The Guyana government on Wednesday defended the Chinese firm selected to construct the Amaila Falls hydropower scheme saying it is misleading to draw a comparison with its parent company which has been blacklisted by a Norwegian ethics council after being involved in corruption.
“The Government of Guyana follows high standards and will continue to defend against baseless attacks that try to derail Guyana’s development,” the government said in a statement.
“The Amaila Falls Hydropower Project (AFHP) has best in class international standards and is being developed according to the highest standards, and it will deliver transformative social and economic benefits for the people and economy of Guyana,” the statement said while adding that government remains fully committed to realizing these benefits.
Yesterday, Stabroek News reported that Norway’s Council on Ethics (CE) has recommended that China Railway Group (CRG) which is the parent company of China Railways First Group (CRFG) be excluded from the Scandinavian country’s sovereign fund “due to the unacceptable risk of the company being responsible for gross corruption.” CRFG is involved in several major multi-billion projects here and was selected to construct the Amaila Falls hydropower station as well as a section of the access road to the Falls. It was also awarded the multi-billion dollar East Coast road project.
The Guyana Human Rights Association (GHRA) has recommended another round of consultation together with serious due diligence investigations of contracted companies for the AFPH. “While the China Railways First Group is not the company directly referred to in the CE Report, the extensive inter-changing of Directors and CEOs between parent and wholly-owned subsidiary companies…has to be a matter of concern to Guyanese authorities and citizens,” the human rights body said in a statement.
On Wednesday, government accused the GHRA of seeking to attack the progress being made in the AFHP and drawing incorrect and misleading implications of the CE’s recommendation. Calling the GHRA an “opposition-aligned” NGO, the government said that the GHRA’s allegation is largely based on a corruption case in China that involves state-owned China Railway Engineering Corporation (CREC) which is the parent company of CRG which is in turn, the parent company of CRFG.
The government said that CREC is one of the world’s largest firms and has hundreds of subsidiary firms under its umbrella. “Therefore, it’s very misleading and nonsensical to draw such a comparison with the partner company of the Amaila Falls Project,” the government said.
Norway’s CE report had focused specifically on CRG. According to the CE’s report, a limited number of companies, including CRG, were examined in detail based on specific accusations of corruption. It noted that CRG has 46 subsidiaries.
“According to information obtained by the Council on Ethics, including information relating to legal rulings and internal disciplinary processes in the Communist Party published in the Chinese press, it is highly likely that CRG has been involved in gross corruption. CRG and one of its subsidiaries have apparently bribed civil servants to secure contracts to build railways and housing projects. This is reflected in two Chinese legal rulings relating to the recipients of the bribes. In addition, the parent company has apparently bribed China’s former railway minister in order to secure major contracts for CRG. In June 2013, the railway minister was convicted in China of taking bribes to award contracts to individual companies for a number of years. The Council on Ethics assumes that CRG knew about its parent company’s bribes. This assumption is substantiated by, among other things, the close ties between the parent company and CRG. Reports in the Chinese press also refer to the parent company being one of the companies that have been investigated and sanctioned internally by the Communist Party for having paid bribes,” the CE report said.
“The company’s management is to a large extent the same now as when the acts of corruption took place. Numerous members of the board and group management have held management positions in CRG since 2007 and several of them also held senior management positions in the parent company at the time when the acts of corruption apparently took place,” the report said. “Based on the information available, the Council finds it highly likely that CRG has been involved in gross corruption and that the company does not meet national or international standards regarding compliance and anti-corruption,” the report had said.
However, according to government, the AFHP, by virtue of being developed under the governance of the Inter-American Development Bank (IDB) will adhere to the IDB’s strict and internationally recognized standards. “As a member of the IDB, the Government of Norway endorses IDB’s policies including its financial and fiduciary safeguards,” the statement said.
It asserted that the integrity concerns raised by the GHRA are based on allegations made for projects taking place in China. The safeguard policies for these projects are very different from the strict IDB safeguard policies followed in the Amaila Falls Project, government said.
In 2012, CRFG signed a contract with Sithe Global of the Blackstone Group for construction of the Amaila Falls hydro-station and related transmission lines in a contract worth US$506 million. The company was also awarded an US$8.5M contract for the construction of a difficult section of the Amaila Falls access road. In 2014, CRFG, was awarded the G$8.7 billion East Coast road expansion project.
Last June, Stabroek News had also reported that government holding company, the National Industrial and Commercial Investments Limited (NICIL) had confirmed that land had been gifted to CRFG at Liliendaal, as part of a deal for a fixed contract price for the Amaila Falls Hydropower Station and construction of a crucial section of the access road. In a statement, NICIL disclosed the transfer, “by way of Deed of Gift, from government of two lots of land, one acre at Liliendaal…and 7.5 acres at Friendship.”
