Sarajevo tramway: Secret Contract with the Chinese

14.06.2024. / 10:13

SARAJEVO – Almost a year after the completion of the project, the Sarajevo Canton Ministry of Transport is concealing the contents of the contract for the reconstruction of the tramway in Sarajevo, leaving the cost, deadlines, and other details unknown.

Notably, subsidiary companies of China Railway No.10 Engineering Group, part of the Chinese consortium awarded the reconstruction contract, built a bridge in Kenya that collapsed during construction. Previously, the consortium had numerous work accidents across Asia. This same company has had issues with the World Bank due to illegal activities.

Walter's Research Team

In September 2023, after two and a half years, the tram line in Sarajevo on the Ilidža-Marijin Dvor route was renewed. This section was reconstructed for the first time in more than 60 years and is certainly the most significant public transportation project that will greatly improve its quality and safety.

However, in this case, one positive story has another side: how much did the renewal cost and who are the real investors – representatives of the Government of Sarajevo Canton, specifically the Minister of Transport of Sarajevo Canton, have been keeping this information as the biggest secret almost a year after the reconstruction was completed.

Transparency International Lawsuit

Transparency International BiH recently filed a lawsuit with the Cantonal Court in Sarajevo over the concealment of the contract.

Meanwhile, the construction of the tram line to Hrasnica has begun, and the Feasibility Study stated that with this reconstruction, the total cost will be 100 million KM, which was accepted in the latest budget of Sarajevo Canton.

Ultimately, the figures have increased by about 20 million KM. Initially, it was said that the reconstruction of the tram line from Ilidža to Marijin Dvor would cost 20 million KM, but it officially cost over 40 million KM. How much more is not known, as the information is being hidden. Together with the reconstruction to Hrasnica, it should cost around 100 million KM. The money is secured by a loan from the European Bank for Reconstruction and Development (EBRD).

We remind you that in mid-June 2021, Minister Šteta signed a contract for the works with a consortium of two Chinese companies: China Shandong International Economic & Technical Cooperation Group Ltd. and China Railway No.10 Engineering Group, which were supposed to reconstruct more than 21 kilometres of tram tracks in Sarajevo. The oversight was given to the companies PPG Sarajevo and Yuksel Proje.

The reconstruction began on August 26, 2021.

During the signing of the contract, the Chinese companies/partners were presented as companies “engaged in major projects worldwide” and “both have a significant number of references in their portfolios when it comes to demanding railway projects”.

However, relevant international reports have recorded that subsidiaries of one of the companies in this consortium, China Railway No.10 Engineering Group, built a bridge in Kenya that collapsed during construction. Previously, the consortium had a number of work accidents across Asia, resulting in injuries or fatalities of workers. The same company had issues with the World Bank due to illegal activities.

Photo: Reports from major foreign agencies on the collapsed bridge and the responsibility of the Chinese company
It was sanctioned in 2019 for, among other things, falsifying documents used to compete for two project tenders in Africa, raising the question of how a blacklisted company even got the opportunity to partner with the Sarajevo Canton Government in the reconstruction of the Sarajevo tram line.

In the Cantonal Assembly, the opposition repeatedly requested to see the contract, as it was stated that the initial contract had been amended several times. They were refused with the explanation that it was a “business secret”.

Although the contract was awarded to the Chinese, it is worth noting that the work was carried out by the local company Bosman, which emerged from Jahić Commerce Ltd., a construction and civil engineering company. According to our sources, thanks to a good contract, last year Bosman bought parking lots across from the BiH Parliament building and gas stations in Blažuj from the controversial businessman and former McDonald's licensee for BiH, Haris Ihtijarević.

“Suspicious circumstances” and contract concealment

The first parking lot was privatized under suspicious circumstances, and a concert hall was supposed to be built there. Instead, the former mayor of Sarajevo changed the Regulatory Plan (which was never adopted) and included the construction of a skyscraper over 100 meters high.

There are numerous irregularities related to the reconstruction of the tramway in Sarajevo. Our well-informed sources claim that all the Chinese staff and workers involved in the project did not have permits to work in Sarajevo, as all foreign nationals had registered addresses in Banja Luka. The Sarajevo branch has no employees and was established solely for this project.

The chief engineer, who was behind all the signatures and the only one authorized to use the company seal to approve the works, is not competent to do his job and lacks sufficient work experience to lead the project. Moreover, Chinese workers were rarely seen during the execution of the works.

