Rivada’s 4G bid rigging allegations overflow with plots expected in a Grisham novel

In Featured News by Wireless Estimator

Declan Ganley, CEO, Rivada Networks, believes that an agency of the Mexican government had already decided which company they wanted to win the $7 billion project before bids were opened

Declan Ganley, CEO, Rivada Networks, believes that an agency of the Mexican government had already decided which company would win the $7 billion project before bids were opened

In November, Rivada Mercury, a consortium led by Rivada Networks, which includes Harris, Fujitsu, Black & Veatch, Nokia, Intel and Ericsson, filed a lawsuit against the U.S. government over what it says is the illegal and “wrongful exclusion” of the consortium from the First Responder Network Authority’s (FirstNet) procurement process.

Rivada’s latest lawsuit involves a $7 billion contract to operate 4G wireless networks in Mexico after the company lost a spectrum auction Nov. 4 because, as claimed in court papers, the Mexican government and its rival didn’t just make an administrative error, as it claims in the U.S., but colluded with another bidder and rigged the award.

The legal battle regarding the nationwide LTE auction, overseen by the Mexican government, designed to bring high-speed, low-cost wireless services to millions of Mexicans by early 2018, has the intrigue and accusations one might expect in a John Grisham novel.

Rivada believes that the Mexican government was underhanded when it awarded the contract to Altán, Rivada’s only rival in the auction, stating in its lawsuit that Altán was provided with insider information regarding how the bid would be judged.

Although Rivada is pursuing its legal remedies in Mexico, it has filed an action in the U.S. District Court, Eastern District of Virginia, to obtain critical evidence from Deloittte Consulting, specifically the business model that it prepared for the Secretaria de Communicaciones y Transportes [SCT].

Rivada believes that it can then show the that Altán used it and they will be able to demonstrate that it was evident in their bid.

According to Rivada, the bidding process was initially set to close in July of 2016, but SCT delayed the close of bidding until November, over Rivada’s objection and to the Altán Consortuim’s benefit.

At the time, the Mexican government, according to the court filing, told Rivada that the delay came at the request of certain development banks and that the development banks would treat all bidders on equal terms. However, Rivada said, that the development banks are indirect equity participants in the consortium.

Key employees had to be guarded during the bid process
Rivada officials sensed that they were under surveillance while preparing their bid and took countermeasures in an attempt to ensure the integrity of their bid as well as the integrity of their people.

One countermeasure was the hiring of security personnel to guard key employees. In addition, bid delivery boxes plainly marked as belonging to Rivada were hijacked on the streets of Mexico City by a motorcylist three weeks before the close of bidding. The boxes were empty, something the thieves only could have learned upon opening them, Rivada said.

Eleventh hour changes tried to derail bid
Rivada said that in the final four days before the bid submission deadline, the Mexican antitrust authority barred Dish Network’s participation in Rivada’s consortium on very short notice.

And then, two days before the bid was due, BanaMex – which was to deliver a $55 million letter of credit on Rivada’s behalf, in connection with Rivada’s bid – made new and unreasonable demands on Rivada as conditions for its issuance of the required letter.

Rivada said this was the first time that BanaMex had raised the commercially unreasonable demands, even though BanaMex and Rivada had been working on the letter of credit for the previous month.

“Due to BanaMex’s new demands, Rivada was forced to submit its bid without BanaMex’s letter of credit, on October 20, 2016. Rivada subsequently submitted a new letter of credit ten days after submitting its bid. Under Mexican law, the late submission of the letter of credit did not affect Rivada’s solvency and was not sufficient grounds for disqualification of Rivada’s bid,” Rivada said in its filing.

Nevertheless, SCT took the extraordinary step of disqualifying Rivada’s bid on Nov. 4 due to the late submission. Once Rivada’s bid was disqualified, SCT selected the only remaining bid – the Altán Consortium bid – for the $7 billion Red Compartida contract.

Rivada claims SCT official tried to rig bid
In violation of its own rules, Rivada said, SCT barred Rivada from attending the room where the award was announced.

Rivada stated that it had learned that an official within SCT sought to rig the bidding process in favor of CVG, the predecessor to the Altán Consortium. That same official, they said, sought to award the contract to CVG even before SCT had decided to issue bid requests, and subsequently sought to have the contract awarded to the Altán Consortium even before the bids were received.

During a deposition by Rivada’s attorneys of two Deloitte consultants who developed the bid model for SCT, one of them said that “one of the bids was essentially a photocopy of our Deloitte work, and it was a 1 percent difference.”

In a deposition, a Deloitte consultant said: “After the meeting, I exited, and Mario had two issues. Sorry. One was he turned to me and said I want you to select CVG by the end of the month. To which I replied, and I actually remember this quite clearly, that we cannot make a multibillion dollar assessment or decision on the back of an envelope. It would be an international scandal that would not meet the President’s goals.”

Murder adds intrigue to Altán bid
Although it has no bearing on the alleged bid fixing allegations, a prominent British telecom executive and Altán consultant assisting with the bid who began his career at Deloitte, was charged with murdering a Kenyan woman in his home in Nairobi last June.

A former lawyer of Richard Alden, 52, said the woman had accidentally shot herself while taking a selfie with Alden’s gun; however, Alden denied that statement.

His trial will begin Jan. 30.

Heavy hitters on Rivada’s Board of Directors could be a liability
Based in Herndon, Va., Rivada’s board of directors include  some of the most influential people in America, but they could be viewed as liabilities in the lawsuit if the judge hearing the action might harbor a slight bias based upon strained relations between Mexico President Enrique Peña Nieto and President Donald Trump over trade with the U.S. and border fencing.

Chaired by Rivada CEO Declan Ganley, two former executives from the Department of Homeland Security, George Foresman and Admiral Jim Loy, are directors. Former Florida Governor and presidential candidate Jeb Bush is also a director.

However, for balance, former Governor of Maryland and also a 2016 presidential candidate, Martin O’Malley, is also a director and earlier this month on Twitter asserted that President-elect Trump is an evil man on par with the Nazis.