GOVERNMENT is moving towards legal recourse following the termination of the contract with Surendra Engineering Company Limited (SECL) for the design and construction of the Specialty Hospital.

Attorney-General and Minister of Legal Affairs, Mr. Anil Nandlall told a news conference yesterday that the contractor, SECL, has “failed abysmally” and as such the Government has decided to take remedial actions.

“Both at the level of technical deficiencies as well as at the level of failing to provide fundamental requirements of the contract, this contractor has abysmally failed. Therefore the Government of Guyana has decided to take remedial actions,” Nandlall told reporters.

The Government of Guyana on Tuesday announced its intention to move against SECL’s after citing what it termed “deep concerns” over the execution of the contract, both as it relates to technical shortcomings and suspicion of fraud.

According to Nandlall, the course of actions to be taken will include: termination of the contract; engaging the police and requesting an investigation into the alleged fraud; and pursuing civil litigation against the company for compensation, damages and breach of contract.

He also said if there is a move to litigation, which will be done in Guyana, it is possible that enforcement will have to take place in India, but assured that the process is not expected to be an expensive process.
“Efforts were made to rectify certain technical deficiencies, but those efforts proved futile. On the other hand part of the contract requirement was the provision of certain securities that would have guaranteed certain performance…the documents, when they were examined, did not withstand scrutiny,” the AG said.
CONFIRMED FRAUD
The Government of Guyana, since June this year, had been engaging SECL on a number of issues regarding allegations of fraud and financial irregularities.
Initially, the Government’s concerns related to delayed milestones and inadequate accountability by SECL for public funds the company had received on signing the contract with the Ministry of Health.
Subsequently, the Government of Guyana discovered that SECL’s representative in Guyana had submitted a fraudulent document purporting to emanate from the Central Bank of Trinidad and Tobago.
The fraudulent Act by SECL has since been confirmed by the Central Bank of Trinidad and Tobago. “Contact was made with the Central Bank of Trinidad and Tobago, which confirmed, first by telephone and then in writing that the document produced did not come from Trinidad and Tobago,” the AG said.
Nandlall said, too, that the Trinidad and Tobago Central Bank has launched an investigation and the Government of Guyana is assisting in any way it can.
“I know that the Central Bank has activated a process to investigate how their procedures could have been misused, manipulated and penetrated in this manner,” the Guyanese Attorney General said.
“We have promised the people of this country and we engaged a process to have that achieved. We were working with the Indian Exim Bank and to some extent the Government of India. That process produced a procurement exercise and from that exercise this contractor was selected. From the inception, Indian Exim Bank, as part of its conditionalities, shortlisted a number of contractors who were required to submit bids…that process produced Surendra Engineering Company Limited as the most suitable contractor for this job,” Nandlall told reporters.
He added that the Government of Guyana was fortunate to have been able to act in a timely manner to address this issue.
TIMELINE
SECL’s contract for the design and construction of the Specialty Hospital began in September 2012, having bid US$18.1M.

As per the normal procurement process, a five per cent security had to have been deposited.
The Attorney-General explained that this was done via a security guarantee by CARICOM Insurance. “It is in lieu of cash that bonds and documents of that security nature are accepted. This is a standard way of satisfying contractual obligations. This was done, first by CARICOM Insurance,” the AG said.
In March this year, CARICOM Insurance withdrew its guarantee of the project, following expressed concerns over financial irregularities, at which time no additional monies were released to the contractor.
“At this time another source (a guarantor) was sought…when CARICOM withdrew, we withheld payment. We were not paying, until you have another person to guarantee us your performance, as well as the monies we’re going to pay to you,” Nandlall said.
As a result, SECL moved to secure another guarantor, at which time the contractor submitted fraudulent documents.
Both prior to and after the submission of these fraudulent documents, no payments were made to the contractor; although monies were requested for work done.
SECL stopped work in June 2014.
“On various grounds and for various reasons this contractor is no longer deemed suitable to continue with this contract,” Nandlall said.
The Attorney-General pointed out that prior to the March 2014 expiration of the guarantee by CARICOM Insurance, a total of US$4.2M was paid to the contractor, US$3.36M of which was a mobilisation advance – in total 23.5 per cent of the entire contract sum.
Reports indicated that to date, the structural designs for the project have been completed, while the architectural designs are currently being reviewed. Physical progress has been seen on the essential site preparation which is some 75 per cent completed. On the building foundations 361 piles have been supplied and 235 piles have been driven.
Nandlall stressed that, in all fairness, the monies paid over must be measured against the significant portion of work that was completed. “Very shortly we will have to go on the ground and measure how much we have lost, if we have lost…having regard to the amount of work that was done,” he said.
Additionally, a 12-month contract was been inked with consultant, VIKAB Engineering Consultants Limited, which was the company working with a local evaluation team that uncovered the irregularities and contract violations that forced the termination of the SECL engagement on the Specialty Hospital.
NEXT STEP

The Indian Exim Bank, which extended a line of credit that contributed significantly to the realisation of the project, the Government of Indian and other development partners have been apprised of the situation and are expected to be engaged on the way forward.

The Attorney-General said, “The Indian High Commission and the Indian Ministry of External Affairs are both involved in this process. We have been informing them of the developments as they unfold.”

He noted that the Government will be unable to unilaterally determine on the way forward.

“The better course would be to have a consultative process to arrive at a common course forward. It would be premature to speculate on what such a procedure is…it is a multiparty process that involves other persons whose input would be requisite in determining the way forward,” Nandlall said.

WILL DELIVER

Meanwhile, Health Minister, Dr. Bheri Ramsaran was emphatic is stressing the commitment of the Government of Guyana and, by extension, his Ministry to deliver on the promise of a Specialty Hospital.
“Even as we take action to terminate the current contract, the Ministry of Health assures that it will explore ways and means to deliver on the promise of the Specialty Hospital. The details of this will evolve,” he said.
The Minster stressed the Ministry is focused on value for money. “

According to Dr. Ramsaran, the decision to terminate the contract with SECL was made after lengthy consultation and investigation into several discrepancies on the part of the contractor.
“After having for some protracted time, a review of the situation on the status of the Specialty Hospital and more particularly the situation with the contractors, we have decided to terminate the contract and to do certain other things,” Dr. Ramsaran said.
The Health Minister noted that the Government of Guyana will be taking legal recourse to recover any damage or outstanding obligations that the contractor have, as per contract.
At the same time, the Health Minister reassured that the administration will be taking every action to ensure a specialty hospital is constructed.
“Even as we take these steps to terminate this contact we continue to explore ways and means to ensure that the commitment to Guyanese is fulfilled sooner rather than later,” Minister Ramsaran said.

(By Vanessa Narine)