According to Walter's information from two sources, which we have not officially confirmed, the section of the tram line from Marijin Dvor to Pofalići was not built in accordance with the Feasibility Study, raising questions about the usage permit and the safety of tram operations.

These and many other questions, in accordance with the Freedom of Information Act, were addressed to the Sarajevo Canton Minister of Transport, Adnan Šteta, and others in the chain of responsibility, but they deemed it unnecessary to respond.

For a full two months, Minister Šteta had the opportunity to respond to Valter's questions; however, he believes that he does not need to respect the laws that he is obligated to as an elected official and that he is not obliged to answer to the public. (Photo: Adnan Šteta Instagram account)
Due to the concealment of the contract and information and evasion of responsibility, Transparency International BiH recently (at the end of March 2024), as we have already mentioned, filed a lawsuit against the Sarajevo Canton Ministry of Transport with the Cantonal Court in Sarajevo.

Previously, TI BiH requested to review the contract from the Sarajevo Canton Ministry of Transport, as well as the contract annexes and the selected most favourable bid. However:

“The Sarajevo Canton Ministry of Transport rejected the request for access to information, after which TI BiH filed a complaint, which was also rejected, with the explanation that the contractors did not consent to the disclosure of this information because it contains the bill of quantities and estimates, prices of materials, and installations, which their competitors could misuse. The Ministry of Transport's decision stated that the public is aware of the total cost of the works, concluding that the public interest is fully satisfied. On March 25, 2024, TI BiH filed a lawsuit against this decision of the Sarajevo Canton Ministry of Transport with the Cantonal Court in Sarajevo”, Transparency International told Walter.

Šteta does not answer the public

We sent the same questions to all relevant addresses a few months ago. As we already mentioned, we did not receive any response from the Sarajevo Canton Ministry of Transport, even though we sent the request in accordance with the Freedom of Information Act, meaning that Minister Šteta and his associates grossly violated the law.

The European Bank for Reconstruction and Development (EBRD) informed us that this institution “does not publish contract information because the Bank is not a contractual party in the agreements between the Sarajevo Canton and the Contractors, in accordance with the Bank's Access to Information Policy”.

We received this response a month after sending the inquiries to the provided Sarajevo address. We then learned that their public relations office in Sarajevo is not operational and that the office in Serbia is responsible for BiH.

The EBRD offered the public and citizens, who ultimately repay their loans, two links in response. The first link pertains to the bank's policy. The second link states that “procurement and project implementation is carried out in accordance with EBRD Procurement Policies and Rules”, but upon clicking the link, we found that the page was invalid, which is completely unprofessional for the Bank's operations.

Therefore, it is reasonable to ask: is the EBRD protecting the Sarajevo Canton Government, their own loans, or the Chinese companies? Do they have the legal right to conceal a contract of great importance to the public and citizens by citing the bank's policy? It is worth recalling their advertised and regular campaign for “Bank transparency”. In their documents, when making an exception as in this case, they refer to information identical to our Freedom of Information Act.

Valter also contacted Bankwatch, an international non-governmental organization monitoring international financial institutions, due to the concealment of the contract at all costs. They told our portal that the EBRD essentially “did not violate its policy”, but they also added that they consider the 2019 policy governing this area to be “too weak”.

They emphasized that local authorities are obliged to publish the contract.

“They certainly should improve access to data on projects that are significant to citizens and have a long-term impact on the community”.

In the EBRD database, as suggested by Bankwatch, there are Board Reports published for public sector projects since 2020. However, we did not find the Sarajevo tramway reconstruction project in that database.

In the meantime, we have learned that in dealings with Chinese companies, parts of contracts are always concealed because these companies require it. This was also the case with the contract one of these companies signed with the RS Government in 2018 for the construction and management of the Banja Luka-Novi Grad highway.

We also learned that in both cases, Chinese companies invoked “commercial interest”, which constitutes an “exception to the obligation to disclose in accordance with Article 7 of the Freedom of Information Act”.

Simply put, according to our findings, during the reconstruction of the Sarajevo tramway, Chinese partners, conditioning the Sarajevo Canton Ministry of Transport, demanded an increase in the contracted price by almost half of the originally agreed price of 20 million KM.

Thus, this reconstruction officially cost more than 40 million KM. Additionally, we discovered that the contract did not specify the interest rate, meaning it is unclear whether it is fixed or variable, and the repayment deferral period is seven years, implying that future Sarajevo Canton governments will deal with this issue.

