Multimillion Passport Deal Under Investigation in Kyrgyzstan

Citizens of Kyrgyzstan can enter only 17 countries without obtaining a visa — one of the lowest such rankings in the world. The introduction of new, biometric passports was supposed to make things easier.

Having bought the necessary equipment and created a biometric database, the government’s next step in reaching this goal was to procure the latest generation of passport booklets. A tender to obtain the booklets was held, and the winner announced in February.

But now the winning bid of 940 million soms (US$13.4 million) is at the center of a major corruption probe. Early this month, Kyrgyzstan’s state security agency, known as the GKNB, accused both current and former government officials of accepting bribes from the winner in the form of payment for international travel. The focus of the investigation is the State Registry Service, the agency that issues passports to citizens and put out the tender.

Three officials from the agency have been detained. One of them, according to Kyrgyz media, is also the head of the tender commission that decided on the bid, though this has not been officially confirmed.

Reporters from Kyrgyzstani web outlet Kloop and OCCRP have scrutinized the tender procedure, looked into the State Registry Service, and investigated Garsu Pasaulis, the Lithuanian company that won.

Whether or not the bribes alleged by the GKNB really did take place, an analysis of dozens of tender documents shows that the company’s bid — which fell short of qualifications — appears to have been treated extremely leniently by the commission in charge of evaluating it, which consisted largely of State Registry Service officials.

Not only did the commission overlook Garsu Pasaulis’s failure to meet certain requirements — while disqualifying its main competitor on similar grounds — it also failed to evaluate the company’s bid on an important metric on which it would have fallen even further short.

The documents further show that Garsu Pasaulis’s offer would result in higher passport prices for citizens.

Reporters also looked into the ownership of Garsu Pasaulis, finding a Belgian company and Belgian citizen behind it. Both are reportedly under investigation in Belgium and the Comoros Islands for corruption involving passport contracts in the Congo and the illegal sale of identification documents.

In an interview with reporters, Garsu Pasaulis’s director, Ana Janauskiene, denied paying any bribes to Kyrgyzstani officials, though she did say the company paid for some of their travel, speculating that it could have been business-related.

“It was somewhere around 2015 or 2016, and … absolutely unrelated to this tender,” she said.

A Changing Story

In initial conversations with reporters, State Registry Service press secretary Elzat Kydyrmysheva said only that her agency had “no official connections with Garsu Pasaulis in the past” and that its next steps would be determined by “the recommendations of the law-enforcement authorities.”

Things seemed to change in the week of April 15, after the detentions caused a growing scandal in Kyrgyz media.

In an April 17 press release, the State Registry Service now claimed that Garsu Pasaulis’ tender application had expired on April 2 with no contract being signed, and that as a result, the tender had not been concluded, and no “economic damage” had occurred. (It also said that an “independent audit” and a examination by a review commission found that no violations of tender procedures had taken place.)

An independent review of tender documents by reporters established that, in fact, the tender should have expired at the end of February. According to Kydyrmysheva, it was prolonged until the beginning of April after the German and French bidders submitted complaints about the process. It’s not clear why the question of expiration had not been raised until this week.

Favoring One Bidder

In all, five foreign companies applied for the passport booklets tender, which was announced in October 2018.

Three were rejected by the tender commission for failing to meet bid requirements. Of the remaining two — Garsu Pasaulis and a French competitor, IDEMIAFrance — the Lithuanian company won because it had submitted a lower bid.

But an analysis by reporters shows that the same criteria were applied differently to different bidders. In particular, Garsu Pasaulis appears to have sailed through requirements that the others were disqualified for not meeting.

One key criterion, meant to evaluate a company’s experience with large passport orders, was for bidders to have completed at least two projects and delivered at least 2 million booklets over the previous five years. To substantiate their claims, they were asked to provide copies of contracts, proofs of delivery containing exact figures, and reference letters.

IDEMIAFrance only provided documentation on the delivery of finished passport booklets for one of its contracts. The amount did not reach the 2 million requirement, which should have disqualified the company’s bid.

Furthermore, IDEMIAFrance submitted incomplete documentation by providing only excerpts of contracts it had fulfilled. The documents excluded some required details, such as the number of passport booklets to be delivered and the value of the contracts.

A German company, Mühlbauer ID Services GmbH, did claim it had delivered over 2 million booklets, submitting confirmation letters from Bosnia and Tajikistan. However, it provided no contracts, as was required.

Unlike IDEMIAFrance, the German company — a dangerous competitor since it had submitted by far the lowest bid — was disqualified for its omissions.

“They were simply looking for a pretext to motivate their decision [to reject the application],” Mühlbauer’s sales manager, Sandor Kovtun, told OCCRP. In the company’s view, he said, it had submitted sufficient other documentation to stand in place of the contracts.

