Companies linked to Socialist Party officials and a handful of businesses known for winning concessions or licenses are among the biggest beneficiaries of Reconstruction tenders, while work is dragging on beyond schedule.
It’s 12:00 on a sunny March day and Evelina Zguro takes advantage of her lunch break to take a look at the pit, upon which her apartment building has just started to be built in the municipality of Vora – about 16 kilometers west of Tirana.
The woman wears a cherry-colored wool hood and walks impatiently down a muddy road next to the reconstruction site. There is no information board visible between the concrete carabineers, but Evelina confidently says that she knows where the foundations of her future apartment block are being laid.
“Finally, our pit was dug,” she says enthusiastically. “Before the works started, we were not sure that they would really build our houses”.
Evelina Zguro lost her apartment due to the November 26, 2019 earthquake and has been waiting two and a half years for the Albanian government to replace it. Thousands of other families in the earthquake-affected areas share the same concerns.
After declaring a state of natural disaster in 2019, the Albanian government avoided the public procurement law and applied restricted procurement procedures, through the framework agreement for the reconstruction program, arguing for the need to shelter those affected by the earthquake as soon as possible.
But in the third year of reconstruction, the process has not guaranteed compliance with the deadlines or fair contracts.
The data provided by BIRN through the analysis of over 700 procurement procedures announced by the Albanian Development Fund and the 10 affected municipalities show that the major beneficiaries of the reconstruction process are companies linked to Socialist Party officials, previous winners of concessions or licenses or companies with questionable financing.
At the top of the list is the company “Kevin Construction” owned by Lavdrim Gjici – the brother of the socialist mayor of Kukës, Safet Gjici.
Public finance experts in Albania criticize the accelerated procedure for the reconstruction program tenders. According to Aranita Brahaj, executive director of “Open Data Albania”, these procedures undermine competition and increase the possibility of favoritism and clientelism.
“We hear that there are 150 construction companies engaged, but in reality only 10-15% of them are truly involved. If you look at these companies, you will notice that they are also the beneficiaries of licenses and construction permits, they are companies whose integrity has been questioned and whose owners are rumored to be behind criminal affairs,” said Brahaj.
The administrator of the company “Kevin Construction”, Lavdrim Gjici, considers the suspicions that the company he runs may have been “pampered” with funds due to his brother’s political influence as unfounded.
“I am a man of work, I don’t like to just run my mouth,” Gjici told BIRN.
“If there’s someone who offers all these works for as much money that I have offered, let him come forward and I am ready to hand over the license,” he added.
Reconstruction tenders
With a donor-promised fund of 140 billion Lek [1.15 billion euro], the reconstruction program turned into a “golden egg” for companies dealing in construction, study or design.
According to the Public Procurement Agency, during the 2020 and 2021 contracts were procured with a limited fund of almost 80 billion Leks [660 million euros] within the framework of the reconstruction program.
Based on a normative act of the government “On coping with the consequences of natural disasters”, the procurement procedures for the selection of winners were made through framework agreements – restricted procedures or above the upper estimated monetary fund, which according to officials have shorter deadlines for receiving offers.
Out of 127 contracts published in 2020, one hundred procedures with an estimated fund of 63.4 billion ALL moved through the process towards finalization.
Whereas in 2021, 145 contracts were published, but only 132 of them with an estimated fund of 17 billion Lek were still in different stages of the process.
Despite the large number of companies involved, the efficiency of this procurement procedure has been close to zero.
Referring to an analysis by the Public Procurement Agency, during 2021, 117 tenders with a restricted procedure were finalized, where the winning offers were as much as 99.3% of the estimated fund. While in the restricted procedures above the high estimated fund, the state has saved zero Lek, as the winning bids matched 100% of the estimated fund.
APP interprets the “seemingly low” percentage of saving the estimated fund with the method of statistical calculation.
“Framework agreements are accompanied by a large number of mini-contracts, according to the needs of contracting authorities, during which the prices can be reduced even further. Also, we emphasize that not necessarily all the value of the Framework Agreement is exhausted,” APP states.
The reconstruction funds were administered by the Albanian Development Fund and the 10 municipalities affected by the earthquake of November 26, 2019, led by the Municipality of Tirana.