The opposition in the Cantonal Assembly is heavily using the secrecy of the contract, claiming that this reconstruction cost as much as 80 million KM. We sent questions to the SDA representative in the Cantonal Assembly, Faruk Kapidžić, who has repeatedly spoken publicly about the alleged shortcomings related to this reconstruction. After two months of sending urgencies, we have not received his response either.

The only document related to the reconstruction of the tramway that we managed to obtain after several months of research and search is this one from January 2019. It is the Contract for the procurement of “Project review services for the Ilidža-Hrasnica tramway and the repair, reconstruction, and modernization of the tramway in Sarajevo on the section from the ‘S’ curve near Holiday to Ilidža with a connection to the railway station, turnaround at the railway station, tramway through Hamze Hume street, and branch line to the tram depot”.

The contract was signed by the Minister of Transport, Adnan Šteta, and the director of Saraj Inženjering Ltd., Mustafa Musabegović.

The results of this review are also unknown, as is the fact that this capital project leaves doubts about the existence of a thorough plan and serious strategy. This will remain so until the Sarajevo Canton Ministry of Transport answers the questions of why the tramway reconstruction contract is a secret, why deadlines were missed, and why costs were so significantly increased, which raises further suspicions.

We have learned that there is significant suspicion within the Sarajevo Canton Government that other offers were better and that this is also part of the secrecy. The specific question is why the Sarajevo Canton Government rejected the possibility of awarding the contractor job to local companies.

“Chinese treatment” for local staff

One of our sources claims that there is also suspicion that the selected Chinese contractor “resold” the job and brought in some local companies to carry out the work. Supporting this is the fact that Chinese workers were almost invisible during the construction.

Experts point out that the Chinese contractor did not pay attention to some technical details, such as pouring liquid concrete into exterior panels, which is unacceptable in this type of construction because it starts to crack at high temperatures.

Local workers employed by the Chinese companies were forced to stay silent about any problems. Even the local interpreter was replaced by an interpreter from Belgrade.

Ammar Čaplja, who contracted COVID-19 while working for this company during the pandemic, is also one of the dismissed workers. He was fired because he wasn't supposed to disclose that the virus was transmitted to him by Chinese colleagues. Valter possesses a letter that Čaplja sent to the Chinese companies in the consortium, as well as to the Chinese Embassy in Bosnia and Herzegovina in 2022. In this letter, he described the chronology of infections within the company in Sarajevo and how he was infected by his Chinese colleagues, which he was not allowed to inform the local staff about.

“To make this clearer: when a Chinese staff member is COVID-positive, we should not talk about it. We should say they have a cold, that they are in another city, that they are negative, or any other misinformation, but we must not tell the truth and present the facts! When local staff are COVID-positive, everyone should know!” wrote Čaplja.

He also mentioned that it involved “hiding information and misleading the entire team about the health condition of colleagues while revealing information about the health status of local workers who are also part of the team”.

Čaplja told Valter that the Chinese tried to find a way to fire him.

“However, due to my impeccable work (professional driver) and a series of other services I provided for the same company, they had no grounds. In the end, they waited until the end of my contract and then dismissed me. The only reason for not renewing the contract was genuinely my report on the events in the company related to hiding evidence of COVID-19 spread”, Čaplja told Valter.

Our portal also addressed questions to the Sarajevo Canton Anti-Corruption Office, which stated that they held a meeting with the deputy cantonal minister on July 8, 2022, initiated after the office received a complaint regarding this reconstruction. The complaint stated that the contract was not published in the Sarajevo Canton Public Procurement Data Register. Following the complaint, the Ministry subsequently published the data on the public procurement but not the contract.

Photo: Response from the Anti-Corruption Office
At the same July meeting, it was agreed that the Ministry would provide the Office with information explaining the project's progress to date and publish the basic elements of the contract (concluded with JC China Shandong International Economic & Technical Cooperation Group Ltd and China Railway No.10 Engineering Group). Two years have passed since then, and the Office has yet to receive the disputed information.

Thus, even after the work was completed, the contents of the contract remain unknown: the price, deadlines, and other details, which were limited by the Chinese consortium, which, judging by the blacklists worldwide, could only get the job here and be paid with the money of Sarajevo citizens. Sarajevo Mayor Benjamina Karić, a party colleague of Adnan Šteta, enthusiastically welcomed the completion of the tramway reconstruction, stating that “the brilliant minister Šteta is pushing boundaries and showing the way for future generations to follow”.

It is precisely the future generations that will repay Šteta's harmful loans, hidden in secret contracts. Valter

Tagovi: tramway