Kosovo has spent some 170 million euro on road-building projects in the last two years. The Ministry of Transport has absorbed a growing share of the budget, mainly as a result of the expansion of road-building projects.
In 2008, Limaj’s budget was 139 million euro, more than 10 per cent of Kosovo’s total budget of about 1.3 billion euro. In 2009, it rose to 160 million. The figure for 2010 is more modest at 124 million euro, but the ministry still receives the highest share of the budget of any ministry.
But our research shows that more than one-third of the winning tenders were issued to firms that only registered after Limaj took up his position.
Given the poor state of roads at the time, the minister’s dynamism and “no-nonsense” approach has attracted plaudits. An anti-corruption NGO, Cohu, in July 2008 noted that he had “undertaken great efforts to build new roads”.
But complaints have arisen over the quality of the new roads, which critics suggest require regular repair. A separate but related complaint is that tenders have been awarded corruptly and often to unqualified firms.
Friends and relatives:
Most tenders for road construction are issued by the Ministry of Transport, although municipalities also commission work. Bids are awarded on the basis of the lowest price or under a weighted system, including criteria such as the technical quality of the tender proposal. This evaluation is carried out by a procurement board within the issuing authority.
The second-largest contract issued to date by the ministry, worth 11 million euro, was handed in July 2009 to an Albanian firm, Delia Group. This was to build a five-km section of main road from the airport to the western city of Peja.
This firm was registered in Kosovo in January 2009, with the Albanian company owner, Viktor Delia, and another man, Haxhi Shala, of Pristina, listed as “authorised persons” to operate in Kosovo on the company’s behalf.
Limaj and Haxhi Shala are closely connected. According to ICTY records, they are relatives, attended school together and lived together in the 1990s after they both left Kosovo for Switzerland. They returned to Kosovo together to fight with the KLA. Shala, a colonel in the Kosovo Security Force, Kosovo’s putative army, regularly attends commemorative events with Limaj.
When Balkan Insight contacted him, Shala said he did not work for Delia Group, suggesting the listing of his name was “a mistake”. He suggested we contact the owners, which he knew to be the “Delia brothers”.
Minutes later, a staff member of Delia Group telephoned to confirm that Shala had worked for the firm but was no longer with them, owing to “staff changes.” He suggested we speak to the owner, Viktor Delia, but he has not returned our calls.
The minister’s advisor, Endrit Shala, explained that Haxhi Shala was probably associated with the firm because the colonel “used to live” at the address of Delia Group.
But when Balkan Insight showed the advisor a copy of the firm’s entry in the business register, which lists Haxhi Shala as one of the firm’s “authorised persons”, he offered no other explanation.
The tender was open to all bidders and was awarded as a result of being “the most economically advantageous” offer, which means that the procurement board had to weigh up different criteria, including price, quality, and other issues, before deciding the winner.
The board said Delia Group’s 11.8 million euro bid was the best, even though one firm submitted a lower price of 11.5 million euro.
During the limited time provided to Prishtina Insight to check the evaluation report of the offers, the process appeared to have been carried out properly.
Balkan Insight has also established that another friend of the minister’s, Habib Morina, also from Malisheve, won two major road tenders, worth 5.8 million and 4.5 million euro respectively. The information was obtained from tender award documents and the company’s entry on Kosovo’s business register.
Morina’s firm, Patroni, best known as owners of a chain of petrol stations, won a 4.5-million-euro contract to build the road from Arllat to Xerxe in the Malisheve region in September 2008 as part of a consortium.
An audit of the ministry’s accounts by the Auditor General for that year revealed that another bidder offered to do the same work for less. The ministry said it chose Morina’s consortium because it scored maximum points for “technical criteria”.
However, the auditors wrote that they detected “no big advantage” on technical grounds between Morina’s bid and the cheaper, rival offer. The ministry has not responded to requests for an explanation.
The audit also revealed that another company in the Patroni consortium, Jehona, failed to meet the guidelines for applying because it did not submit an audit report for 2007. As a result, the whole consortium should have been disqualified from the tender.
Morina’s AHN Group, meanwhile, won a major road tender in July 2009, worth 5.8 million euro, to build part of the road to Mitrovica, as part of a consortium with Timi Krsko, a Slovenian-based firm whose owners also come from Malisheve. Again, Morina succeeded, although his offer was not the lowest in price.
This is technically acceptable, as the rules for the tender stipulated that the “most economically advantageous” company would be selected – not necessarily the company offering the lowest-price bid.
However, according to the procurement board’s evaluation of the offers, which Balkan Insight has seen, the AHN Group and Timi Krsko failed to provide key documents, including copies of contracts certifying the value of work their firms had undertaken in the past three years and details of their technical staff. Failure to submit such documents usually leads to bids being disqualified.
Morina denies his success in obtaining contracts owes anything to his friendship to the minister. “I am a close friend of minister Limaj but this does not mean that my company has an advantage on tenders,” he told Prishtina Insight.
