Govt. takes over responsibility for Chinese defects in CJIA
…this is dÉjà vu, this is Skeldon II – Ramon Gaskin
“…we will take the responsibility to pay for any defective work, even if the lifts do not work, the roof collapses or each half-a-million toilet does not flush!”
Not only has the Guyana Government agreed to pay half a million dollars for a toilet in the new Cheddi Jagan International Airport (CJIA), it has also amended the international best practice standards, to take on responsibility for any defects in the works being done by the Chinese Contractor.
The Guyana Government and China Harbor Engineering Corporation (CHEC) signed the US$150M contract, a day before the hosting of the General Elections in 2011, but not before amending the international standards.
According to the international standards, “the contractor shall give all notices, pay all taxes, duties and fees, and obtain all permits, licences and approvals, as required by the Laws in relation to the design, execution and completion of the works and the remedying of any defects and the Contractor shall indemnify and hold the Employer harmless against and from the consequences of any failure to do.”
Ramon Gaskin
Financial Analyst, Ramon Gaskin, in his perusal of the contract document, has since pointed out that this clause/condition was amended dramatically and incomprehensibly.
The Guyana government agreed that the word “Contractor” be changed to “Employer” (i.e. government) and conversely where the word employer appears, it is replaced by contractor.
According to Gaskin, the effect of this amendment is to transfer from the contractor to the government, the responsibilities, which the international best practice standard, imposes on the contractor.
Under the contract inked with the Chinese Contractor, even where notices and expenses are incurred in remedying defects caused by the contractors, the government is required, by contract to deal with this.
“This is not only unbelievable but reckless, irresponsible and insane…It is elementary and logical that any contractor is responsible for remedying defective work done by him.”
Gaskin in summarizing the amendment made said that, “we will take the responsibility to pay for any defective work, even if the lifts do not work, the roof collapses or each half-a-million toilet does not flush!”
According to Gaskin, “This is dÉjà vu…This is Skeldon II.”
Gaskin said that not only is the government required to do what normally the contractor must do, but by upturning logic, the government indemnifies (protect against damage, loss) the contractor and protects him from the consequences of failing to do what he was supposed to do in the first place.
Another aspect of the contract which had drawn criticism from Gaskin, is the performance security bond to be lodged by the Chinese Contractor.
The bond serves as a guarantee if the contractor fails to fulfill all the terms of a specified contract.
Gaskin firstly said that the Chinese contractor gave a bond equivalent to mere 10 per cent of the contract price and is lodged with Chinese Bank.
According to Gaskin, “this is Fip Motilall’s/NICIL’s/Hand-in-Hand’s Amaila Road project all over again.”
He said that it would be interesting to contemplate how the government will enforce a claim in China against a Chinese contractor through a Chinese bank.
To compound the situation further, Gaskin points out that “we cannot even pursue our sovereign interest in our sovereign country.”
Under the Contract, Government has agreed that any arbitration will take place in England under English Rules of Arbitration.
“The similarities between this contract and Skeldon are too dangerous and too obvious to ignore,” said Gaskin.