The Albanian Development Fund told BIRN, in response to a request for information that, in over two years a sum of 33.3 billion ALL was approved, of which 55% of the value or 18 billion ALL has been already disbursed. The Municipality of Tirana did not respond to a request for the right to information.
For public finance experts, the procedures, followed with the reconstruction tenders, conflict with economic rights and freedoms and encouraged the creation of dubious consortia.
Experts also express concern that these procedures led to the exclusion of foreign companies or medium or small businesses in the construction field, favoring large public contractors.
“It was a restricted procedure with deadlines imposed by law. A company had only 10 days to show interest. This means that all foreign companies were disqualified, as they could not even prepare the apostille document for 10 days,” Brahaj told BIRN.
“Medium and small builders were excluded, who could very well build a school but could not compete in a contest where there are 15 buildings (to be constructed),” she added.
Zef Preçi, director of the Albanian Center for Economic Research, says that the accelerated procedures did not justify their purpose and that most of the deadlines were violated along the way.
“The rush is related to self-interest, it is not related to public service, because an emergency does not last three years, especially since all the deadlines have been exceeded,” he told BIRN.
Preçi also emphasizes that in line with the best practices, people with political connections or criminal past should not benefit from public money. But this is not, according to him, the case of the reconstruction program.
The great beneficiaries
Over two hundred companies are estimated to have been involved in the reconstruction process, but the companies that won high volumes of work can be counted on the fingers of the hand.
The construction company “Kevin Construction” was founded in 2006 by Safet Gjici and passed to his brother in 2014, when Gjici was first appointed prefect and then, mayor of the Kukes Municipality.
The consortium led by “Kevin Construction” with Riviera 2008, Mela and Pepa Group as partners companies, won two tenders worth 3.7 billion ALL from the Albanian Development Fund for the construction of 1420 individual homes in the areas affected by the earthquake.
Despite the large volume of work, “Kevin Construction” created a consortium with other companies and won three more tenders from the Albanian Development Fund and the Municipality of Shijak – bringing the total value won to 4.7 billion ALL – or 14% of all funds available to the Albanian Development Fund.
“Kevin Construction” is not the only company linked to Socialist Party officials that won tenders from the reconstruction program.
Even the “Dajti Park 2007” company, with shareholder Lulëzim Qefalia – the brother of socialist MP Xhemal Qefalia has won three tenders worth 1.3 billion lek from the Albanian Development Fund, as well as another tender of 545 million Lek from the Municipality of Tirana as part of a consortium. For constructions in the Kombinat area.
In the list of the biggest beneficiaries of the reconstruction tenders there are also the companies “Ante Group”, “Gjikuria”, “G.P.G Company” or “Salillari” – with the last three also big contractors of the Albanian government.
The consortium consisting of “Ante Group” and “Ferro Beton & Construction Co” have won four contracts from the Albanian Development Fund with a value of 2.2 billion lek. “Ante Group” also leads operator unions that won 5 other contracts from municipalities with a total value of 1.7 billion lrk.
“Gjikuria” company is also among the major beneficiaries of the program, having won five contracts with the Albanian Development Fund and two other contracts with the municipalities of Tirana and Kurbini.
The concession holder of the Orikum-Llogara road has won a total of contracts worth about 2.8 billion ALL.
“G.P.G Company” of Paqsor Buzi – one of the frequent public works contractors in Albania won tenders worth about 2.3 billion lek from the Reconstruction program as a sole operator or as a consortium.
Whereas, the company “Salillari” – also a large public works contractor, – has benefited from tenders worth 1.9 billion ALL from the reconstruction program.
In the normative act that regulates the procedures of the reconstruction program, the government provides for the disqualification of any operator convicted by a final decision for a number of criminal offenses – including crimes in the field of narcotics.
However, the company “Alesio-2014” managed to win 3 contracts as a union of operators and two more contracts as a single operator with a total fund of almost 1.5 billion ALL.
“Alesio -2014” is owned by Anton Gjinaj, arrested in April 2021 by the Montenegrin police in response to an arrest warrant issued by the Spanish authorities for an outstanding sentence for drug trafficking.
