Ericsson appeals to Costa Rican courts over contract debacle

7 Oct 2004

Swedish equipment manufacturer Ericsson has asked Costa Rica’s Constitutional Court to overturn a decision by the comptroller’s office to void a USD130 million contract with the national telecoms monopoly ICE. The watchdog initially annulled the agreement on 24 September, due to what it termed ‘inconsistencies’ in the tender process. The tender for 600,000 GSM lines was originally announced in early 2003, but was delayed by constant budget cuts by the government – and the resultant workforce strikes. It was not until December that Ericsson was contracted to supply and install the equipment in a USD130 million deal. However, once again, the process was dogged by delays and the deal was contested by failed rival bidders Motorola and Alcatel, which claimed the tender was not transparent.

Ericsson was due to begin building out the lines in July, but it was at that point that the comptroller took the contract under review. Ericsson was also chastised by the regulator for shipping USD45 million worth of network equipment whilst the deal was still under review. ICE is now reported to be planning to seek new arrangements for the lines and is taking legal steps to bar Ericsson from future government business. However, Ericsson has stridently denied any wrongdoing, saying it ‘vehemently’ condemns corruption and is known globally for its ‘business ethics and rectitude’.

Costa Rica, Sweden, Ericsson, Grupo ICE, Grupo ICE (Kolbi)