…the story of Dipcon Engineering Services

THE Trinidad construction firm, Dipcon Engineering Services, which is now embroiled in a court case and faces a $527M tax liability, has a long history of delayed and bungled projects in Guyana that have cost taxpayers millions and set back the country’s development.

Even the original 2003 Rosignol-Mahaica Road Rehabilitation Project, which is the centre of the US$2M judgement, was extensively delayed. Back in November 2003, then Minister of Transport and Hydraulics, Anthony Xavier, declared that he was not satisfied that the Trinidadian company had only completed 10% of the work as opposed to the 30% which should have been done by that stage. That project was greatly delayed and had huge cost overruns.

East Coast works “abandoned”
This same pattern of delays continued with a US$5.9M contract awarded to Dipcon for a section of the East Coast road that was awarded to Dipcon in 2011 even as it was before the courts demanding payment for the Rosignol-Mahaica project. By 2015, the Auditor-General, in reporting on Dipcon’s section – Lot 5- Triumph to Mon Repos “At the time of the physical verification, the works were incomplete. The contractor was not on site and the works appear to have been abandoned.” The AG stated: Findings: a) The contract completion date expired on 17th June, 2015, and at the time of our physical verification on 18 September, 2015, the works are incomplete and the site appears to have been abandoned. No equipment or personnel from the contractor were on site. b) The advance payment was not fully recovered at the time of the physical verification; however, the Advance Payment Bond is in force and remains valid until 12 December, 2015; and c) The Performance Bond no longer provides the required period of coverage for the works. This Bond will expire in December 2015.” The Ministry responded: The Head of Budget Agency explained that action will be taken to terminate the contract since the contractor has abandoned the site. In addition, the Insurance and Performance Bonds will be levied on to recover the outstanding advance payment. An advance payment of $98.677M was issued to the contractor. A total sum of $64.121M has been recovered, leaving an outstanding balance of $34.556M. Action will be taken as outlined above.”

In the end, China Railway First Group Limited was tasked with completing the entire stretch from Better Hope to Belfield. The agreement was signed on November 23, 2016 and the project is close to completion.

East Bank Frustrations
Over on the East Bank, frustrations abound over the delays to Dipcon’s section of the road expansion project with commuters fuming in endless traffic jams. The project, which began in November 2011, was expected to take 18 months to complete at a cost of US$22M. But a report by the Auditor-General noted that Dipcon was subsequently granted three extensions on their Providence to Covent Garden US$8M section: from April 30th, 2013 to October 31st, 2013, then to June 28th, 2014, and then to December 28, 2014. The OAG report said that at August 2014, only 42% of the project had been completed. In the end, the Dipcon contract was terminated and transferred to Gaico Construction and BK International. Meanwhile, former Auditor-General Anand Goolsarran had estimated that G$500 million was lost in respect of the East Coast Demerara and East Bank Demerara Road projects because performance bonds had expired.

Hope(less) Bridge
Finally, the Hope Bridge, which Dipcon was awarded with a bid of $349M, started in August 2011. Again, there were two extensions, making the completion date nine months late. It was opened with much fanfare by the then President, Donald Ramotar, but within a few months, both the east and west approaches started sinking. This caused depressions at either end of the structure which meant commuters had to slow down causing extensive delays. This is one of numerous shoddy infrastructure projects constructed under the PPP/C administration that the present coalition government has been forced to rectify at great expense to the taxpayers.

DIPCON is currently pursuing Minister of Finance, Winston Jordan, for US$2.2M owed by the State, but the company is in fact over US$2.5M in arrears in taxes to the Guyana Revenue Authority (GRA) and has been asked to “immediately” pay up. Recently, a Letter of Garnishment from GRA Commissioner- General, Godfrey Statia, was sent to Finance Secretary at the Ministry of Finance, Michael Joseph and Dipcon, disclosing the outstanding sum of G$527,846,657.

The letter, sent out by Statia indicated that the request for DIPCON to pay up its sum due is in keeping with Section 102 (1) of the Income Tax Act, Chapter 81:01. Section 102 (1) states: “When the Commissioner-General has knowledge or suspects that a person is or is about to become indebted or liable to make any payment to a person liable to make a payment of tax under this Act, he may, by registered letter or by letter served personally, require such first-mentioned person to pay the moneys otherwise payable to such second-mentioned person in whole or in part to him on account of the liability of the second mentioned person under this Act.”

Meanwhile, the Act states that the receipt of the Commissioner-General for moneys paid as required under the Act shall, to the extent of the payment, be “a good and sufficient discharge of the original liability”. This goes for both the person who pays such moneys to the Commissioner-General to the person liable to make a payment under the Act and the person liable to make a payment of tax under the Act to the Commissioner-General.
Indicating that it is through this guidance that the GRA invokes its powers to garnish the sum, Statia stated: “Therefore, with immediate effect, you are required to pay over to the Revenue Authority the sum of $527,846,657 GYD due to the State by the Company. Please note that under Section 102 (2), the Revenue Authority will issue a receipt for the sum collected.”

The GRA Head also reminded that according to the Income Tax Act, every person who has discharged any liability to a person liable to make payment of tax under the Act without complying with requirements under the section shall be liable to pay the Commissioner-General, as a debt due to the State, an amount equal to the liability discharged. Otherwise, the Act stated that the person in question could also have to pay the amount which he was required under the Section of the Act to pay to the Commissioner-General, whichever is the less.