According to the Ministry of the Interior of Montenegro, Anton Gjinaj was a member of a criminal organization, which in 2006 organized and coordinated the importation and sale of 50 kilograms of heroin in the territory of Spain, in the areas around the cities of Murcia and Alicante.
The qualification of companies like “Alesio-2014” to ptofit from earthquake tenders worries Zef Preçi.
“Alessio is a company whose owner is in prison and according to the legislation it should have been out of the competition,” said Preçi. “You don’t prevent him from doing business, you don’t deny him economic freedom, but you don’t take taxpayers’ money without clarifying his situation,” he added.
The administrator of “Dajti Park 2007”, Lulzim Qefalia, denied to BIRN that his company was favored, while adding that the selection of winners was done electronically.
“My brother has not had any type of influence. We were in competition and lost even,” said Qefalia.
The administrator of the company “Alesio-2014” was not available for comment, while the companies “Ante Group”, “Gjikuria”, “G.P.G Company” and “Salillari” did not respond until the publication of this article.
Infringe of deadlines
On March 19th, Prime Minister Edi Rama published a video from the reconstruction site in the “Lugina” neighborhood in Shijak – baptized by him with the new name “Rilindja”.
“…with the Rilindja neighborhood containing 665 apartments, which also concludes the Reconstruction Program in Shijak, where a new shelter has been provided for 802 families after the tragic earthquake, I wish you a good weekend,” wrote the prime minister.
However, Rama’s promise still seems a distant dream.
The data provided by BIRN through a right to information request from the Albanian Development Fund show that the works have stalled in Shijak and Vorë due to problems encountered with expropriations.
In Shijak, 21 seven-story buildings are planned to be built, and by the end of March, work had been completed on four of them. According to the Albanian Development Fund, 100 apartments out of 656 have been completed in Shijak, or only 15.2% of the total.
Similarly, in the municipality of Vora, 70 apartments out of 405 in total have been completed, with only 17.3% of the works completed.
ADF explains the delays in Shijak by changing the positioning of buildings several times within the area under development, due to expropriations of the construction site. Meanwhile, in the municipality of Vora, the Fund said that the contracts have not yet become effective as a result of the non-release of the construction site, also due to expropriations.
In Valias – part of the municipality of Kamza – BIRN verified that some buildings still in the construction phase should have been completed in October 2021, but the Fund denied that there were any violations of deadlines in this reconstruction site.
In Valias, 98 apartments out of 270 in total have been completed and it is expected that the works will be completed in June 2022.
The company “Kevin Construction” was one of the first to start the works for the construction of two buildings in Shijak, but the works have been stalled for a long time. Administrator Lavdrim Gjici blames the municipality for the stalling of works.
“The reason for the delay in the works is the problems with the expropriations that the municipality has encountered in this area. We have sent several letters to the Albanian Development Fund to resolve this situation,” Gjici told BIRN.
But the Mayor of Shijak, Enton Arbana expressed optimism that the buildings together with the infrastructure will be completed within the month of July.
“Currently, 4 buildings have been completed within the deadlines that we had promised, but no residents will enter them, as we want to hand over all these buildings along with the infrastructure and all the urban intervention that is foreseen in this area,” Arbana said.
Shkenca Shkodra works in a minimarket in Shijak and the delay in the works has disheartened her.
“My apartment building is by Gjikuria – it’s not finished like a carabiner yet, there’s a lot of work to be done before one can move in,” Shkodra told BIRN. “Let’s hope that this new year, at least, we can make merry in our homes,” she added.
Brahaj from “Open Data Albania” is also skeptical and predicts that the reconstruction program could last up to five years at best.
“We have contracts that were drawn in 2020 and have yet to start in 2022. We do not know if it was the projects that were not ready and thus, the contracts were mistakenly procured earlier, or if they were postponed at some point so as to not coincide with an election campaign …,” said Brahaj.
“Unfortunately, there is no clear deadline for when it will end,” Brahaj added.
But time is important for Evelina Zguron, who is hoping for the day when she will have a home again.
“I am here every day, whenever I have free time. I can’t wait to get into my house,” Zguro concludes.