Minister in the Office of the Attorney General and Legal Affairs, Stuart Young, yesterday called on the Integrity Commission to investigate the Solomon Hochoy Highway to Point Fortin project, which he described as a “travesty.”
Young said the Government was also exploring all legal options regarding the highway’s main contractor Construtora OAS, since the project was now estimated to cost taxpayers in excess of $8 billion.
The disclosure was made by Young in the House of Representatives as he outlined the status of the four-year project.
Young said on March 4, 2011, the former People’s Partnership government, through the National Infrastructure Development Company (NIDCO), awarded a design-build contract to OAS for $5.2 billion, which was $1.6 billion more than the engineer’s estimate.
He said although the contract was governed by the International Federation of Consulting Engineers (FIDIC) yellow book, the PP changed the standard and accepted advanced payment terms from 10 to 20 per cent.
“This upward amendment resulted in OAS receiving approximately TT$856 million, as opposed to $428 million as an advance,” he said.
“Another major issue at inception was that all payments made to OAS for activities under the Letter of Intent, which totalled TT$236 million, should have been deducted from the advance payment. However, these sums were not deducted. So even before construction began, the former government provided OAS with over TT$1 billion of taxpayers’ funds.”
The project should have been completed in March 2015 with a four-lane highway and full grade separated interchanges.
Young also said rather than utilising low interest rate funding for this project from a multilateral lending agency, such as the International Development Bank (IDB), the PP paid OAS, and others, via cash transfers from the Ministry of Finance up to 2014.
“Five years later, over $5 billion have been spent with only 49 per cent of the construction being completed by OAS. This despite the UNC government telling the population, over and over, that it was on budget and on time.”
Young said from the onset the project was faced with problems, as OAS defaulted in paying subcontractors and were late in paying workers.
In December 2015, Young said the situation worsened after they demobilised, with the site being almost completely abandoned.
Against this backdrop, Young said OAS filed for Judicial Reorganisation in Brazil on March 31, 2015, where they sought bankruptcy protection, which left the project in dire difficulties.
Young said the former government did not pursue ways and means to terminate OAS’ contract to protect the public interest.
On September 4, Young said the UNC “entered into a written agreement with OAS called Contract Addendum No. 2, whereby they expressly recognised that OAS was bankrupt, and stated that they could invoke Clause 15.2 (e) of the FIDIC contract immediately terminating the contract. However, despite this, they proceeded secretly to give up this right of termination and waived all claims against OAS, thus releasing and discharging OAS from any liability. This action by the UNC government the day before a general election requires immediate investigation.”
Young said they must now account to the population why they threw away the cleanest, easiest, most cost effective and simplest opportunity to have terminated OAS.
In addition to this, Young said they also removed from OAS’ responsibility, substantial sections of the highway, with an intention to award the construction of parts of the highway to other contractors, at an additional cost to the taxpayer. “They removed 26 per cent of the highway works worth $1.5 billion from OAS’ contract, but surprisingly, still agreed to pay OAS $5 billion for the reduced scope of works that remained with OAS.”
Young said while OAS was having difficulty meeting its obligations to local suppliers, sub contractors and employees, the contract was allowed to continue for the same sum they were originally contracted at $5 billion.
“The UNC government went further and burdened taxpayers with the additional expenses of over $2 billion to pay new contractors to complete the portion of the highway excised from OAS’ contract.”
To compound matters, Young said OAS changed the scope of works.
“So whilst the value of the product was being significantly reduced by the removal of interchanges and lanes, the costs were escalating.”
He said the contract Addendum No 2 had the distinguished features of a conspiracy, which “may require attention of law enforcement agencies.”
RAMBACHAN’S RESPONSE
In response to the allegations raised, former minister of works Dr Suruj Rambachan said the People’s National Movement Government has the right to do whatever they think was in the best interest of the country.
“We welcome any kind of investigations they wish to have. What I can say is that everything that was done by the ministry was done above board. There is no corruption on the highway. I am willing to stand up to any scrutiny.” Rambachan denied that OAS was paid $5.2 billion.
“They were only to be paid for work completed.” He said he was unaware the project was now estimated to cost $8 billion, since it was kept within budget.