The Chinese company which the Bharrat Jagdeo administration gave the green light to for the massive expansion of the Cheddi Jagan International Airport (CJIA), Timehri has been debarred by the World Bank under its `Fraud and Corruption Sanctioning Policy’.
This stunning disclosure was made today by the Office of the Contractor General (OCG) in Jamaica which has raised serious concerns about projects that China Harbour Engineering Company (CHEC) is undertaking in Jamaica.
According to a report in today’s Jamaica Gleaner, the OCG discovered that CHEC’s parent company, China Communications Construction Company (CCCC) and, by extension, CHEC, have been blacklisted, since January 2009, by the World Bank, under the Bank’s ‘Fraud and Corruption Sanctioning Policy’.
The OCG said that under the terms of the debarment, CCCC and “any firm directly or indirectly controlled by CCCC”, have been declared ineligible to be assigned any World Bank-financed contracts that are related to “roads and bridges”, during the period January 12, 2009 to January 12, 2017.
The OCG said that CHEC is a major subsidiary of CCCC, and one of the two entities that is currently listed by CCCC as its “overseas business”. As such, the OCG declared that the debarment automatically extends to CHEC.
The Gleaner report said that the new information about CHEC’s parent company is the latest controversy in relation to the Government of Jamaica’s business dealings with the company.
In August 2009, CHEC was awarded a US$400 million contract, on a sole-source basis, by the Jamaica Government, to execute its Jamaica Development Infrastructure Programme.
The loan agreement between the China Exim Bank, which financed US$340 million of the contract sum, and the Government, was signed in February 2010. Both agreements were, executed several months after CHEC had been debarred by the World Bank.
Due diligence
The Gleaner said that in commenting on the World Bank’s debarment of CHEC, the Contractor General, Greg Christie, raised the issue as to whether the Government of Jamaica, in its due diligence exercises, if any, had identified CHEC’s debarred status and, if so, what decisions were taken by it about the matter.
“Now that it is known that the World Bank, in the judicious application of its anti-fraud and anti-corruption policies in public contracting, has had cause to sanction and to debar CCCC and CHEC from receiving World Bank financed contracts, the obvious question that now arises is whether this is something that the Government, as a matter of good, prudent and diligent business practice, intends to be guided by in the award of its own contracts that are financed from non-World Bank sources,” Christie was quoted in the report as saying.
“The OCG, in keeping with its mandates under the law, has always been of the view that Jamaica’s economic development must be pursued in a sustainable and responsible manner, and within an appropriate system of institutionalized independent checks and balances which will ensure probity, transparency, accountability and value for money in all Government commercial transactions,” he added.
Modern terminal
On November 18, 2011 CHEC announced in the Jamaica Observer newspaper that it had secured a contract for a modern terminal for the CJIA, Timehri.
The Guyana Government made no announcement of the award prior to the report in the Jamaican newspaper, which said that the agreement was signed the previous Friday. A Government Information Agency (GINA) statement, issued later that day said that Cabinet had approved a US$138M design and construction contract with CHEC. It said that construction would commence early this year and is expected to take a total of 32 months.
According to the Observer report, the construction company said that as with the infrastructural projects that it is taking on in Jamaica, the China Exim Bank will fund the construction of the modern terminal building and the extension of the runway by 1,066 metres to reach a total of 3,336 metres at the airport. The report said that China Exim is providing the US$138 million in financing.
GINA, said then that the runway extension would accommodate large transatlantic aircraft such as the Boeing 747, and in addition to the construction of a new terminal building, the project would also see acquisition of eight boarding bridges, and installation of other state of the art equipment such as elevators, escalators, and x-ray scanners using three-dimensional technology along with flight information and security monitoring systems. “Once completed, the project would ensure that the Cheddi Jagan International Airport is able to meet the needs of projected traffic for several years into the future, along with becoming a hub for regional and continental traffic,” it said.
Secrecy
Explaining the secrecy surrounding the project, government officials here had later said that a quick decision on the project had to be taken during the visit of a senior Chinese official to the Caribbean last year. Contracts such as these, where the Chinese government provides financing, usually come with a stipulation by Beijing that a Chinese company undertakes the construction. CHEC was the company chosen.
Questions have been raised here about the wisdom of the expansion and why the government has allowed Beijing to impose decisions that run afoul of the country’s procurement laws.
According to the CHEC contract, tabled in the National Assembly in March this year, the government has identified tourism as a priority in the country’s economic development plan and has recognised the improvement of the CJIA as being of paramount importance in order to promote a sustainable tourism industry.
At the moment, the document says, the existing terminal building is not capable of meeting the demands of peak traffic and neither is it capable of achieving such a feat if extended. The authorities noted that the building’s ability to generate revenue from concessions, airline office space as well as ticket counter usage, is also limited. “Expansion capabilities of the existing terminal are compromised due to the current terminal configurations,” it was noted in the contract.
As regards the two existing runways at the airport, the contract says the primary runway, considering its length and width, is limited to accommodate the range and size of aircraft types that can use the airport. Against this backdrop, the expansion project is aimed at enlarging the runway to provide greater levels of comfort and safety for the travelling public as well as to allow for emergency diversions. It is also expected to lower operating costs for cargo and passengers while state-of-the- art technology, including security screening, communications, baggage handling and other systems, is to add towards the enhancement of the port of entry.
Class 4E
Following the expansion project, the airfield will fit into Class 4E of the international standards for airports, the contract states. Works to the airfield will include the construction of a turning area for aircraft at the extended runway end, the installation of navigation facilities as well as construction of a service vehicle lane and emergency facilities, such as fire fighting systems.
The new terminal building will be divided into two parts, inclusive of a departure lounge/gates as well as an arrival concourse. The two floor structure will house space for concessions, airline back-of-counter office space, immigrations, customs, ground transportation, twenty (20) check-in counters as well as a passenger drop off zone. A Flight Information Display System, CCTV camera network, fire alarm and linkage control system will further add to the appearance of the new facility.
The commencement date of extension work s will be determined by the availability of an advance payment of 15% of the cost of the contract. Works will commence 21 days after the sum is made available to the contractor. The contractor is also expected to lodge a performance security of 10% of the cost accepted contract sum. The contract is bound by a 365 days defects notification period as payment of US$7,000 per day for delay damages for the works.
The CJIA corporation recently upgraded the navigation systems at Timehri, which included the installation of a new Instrument Landing System (ILS) landing aid which was built by Canadian engineering company IntelCan as part of a $700M upgrade. The equipment will have to shifted from its present position at the end of the existing runway, a source noted, and may require additional testing, as well as financing, when the time arrives.
Abaco
Since setting up shop in Jamaica in 2010, the Cheddi Jagan expansion is CHEC’s fourth project in the region. In October 2012 CHEC announced that it had signed a US$40 million agreement with The Bahamas to construct the Abaco Port and build a bridge that will link Little Abaco and North Abaco Islands. And also in October, it announced that it will begin construction of a cruise berthing facility in George Town, Cayman Islands.
Critics of the Bahamas development said that CHEC is executing the project in the Bahamas without the use of local workers. Critics also knocked the Bahamian government for allowing such a situation saying that the unemployment rates in the Bahamas are some of the highest in the region.
Similarly, critics of the proposed cruise ship port facility development in the Cayman Islands have critics in a state of unease. They feel that the 50-year life of the US$300 million project will cost the taxpayers of the Cayman Islands too much and that the nation’s treasury stands to lose about US$500 million.