The bid criteria were not met by the winning company either. Though Garsu Pasaulis provided all the required documentation, its total number of delivered passport booklets over the five-year period was under two million. To rise above the minimum requirement, the company included documents showing deliveries that took place over an additional 8-month period, an irregularity that appears to have gone unremarked by the tender commission.

After Garsu Pasaulis won, both Mühlbauer and IDEMIAFrance complained to a separate review commission about the tender process.

Neither appeal was successful. Kovtun, the German company’s sales manager, told Kloop and OCCRP that it has sued the State Registry Service for illegitimately excluding it from the tender.

In their own complaint, IDEMIAFrance had attempted to draw the review commission’s attention to the legal problems Garsu Pasaulis was experiencing in Belgium. Though it submitted links to news articles about the Belgian investigation, the commission rejected their complaint.

Nuruipa Mukanova, a member of the review commission, told reporters that the commission is only able to review the original tender, and cannot take into account any additional information provided by applicants.

Garsu Pasaulis’s Owner: A History of Bribery

According to its web site, Garsu Pasaulis is one of Lithuania’s largest and most modern printing houses.

Since 2014, the company has been owned by Albert Karaziwan, a Belgian citizen, and Semlex Europe, a company operated by him and owned at least in part by him and his family.

According to a Reuters report, Semlex has been under investigation in Belgium since early 2017. (Prosecutors did not deny the existence of the investigation, but did not confirm its subjects and provided no details.)

As reported by Reuters, the Semlex head office was searched in January 2018 after the news agency published two reports examining the company’s activities in Africa involving a controversial contract in the Congo. About a third of the money from the Congo contract is alleged to have gone to an offshore company owned by a close relative of Joseph Kabila, the country’s president at the time. A separate inquiry by a parliamentary commission in the Comoros investigated the role of Semlex in illegally selling Comoros identification documents to foreigners who are suspected to be security threats by various countries.

After analyzing Semlex Group records, Reuters further reported that the company has received other contracts without tenders and sometimes through political connections. In 2006, for example, Semlex reportedly won a passport, visa, ID card, and foreign residency card contract in Guinea-Bissau after making payments to the country’s defense minister.

Janauskiene, Garsu Pasaulis’s director, dismissed the allegations against Semlex, its parent company. “Those were absolutely groundless articles ordered by competitors,” she said.

Ordinary Citizens Would Pay

Since the entire cost of Kyrgyz passports is passed to citizens, it’s possible to estimate what they would have had to pay if Garsu Pasaulis’s bid had gone ahead. The new passports would have been more expensive than they currently are.

Currently, Kyrgyz passports are issued for 590 som (around $8.50), already more than a day’s salary. Garsu Pasaulis offered a starting price of nearly this high — 585 som (about $8.40) — just for the booklet. Because of additional personalization and transportation costs, the final price for citizens would surely be higher.

By contrast, Mühlbauer, the German bidder, offered a passport for 420 som ($6) per booklet.

A Bumpy Road to a Digital Society

Though poor, Kyrgyzstan is relatively democratic compared to its Central Asian neighbors. It has also invested heavily in digital transformation in an effort to root out widespread corruption and increase transparency and accountability.

But the biometric passport scandal isn’t the first bump in the road.

While the country has started digitizing its official documents and introduced some e-government services for citizens, many government institutions have not yet fully transitioned into the digital era or made their data accessible to the public.

The introduction of a biometric database of Kyrgyzstani citizens — an important initiative that enables the issuance of biometric passports and is meant to help prevent election fraud — was also mired in problems.

Soon after data collection began in August 2014, citizens realized that not all the application locations had the equipment needed to collect their information.

Over the next year, two laptops meant to be used for gathering biometrics, as well as a USB stick that had been used to transport biometric data, were stolen or lost. The authorities claimed that there had been no biometric data on the devices, according to local news sites.

Moreover, many citizens have been reluctant to provide their biometric data — which the government had made obligatory. A number of rights activists say the requirement violates privacy protections that appear in the country’s constitution. Citizens were required to provide biometric data in order to participate in the 2015 parliamentary elections, and the government has made only biometric ID cards available for new applicants or replacements.

The security of the data remains a sore subject. In October 2017, Kloop reporters revealed that a server belonging to the State Registry Service, one of the agencies that holds citizens’ personal information, was illegally used for the benefit of one of the candidates in the 2017 presidential election, Sooronbai Zheenbekov.

The server was used to host a management system and keep track of voters’ intentions during the elections — the first peaceful transition of power in the country from one elected president to another.

The authorities denied that the website was hosted there.

Zheenbekov ended up winning.

With additional reporting by Šarūnas Černiauskas, Jelter Meers, and Karina Shedrofsky.