The Government on October 15th sued Cari-com General Insurance Company for almost $15M in relation to a performance bond and an advance payment guarantee.
A statement from the Attorney General’s Cham-bers yesterday said that the bond and guarantee had been put up by Caricom General Insurance at the request of Deokie Construction Services in favour of the Guyana Government in pursuance of the contract with the government for the construction of part of the synthetic track and field facility at Leonora. The government terminated the contract with Deokie Construction in August 11 leading to the demand for payment of the bond and guarantee. The statement said that Caricom General Insurance has refused to effect payment.
The statement said that Attorney General Anil Nandlall filed the lawsuit on government’s behalf and the matter has been fixed for hearing on December 3.
In a press release yesterday Nandlall said that the contract with Deokie Construction pertained to Phase 3 – Lot 1- Construction of Club House/Pavilion, Leonora, Region No.3.
According to the release on the 15th and 28th of January, 2014, Caricom General Insurance Com-pany Inc., executed the Performance Bond/Gua-rantee and an Advance Payment Guarantee in favour of the Government. The purpose of the Performance Bond it was explained, was to guarantee satisfactory completion of the project by the Contractor, failing which, the Government (the beneficiary of the Bond) is guaranteed compensation for any monetary loss up to the amount specified in the Bonds.
“Upon execution of the Performance Bond and Advance Payment Guaran-tee, Caricom General Insurance Company Inc. agreed and irrevocably undertook to pay to the Government, any sum not exceeding the amounts stated in the Bonds, upon receipt by them of the Government’s first demand in writing accompanied by a written statement stating that the Contractor is in breach of its obligations under the contract, without the Government needing to prove and show grounds for the demand of the Bond”, the release said.
It went on to state that on the 11th August, 2014, the Government terminated the said contract owing to the company’s “failure to discharge its contractual obligations”. As such in accordance with the terms of the Bonds, on 25th September, 2014, the Permanent Secretary of the Ministry of Culture, Youth and Sport wrote to Caricom General Insur-ance Company Inc. informing the company that the Contractor was in breach of the contract and that the contract had consequently been terminated.
The company was also told that a first demand for the payment of the Perfor-mance Guarantee in the amount of six million, two hundred and twenty thousand, seven hundred and twenty one Guyana dollars ($6,220,721), and the Advance Payment Guara-ntee in the amount of eight million, seven hundred and nine thousand and nine dollars ($8,709,009) was being made.
“Despite the aforementioned claims, Caricom General Insurance Com-pany Inc., has to date failed, refused and neglected to effect payment of the said sum”, hence the resort to the court.
According to the press release the Writ of Summons and Statement of Claim was filed in the Commercial Division of the High Court.
In the documents the Attorney General is claiming the sums of eight million, seven hundred and nine thousand and nine dollars ($8,709,009), and six million, two hundred and twenty thousand, seven hundred and twenty one Guyana dollars ($6,220,721).
Additionally an interest at the rate of 6% per annum from the date of filing to the date of judgment and at the rate of 4% until fully paid and other costs are also being sought.
In the past, the government had been accused of not enforcing performance bonds. Caricom General Insurance was also one of the companies that the government had had a close relationship with.