Morina went on to note that he had demolished two of his petrol stations, in Vragoli and Komoran, at a cost of around 200,000 euro, on the orders of the ministry, because they were building a road through the area. “I should ask a lot from the minister for that,” he joked.
Inexperience not a problem:
Balkan Insight can also reveal that companies that have little experience, few staff, and which appear to have registered as companies only after winning contracts, have won sizable tenders.
One is the Pristina-based firm Damastion Project, which, according to Kosovo’s official business records, was created in November 2008 with just two staff.
Damastion won its first contract worth 3 million euro with the Ministry of Transport in October 2008, according to the procurement agency’s archive, before the firm was even registered.
It worked alongside two other companies for this first bid. In December 2009, it won a 4.6 million project by itself to build a road in the Podujevo region in northwest Kosovo.
When Balkan Insight contacted Damastion, owner Visar Tahiri said the official records were inaccurate as the company was created in 2004. He said the registration date was changed to November 2008 when the company modified its entry in the business registry.
Kosovo’s business register failed to respond to a specific request about whether they had made a mistake with the registration date but chief executive Mehdi Pllashniku told Balkan Insight that in general they would not change a firm’s “constitution date” if a company later made changes to the official record.
Tahiri accepted that the firm had only two staff when it registered but said it had expanded since then to 15. But he also said his company was more professional than many older firms and had complied with all the requirements for a bid. This sometimes meant Damastion Project had submitted 6,000 pages of documentation to win a tender.
Endrit Shala said companies had to meet certain requirements to win tenders, such as having participated in road construction projects up to a certain value and having experienced staff. He said one problem in Kosovo was that few firms had much experience in the field. “Most haven’t built in Kosovo for the last 20 years. These are the companies we have in Kosovo,” he said. He also said that due to the small size and inexperience of most firms, most road tenders were awarded to consortiums.
The owner of one of Kosovo’s most successful and largest road building firms, who asked not to be named for fear that the ministry would “take revenge”, said the use of inexperienced firms that were willing to pay bribes to get tenders had led to a fall in quality.
“We cannot win tenders because we don’t give money to the government,” this businessman claimed. “They come to me and ask for money, but if I give in, the price of the work would be higher,” he explained.
“Other companies do so [pay bribes] and then miss out on laying several centimeters of gravel and asphalt, which is why the quality of their asphalt is poor.”
This man said he had pulled out of work on the main road between Pristina and Skopje because of the poor quality of the gravel used there. He said the quality was so bad that his asphalt-laying machines began sinking into the road.
Almost 7 million euro has been spent on this section of road, between Pristina and Lipjan, one of the few dual carriageways in Kosovo. Parts of this route are already cracked and potholed.
However, Endrit Shala maintained the road had been built to a high standard. He said the ministry experts had advised delaying the laying of a third layer of asphalt until this year because of poor weather conditions.
Quality as important as quantity:
Myzejene Selmani, chair of the Kosovo parliament’s committee for economy, trade, industry, electricity, transport and telecommunication, and a deputy for the opposition New Kosovo Alliance, said corruption in road tenders was a major concern.
“Considering that the Ministry of Transport has a budget which is three times higher than [any] other ministries and has directed almost all its budget towards road infrastructure, it is shame to have such poor quality roads in Kosovo,” she said.
“I drive on these roads and there are a lot of holes,” she added. “The government inaugurates and cuts a lot of red ribbons, but it’s just for marketing. Tenders are not being given out appropriately, not following the law… Companies that win the tenders are not qualified.”
Selmani claimed that six months after many new roads were finished, the Ministry was having to spend the same money all over again on repairs. “The companies constructing roads have no clue how to build a road, they just have connections to the Ministry of Transport,” she asserted. She also highlighted the poor quality of the Pristina to Skopje road.
Another development causing concern in the past two years has been the arrival of Albanian firms on the Kosovo road-building market. Local road firms complain that Albanian firms are manipulating the tendering process.
The manager of the major road-building company mentioned earlier said Albanian companies were winning tenders in Kosovo “because manipulation [of tenders] can be done easily… On the other hand, Kosovo companies cannot work in Albania – I was there as a sub-contractor but left Albania because we were threatened.”
Endrit Shala accepted that there was a need to improve the quality of new roads but said the ministry had made great strides in improving monitoring of road-building. “There is lots of room for improvement but the quality of roads is much better now than it was up to 2007/8,” he said. He added that the government had brought back in-house inspections of roads and employed 20 to 30 experts working on the issue.
In 2008, a Spanish company obtained the job of verifying road quality and materials used and Shala said that all roads were now being put through laboratory tests.
He said the ministry had also brought in contracts that placed the burden of repairs for up to two years on the builders of the roads and to ensure this happened, the ministry retained 10 per cent of value of the contract until the guarantee period had elapsed.
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