene and examine the credibility of the transaction. On July 24, 2015, Parliament’s Joint Select Committee on Finance and Transport launched an investigation. It found that a middleman named Mahmoud Kadi had facilitated the transaction with Poly Technologies Inc. Mr. Kadi coordinated and witnessed a December 2013 visit to China by Sierra Leone’s Minister of Transport and Aviation, Minister of Finance, Director of Public Debts Management, and several senior SLRTC and SLRSA officials. The purpose of the visit was to assess and verify the capacity of Poly Technologies Inc. and to survey the products on offer. A contract proposal was subsequently forwarded to Sierra Leone’s National Public Procurement Authority (NPPA) for a ‘no objection for sole source procurement’. The parliamentary investigation also revealed that ‘in dispose of the contract, Mr. Mahmoud Kadi received an agency fee in six figures; USD currency which is about 6.44% of the total amount paid on the contract.’ A subsequent audit in late 2015 by the Auditor General of Sierra Leone revealed that 89 of the buses were in circulation in Freetown or in the SLRTC’s central bus depot in Freetown, and the remaining buses were operating routes outside of Freetown (in Kenema and Bo).