Jamaica Contractor General to probe US$400M contract to Chinese company

(Jamaica Observer)  Ministry of Transport and Works yesterday welcomed Contractor General Greg Christie’s announcement that he intended to launch a special investigation into the circumstances surrounding the US$400-million contract to China Harbour Engineering Company (CHEC) Limited for the Jamaica Development Infrastructure Programme (JDIP).

The Office of the Contractor General (OCG), in a statement to the media yesterday, said it had taken the decision to conduct the probe following the failure of Permanent Secretary Dr Alwin Hales to substantiate a statement by Minister of Transport and Works Mike Henry that “…that the US$340-million loan being used to fund the (JDIP) project came from the China Ex-Im Bank with a pre-condition for a Chinese firm of their choice to undertake the programme”.

The OCG said the minister’s statement was made on June 27, 2011 after the contractor general issued a press release in which he outlined several concerns regarding the JDIP.

According to the OCG, it has had concerns from the outset that the JDIP, which represents the first major road works rehabilitation contract of that value and magnitude, had been awarded by the Government of Jamaica to a single contracting entity, CHEC, without competition.

The OCG said following Henry’s statement it wrote to Dr Hales, asking him to provide, among other things, documented proof of the minister’s assertions, as Henry had said that it was the China Ex-Im Bank that had imposed the selection of CHEC upon the Jamaican Government.

“The OCG’s concerns in the matter were heightened further, particularly since a careful perusal by the OCG of the contractual and financing documentation, which the ministry had previously submitted to it, had failed to substantiate the minister’s claims,” Christie said yesterday.

The OCG said the failure by Permanent Secretary Hales to provide documents to substantiate Henry’s claim about the need to select a Chinese contractor prompted the latest investigation.

“The commencement of the OCG’s investigation will enable it to invoke its special powers under the Contractor General’s Act as a judge of the Supreme Court of Jamaica to secure the information which it will now require to clarify the true circumstances surrounding the award of the JDIP contract to CHEC. Sworn statements, given under oath, will be solicited by the OCG from several persons, including Minister Henry and other senior public officials,” Christie said yesterday.

Firing back, Dr Hales in a statement issued to the media following Christie’s announcement, insisted that “the question from the OCG was correctly and appropriately answered”.

“But the expectation that the answer would have substantiated the statement attributed to the Honourable Minister in the media was an assumption by the OCG. It is to be appreciated that the Honourable Minster never stated that there was a clause in the JDIP loan agreement requiring that CHEC be engaged as the contractor,” Hales said.

He said the minister’s statement “was based on advice given to him about the process, and references drawn from the sequence of events leading up to the conclusion of the loan agreement”.

Said the permanent secretary: “In the whole process it was made clear to the Ministry of Transport and Works that the application for the Preferential Buyer’s Credit Facility for the project must be accompanied by the commercial contract between the GOJ (Government of Jamaica) and the Chinese contractor. The application was transmitted by the Ministry of Foreign Affairs and Foreign Trade to the Chinese Government, via letter dated August 20, 2009,” Hales said further.

He added that the “fact that the commercial contract had to be executed prior to the submission of the application to the Export-Import Bank of China for the Preferential Buyer’s Credit Facility meant that it would be of no value to include a clause in the loan agreement requiring the engagement of CHEC”.

“Indeed, had I been asked by the OCG to substantiate the Honourable Minister’s statement, instead of being asked to point to a specific provision or clause requiring the engagement of CHEC, the matter would have been put into the appropriate context, including notation of the advice and information given to the Honourable Minister that would have led him to make the statement that he did,” the permanent secretary said.



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