Latest update April 19th, 2024 12:59 AM
Sep 15, 2014 Features / Columnists, Peeping Tom
To my recollection, the decision of the government to initiate a fraud probe against the company contracted to build the Specialty Hospital is the first time any such action has been taken against a contracting firm. In this respect, the decision of the government is to be welcomed and commended.
It is also likely that the government will initiate civil proceedings against the said company in order to mitigate its losses. The company in turn is anticipated to counter sue the government for not honoring aspects of the State’s contractual obligations to the company.
All of this has a background that is being missed. The action by the government follows a civil action being undertaken by a local company against the firm contracted to build the hospital. The claim by the local company is that it is owed, as a sub contractor, in excess of US$200M for foundation works.
This raises a number of issues. From the standpoint of political economy, one has to ask whether the decision of the government to move against the Indian company has to do with the fact that a powerful member of the propertied class is claiming sums owed to it. In other words, is the fact that a powerful member of the business class felt cheated by the Indian firm the reason why action has been taken by the government? Or are the two actions independent of each other?
The two actions, one by the local firm and the other by the government are certainly not mutually exclusive. If the cost to construct the foundation of the hospital is G$400M, then what is likely to be the final cost of the entire hospital? This hospital could end up costing more than the Hope Canal. This cost of the foundation certainly needs some explaining. Is this a hospital being built or a bomb shelter?
The other main problem concerns the monies outlaid so far on the project. It has been said that about G$800M has been so far disbursed by the government to the Contractor. But has G$800M worth of work been undertaken? This is the multimillion dollar question that is being asked.
One would presume that monies would be disbursed in tranches and that each disbursement would only take place after works associated with a previous tranche were satisfactorily completed. Was this done in this case?
There needs to be some explanations from the government as to what are its contractual obligations in respect to the disbursement of funds for this project since significant sums reached the contracting company. But whether value for this sum was obtained is not quite clear. If for argument sake we assume that G$400M dollars was used for foundation works, what was the other G$400M used for or allocated towards? This is what the ordinary man in the street is asking.
There will be all manner of conspiracy theories spun around this issue. It is necessary for the government to defuse these theories by going beyond a mere police investigation.
The police investigation will only relate the allegations that a forged document was submitted. It does not explain how US$4M was disbursed so far. It does not explain why the foundation work alone costs US$2M.
These issues would obviously have been covered in the report by the Consultant to the Project. But it is still necessary that the government undertake a much wider probe to determine a number of other things relating to this project.
For one, if as is alleged a fraudulent bond was submitted by the company, what verification checks were immediately done? Were monies disbursed prior to these verification checks being undertaken and who approved the disbursement? Was the government, as alleged by the Contractor, in breach of its contractual obligations?
Answers are needed to these and other questions because right now conspiracy theories are being spun. Remember that some political parties had previously accused the government of running a Ponzi Scheme in relation to another project. The government should avoid similar accusations in regards to this project.
The government should have a reputable international agency undertake a forensic audit of this project and determine whether there were any irregularities with the way this project was managed by both the executing agency and by the Contractor.
The criminal probe has implications for relations between Guyana and India. In light of what has happened here, it is doubtful whether the Indian government will want to commit further funding on other projects in the pipeline.
The Indian government would want a full and transparent probe of all aspects of this contract.
I am sure that the international community would be willing to provide the skills to undertake a forensic audit of this contract. Such an audit will demonstrate further the government’s commitment to transparency.
Please share this to every Guyanese including your house cats.
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