Attorney General files claims of $186M over performance bonds

Attorney General Anil Nandlall’s office today announced that he has filed three actions seeking a total of $186M on performance bonds for three projects including a section of the Amaila Falls Access Road.

The actions were filed against Citizens Bank Guyana, Caricom General Insurance Company Inc and North American Fire and General Insurance Inc.

The three actions appear to be a shift in policy by the government which has not often enforced performance bond options. The opposition and other critics have harried the government over this. The quality of the work on the Skeldon Sugar Factory has led to critics saying that GuySuCo and the government should have moved to claw back monies for substandard work from the contractor.

The Attorney General’s press release follows:

On 7th May, 2014, the Attorney General and Minister filed three actions on behalf of the State claiming a total of $186,132,052 (one hundred and eighty six million, one hundred and thirty two thousand and fifty two

dollars) against three financial institutions, *viz*, Citizens Bank Guyana Inc., Caricom General Insurance Company Inc., and North American Fire and General Insurance Company, seeking to enforce Performance Bond Guarantees and Advanced Performance Guarantees put up by these companies in respect of different infrastructural contracts.

 

The Bonds and Guarantees were put up by these companies to assure and guarantee the performance of contractors under various contracts and the Government contends that these contractors have failed to discharge their contractual obligations. In these cases, the Government is seeking to “cash in” these Bonds and Guarantees.

 

On 18th August, 2005, Citizens Bank Guyana executed a Performance Bond/Guarantee in favour of the Government of Guyana at the request of Golden Star Contracting Services Company Ltd. pursuant to a contract between the Government and the said company for the Rehabilitation of Access Road to Parika Stelling. On the 11th January, 2008, the Government terminated the said contract owing to the Company’s repeated failures to correct defects within the time frame specified by the engineer. On 23rd April, 2008, the Ministry of Public Works and Communications in

Accordance with the terms and conditions of the contract wrote to Citizens Bank making a first demand on the Performance Bond in the amount of G$38,391,018 (thirty eight million, three hundred and ninety one thousand and eighteen dollars). Despite the aforesaid claim, Citizens Bank has to date failed, refused and neglected to effect payment of the said sum.

 

On 19th September, 2011, Caricom General Insurance Company Inc. executed Performance Bond and Advance Guarantee in favour of the Government of

Guyana at the request of Maurice Balgobin pursuant to a contract between

Maurice Balgobin and the Government for the Rehabilitation and

Re-construction of Kaburi Village Road Region No. 7. On the 24th September, 2012, the Government terminated the said contract owing to the fact that the Contractor failed to substantially complete the works even after an extension of 260 days was granted. On 6th December, 2012, the Ministry of Public Works and Communications in accordance with the terms and conditions of the contract wrote to Caricom General Insurance making a first demand on the Performance Bond and Advance Guarantee in the amount of G$4,986,375 (four million, nine hundred and eighty six thousand, three hundred and seventy five dollars), and G$1,892,009 (one million, eight hundred and ninety two thousand and nine dollars). Despite the aforesaid claim, Caricom General Insurance Company Inc. has to date failed, refused and neglected to effect payment of the said sum.

 

On 7th May, 2012, North American Fire and General Insurance Company executed Performance Bonds in favour of the Government of Guyana at the request of Bovell Construction Services pursuant to a contract between Bovell Construction Services and the Government for the Amaila Falls Road and Transmission Line Clearing Project Section Six (6) Issano Junction to Kuribong River. On the 27th December, 2012, the Government terminated the said contract owing to the fact that the Contractor removed equipment from the site which resulted in a stoppage of work constituting a fundamental breach of contract in accordance with the general conditions of the contracts. On 4th January, 2013, the Ministry of Public Works and

Communications in accordance with the terms and conditions of the contract wrote to North America Fire and General Insurance Co. Ltd. making a first demand on the Performance Bonds in the amounts of G$56,345,060 (fifty six million, three hundred and forty five thousand and sixty dollars), and G$84,517,590 (eighty four million, five hundred and seventeen thousand, five hundred and ninety dollars). Despite the aforesaid claim, North America Fire and General Insurance Co. Ltd. has to date failed, refused and neglected to effect payment of the said sum.

The actions were filed in the Commercial Division of the High Court and are set to be heard on 18th June, 2014.

 

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