Documentary evidence is now available to show that General Pervez Musharraf's Chief of Staff intervened and ordered grant of an over $50 million cellular phone contract to a Canadian firm against a much better offer of a friendly Chinese company.

Thus the military government not only caused a loss of $5.8 million to the national exchequer but also annoyed Pakistan’s most trust-worthy and strategic friend, China, for unexplained and unknown reasons, to the extent that the Chinese company, and then the Ambassador, had to write a letter to General Musharraf, but in vain.

"Certain unknown resource is favoring a Canadian company called Nortel and is pushing Pakistan Telecommunications Mobile Ltd (PTML) to sign this contract with Nortel.... We are sincerely looking that decision should be done on merit basis and favoritism should be stopped immediately," the Chinese company letter to General Musharraf dated January 29, 2000 said.

The deal signed on March 2, 2000, was thrust upon PTML–- a subsidiary of state-owned Pakistan Telecommunications Company Limited (PTCL) Authority -- by the Chief of the Staff to General Pervez Musharraf in violation of rules, documents reveal.

A memo by the Chief of Staff Office clearly stated that contract should be awarded to one company and "there is no reason to reopen the case". The company was Nortel which had been allowed to lower its bid while others, including the Chinese company, were denied the same favor. Click to see Memo

Documents available with SA Tribune, spread over 105 pages, indicate foulplay in dishing out the deal to the Canadian cellular company, Nortel, by allowing it to revise its bid downwards while refusing the same facility to other bidders, including China.

Initially five bidders -- Alcatel, Ericsson, Nokia, Nortel and Siemens – participated in the bid for providing network, billing, customer care, voice mail, and transmission etc. to PTML for its cellular company U-fone. The cost of duties and taxes, worked at $8.0 to 9.0 million, was to be borne by the PTML.

Aclatel offered to complete the job in $71.672 million, Ericsson $78.092 million, Nokia 72.911 million, Nortel 67.622 and Siemens $100.86 million.

After receiving the bids, the PTML appointed a Finland-based consultant company Omnitele to examine the technical data as well as evaluate the offers provided by the bidders.

In its report submitted to the PTML, Omnitele rated Nokia at the top followed by Ericsson, Nortel, and Siemens respectively but did not recommend Alcatel for this job.

Omnitel also backed the financial package offered by Nokia, which had assured 85 percent of financing from China Construction Bank at five per cent per annum with loan maturity period of eight years and a further grace period of at least two years.

“Nokia’s implementation proposal is realistic and well-suited for implementing the GSM turn-key project,” the consultant company’s report said describing Nokia’s solution as technically the most favorable among the five bidders. Click to View Omnitele Report

The consultant company said that although Nortel could offer comprehensive selection of services and features to implements in their GSM networks, “However, their main strength is in the fixed communication network”.

Omintele also pointed out that despite repeated requests Nortel failed to provide detailed description of the Comguard system, nor offered any digital cross-connect equipments, estimation fore the category-3 site preparation costs, any tool for network element planning and cost optimization neither provided any price information for measurement instruments.

However, this report was not circulated among the members of the Board of PTML causing anxiety among them. “It is rather unfortunate that the evaluation report of the consultants and the tender evaluation report was not provided to the members of the Board,” wrote an agitated Board member Malik Muhammad Saeed Khan in a letter addressed to the Chairman of the Board.
He claimed that his letter also reflected the views of Mr Abdullah Yusuf, Secretary Planning/ Member PTML Board. Click to View Saeed Khan letter

While Nokia had offered to set up 184 GSM Base Stations, Nortel offered to set up only 150. The equalization difference was worked out to be around $ 7million, as claimed by Nokia in a letter written to the PTML Board. Nokia claimed that only this difference made its bid lowest in price amongst all.

Despite these facts, the government asked Nortel to lower its bid, which agreed to come down to $50.7 million (excluding duties).

Nokia on the other hand offered to further lower its bid by $10 million bringing it down to $44.9 million (excluding duties) but its offer was ignored on orders of Musharraf's Chief of Staff.

Nokia had also written earlier to Lt. Gen Amjad, Chairman National Accountability Bureau (NAB), who carried out investigations to unearth the irregularities and concluded that the process had been done irregularly and Nokia should have been the lowest, technically compliant and superior solution than Nortel.

In response to NAB’s conclusive report, the Chief Executive Secretariat first directed the PTML Board to reopen negotiations with Nokia, in addition to Nortel but later reversed its own directive by saying that NAB had reported nothing irregular in the evaluation process.

The Chinese were so annoyed, their ambassador in Islamabad, Mr Lu Shulin, personally wrote a letter to General Pervez Musharraf on February 20, 2000, saying the Chinese government was very much interested in the project to help Pakistan. He sought Musharraf's intervention but the deal had probably been finalized and it could no longer be reversed. The Ambassador's intervention remained fruitless. Click to View Ambassador's letter Page1

The PTML Board members also objected to giving the project to Nortel and said that after Nokia’s offer to lower its bid, it was cheaper by $2 million than that of Nortel.

“If that be the case, the tender evaluation committee will need to go into depth of this offer as well and bring up the facts before the PTML Board before a considered decision is taken,” the letter written by a Board member to his Chairman said.

The “active participation” of the Chief Executive’s office in this “shady deal” has raised many questions. The main question which remained unanswered is why this undue favor was given to one company, even to the extent that a friend like China was ignored. Did the project serve the national interest or someone's self interest?