Lawyers in N$105m airport kickbacks

By Shinovene Immanuel and Sakeus Iikela | 30 June 2020

TWO law firms have failed to explain why they fixed what appears to be a N$105 million kickback scheme from the N$7 billion Hosea Kutako International Airport tender that was awarded and cancelled five years ago.

The questionable N$105 million scheme payment linked to a Chinese state-owned company comes five years after The Namibian reported that middleman Knowledge Katti was set to benefit from N$100 million in ‘commission’ from the airport upgrade project.

Court documents now show there was a plan five years ago for N$105 million to be paid to the law firm Tjombe-Elago Incorporated if the airport contract was successfully signed.

The plan emerges from a document filed at the Windhoek High Court in a case in which the law firm Shikongo Law Chambers is suing the Anhui Foreign Economic Construction Group and a subsidiary of Anhui, Sogecoa Investments Namibia, for N$3,1 million in unpaid legal fees the firm says is due to it.

Tjombe-Elago Inc and Shikongo Law Chambers face allegations of concluding an illegal agreement with Anhui, potential conflict of interest and overcharging the Chinese company through legal fees.

The two firms represented Anhui, which won the Hosea Kutako International Airport upgrade contract in December 2015.

President Hage Geingob cancelled the contract that same month, citing irregularities and potential corruption.

Anhui then directed Shikongo Law Chambers to challenge Geingob’s cancellation in the High Court the following year.

Shikongo Law Chambers, which previously represented the Namibia Airports Company, teamed up with Tjombe-Elago Inc – owned by lawyers Norman Tjombe and Petrus Elago – to sue the government on behalf of Anhui.

The Chinese company won in the High Court, but their joy was short-lived. The government appealed against the decision and won the case in the Supreme Court.

Tjombe-Elago Inc invoiced Anhui around N$6,3 million for legal services.
Sources in the legal fraternity branded those figures grossly inflated.

With the Chinese company having not paid the N$6,3 million legal fees in full, Shikongo Law Chambers is suing the company, claiming it still has to be paid its share of the invoice submitted to Anhui.

KICKBACK SCHEME

Shikongo Law Chambers’ decision to sue has brought a contingency agreement signed by Petrus Elago and a representative of Anhui on 11 April 2016 to the surface. The agreement shows how the law firm stood to benefit from the airport deal.

“In consideration of the legal services, the client will pay an amount equivalent to 1,5% of the direct cost of construction of the upgrade of the Hosea Kutako International Airport presently being US$477,8 million [N$7 billion],” the agreement said.

A 1,5% share of N$7 billion would have been around N$105 million. And it was not for legal work done for the court challenge.

“The amount payable is also to exclude any amounts disbursed by the client to the firm during the impending litigation,” the agreement said.

The agreement states the amounts will be paid “directly into any bank account designated by the law firm”.

With Shikongo Law Chambers now suing Anhui, the Chinese company is saying in court documents the contingency agreement was unlawful, as lawyers in Namibia are not allowed to agree to be paid a percentage of the money their clients secure through litigation.

Petrus Shapupala T. Elago, Director at Tjombe-Elago Incorporated

Elago told The Namibian two weeks ago his firm provided legal services to Anhui in the airport cancellation court case.

He claimed the contingency fee was never enforced and the law firm only claimed ordinary fees for services it rendered.

“This was for the litigation in the High Court, which our client instituted, and in the appeal in the Supreme Court, which was instituted by the government,” Elago said.

Elago, however, did not explain why his firm had an agreement to be paid 1,5% or close to N$105 million from the airport tender. He also did not explain what this payment was meant for.

He, however, said “soon after the agreement was signed with the client, we did not proceed on the basis of the contingency fee agreement, but rather on the ordinary fees and disbursements”.

DOUBLE-DIPPING

The resurfacing of the mooted payment of N$105 million comes five years after The Namibian reported that Knowledge Katti was set to benefit from N$100 million in ‘commission’ from the airport upgrade contract.

Sources said at the time some bribes had already been paid.
Shikongo Law Chambers partner Elias Shikongo told The Namibian yesterday he was not part of the agreement that would have resulted in a payment of N$105 million.

“Shikongo Law Chambers had no written agreement and is not covered by the agreement you referred to but rendered similar services jointly with the legal team referred to above and for which legal fees were discussed and agreed,” he said.

However, in its claim in the High Court, Shikongo’s firm says it was verbally agreed that the terms and conditions of the contingency agreement would apply to the firm just like it was to apply to Tjombe-Elago Inc.

Shikongo has in the past acted as Katti’s lawyer.
He yesterday said “our firm was independently approached by Anhui Company as a client and eventually formed part of a legal team comprising two law firms, one local advocate and a South African senior counsel to seek the enforcement of a contract awarded to the company through legal action”.

Shikongo Law Chambers previously represented the Namibia Airports Company (NAC), which was one of the parties sued by Anhui.

In its claim in the High Court, Shikongo’s firm says it “attended to all consultative and court appearances jointly with Tjombe-Elago Inc”, and Anhui was subsequently jointly billed for the firms’ services with an invoice issued by Tjombe-Elago Inc.

Shikongo said he was not conflicted by representing Anhui while he was the NAC’s lawyer in the past.

“No conflict whatsoever as the NAC awarded the contract in question to Anhui Company and thus opted not to oppose the legal action,” he said.

Shikongo also defended the invoice to the Chinese company.

“The legal bill is fully itemised, item by item, and does not allow for inflation, otherwise the client would have availed itself the option of having it taxed,” he said.

Shikongo added that “the fact that legal services were rendered is not at all denied, hence an offer to settle was communicated to us which we unfortunately had to decline”.

He said “the legal team’s involvement and mandate had nothing to do with negotiating or enforcing an inflated contract as such preceded our mandate”.

“Ours was purely a legal mandate like all other legal mandates to ensure compliance with a legal contract already negotiated and agreed upon between two parties themselves until the intervention by the government”.

This is not the first time that Chinese-dominated contracts have been linked to potential kickbacks.

Multibillion-dollar tenders like the airport deal often offer competition among power brokers to push for companies to win the contract in exchange for commissions or kickbacks.