In a major embarrassment, the Donald Ramotar administration yesterday announced that the contract for the controversial US$18M Specialty Hospital at Liliendaal would be terminated and it will initiate legal action against Indian contracting firm Surendra Engineering Company Limited (SECL) for fraud and to recover public funds.
Stabroek News understands that government has already paid over more than $750M to the company for mobilisation works and it was not until a complaint was made by a local contractor that it began investigating the company.
Since the announcement of the award of the contract to SECL, it has been under scrutiny.
In a statement released yesterday, the government said it wrote to SECL informing of its intention to terminate the contract for the design and construction of the hospital, to pursue legal action against the company for fraud, and to recover public funds from SECL for which it has failed to account fully.
It revealed that since late June of this year, it has been engaging the company on a number of issues relating to allegations of fraud and financial irregularities.
“Initially, the Government’s concerns related to delayed milestones and inadequate accountability by SECL for public funds the company had received on signing the contract with the Ministry of Health,” it said.
“Subsequently, the Government of Guyana discovered that SECL’s representative in Guyana had submitted a fraudulent document purporting to emanate from the Central Bank of Trinidad and Tobago,” it added, while noting that the Central Bank of Trinidad and Tobago had since confirmed the fraud.
As a result, it took to the decision to give the company notice of its intention to terminate the contract and pursue legal action.
Earlier this year, Alliance for Change Leader Khemraj Ramjattan had said that the Exim Bank of India had halted funding for the hospital amid claims of corruption by Indian parliamentarian Kirti Azad. Indian officials were also investigating allegations that SECL had submitted false security bid bonds, claiming same to be from an Indian Bank. That investigation is not yet complete.
Haphazard due diligence
“The due diligence was haphazardly done when this contract was being evaluated by the procuring entity,” an official of the National Procurement and Tender Administration Board said yesterday.
The official said that if the claim that the company submitted false security bonds is found to be true, then the Government of Guyana stands to lose further. “They will not receive one cent because there is nothing there to begin with… you can’t seize what is not there,” the official noted.
Another Indian firm, Fedders Lloyd, had complained about the tendering process for the award of the contract to SECL. It charged that Surendra was awarded the contract because of favouritism and its links to the current ruling administration. It had written to the Ministry of Health outlining its concerns but government defended the award.
The company has said that it had also lodged reports with India’s Exim Bank and the country’s External Affairs Ministry on the contentious award and would be pursuing the matter until the contract was retendered.
When contacted by Stabroek News last evening, an executive of Fedders Lloyd said he was not surprised at the decision to now terminate the contract. “The new government in India had this contract, like many, under scrutiny for corruption, so it was only a matter of time before the truth be revealed,” the official said.
Questioned if Fedders Lloyd would still be interested in the execution of the contract, the official said yes, while noting that it had indicated that with its experienced engineering partner Nous it could deliver a state-of-the-art hospital to Guyanese. “We are still interested because we are confident that we can deliver to international specifications… we don’t know what will happen with the contract now if it will be retendered or what but we wait,” he said.
During last year’s consideration of the budget estimates, a proposed $1.25B allocation for the project was cut by the opposition. Main opposition APNU had pointed to the government’s lack of dialogue on the opposition’s concern that the formulation of the deal was not transparent, while the AFC had raised objections and pointed out that SECL was responsible for the problem-plagued Enmore Sugar Packag-ing Plant and had never even built a hospital.
However, in December last year, some $34.4M was approved for the project due to the absence of APNU MP Volda Lawrence on a crucial vote.
This year again the hospital’s $910M construction budget allocation was cut. The funding was lumped with other allocations for other projects under the budget line item ‘Regional and Clinical Services.’
However, recently local construction company BK International announced that it would seek to sue Surendra in Indian courts for some outstanding $180,100,242 for work done at the project site in May, June and July of this year.
Three invoices, dated May 12, June 4, and July 1, were dispatched to Managing Director of Surendra Engineering Corporation Limited here, Brijen Parikh, BK said, and certified by the engineer on site. However, BK said that Parikh indicated that BK International Inc. could not be paid as a result of the opposition’s disapproval of the 2014 budget allocation to the project.
Earlier this year, when it had seemed that the works on the Specialty Hospital site had gone beyond the $34.4M voted last year, Stabroek News had asked the Head of the Presidential Secretariat Dr Roger Luncheon about this and he had said that the work was being done from “out of pocket monies” by the contractor. “Everything they have to subscribe to with their own money…. All of the people who are currently not being paid for works being done and continuing to work have a reasonable expectation to be paid and we will honour that obligation,” Luncheon had said.
Early in 2012, the Ramotar administration also had to cancel another embarrassing contract – the one to Fip Motilall for the Amaila Falls hydropower project road.
