May 14, 2021 News
Kaieteur News – A worrisome Confidentiality Clause used by Chinese state lending agencies, that was flagged by the Center for Global Development (CGD) has been found in at least one contract, that for a US$43M January 2017 loan contract inked between Guyana and the China Export-Import (Exim) Bank for an East Coast Demerara (ECD) Road Expansion project.
In yesterday’s edition, Kaieteur News would have covered this clause and its serious implications within an article titled, “China ramped up use of loan contract confidentiality clauses after 2014 – report highlights.” In the article, it was first noted that the damning revelation about the clause was made in a recent CGD report titled, “How China Lends: A Rare Look into 100 Debt Contracts with Foreign Governments”- the first systematic analysis of China’s lending, which assessed 100 loan contracts between China and governments in 24 developing countries within Africa, Asia, Eastern Europe, Latin America and Oceania and compared them to other contracts those very countries inked with other bilateral, multilateral and commercial creditors.
Secondly, it highlighted that China’s state-owned lending entities would have ramped up the use of confidentiality clauses in their loan contracts after 2014, showing a greater shift towards secrecy and the CGD report also cited the clause as “unusual” and “binding.” This prompted independent research being conducted by this publication, during which the exact clause was spotted in one of Guyana’s contracts.
The US$43M contract seen by this newspaper was signed by former Minister of Finance, Winston Jordan, and China Exim Bank official, Gao Ning, and it stipulated that the project was to be carried out by the Ministry of Public Infrastructure (now Ministry of Public Works) with its supplier being China Railway First Group Company Limited. As it relates to the goods, technologies and services purchased using the proceeds of the loan, the contract mandates that the purchases are made from China preferentially and for the technical standards used, preference should also be given to China. It also pronounced that Guyana is required to pay a 2 percent interest rate on the loan per annum with a repayment period of 140 months, or 11 years 8 months.
With the receipt of the funds, the project aimed to expand the highway road between Better Hope and Belfield Village on the ECD and enhance the mobility and accessibility of commuters to and from Georgetown. It was also outlined that the project would positively impact the accident rate and vehicular maintenance. This publication even reported that the project was also deemed one of the costliest infrastructural projects after the Cheddi Jagan International Airport Project and the Marriott Hotel.
In the CGD report, it is highlighted that while assessing the 100 loan contracts it found that China was using a confidentiality clause, which said that, “The Borrower shall keep all the terms, conditions and the standard of fees hereunder or in connection with this Agreement strictly confidential. Without the prior written consent of the Lender, the Borrower shall not disclose any information hereunder or in connection with this Agreement to any third party unless required by applicable law.” In the report, it was indicated that such a clause is “unusual” since it bars borrowers from revealing the terms or even the existence of the debt.
Further adding to that point, the organisation made the case that while many other creditors may use confidentiality clauses, China’s is unusual since it imposes strict confidentiality obligations on the borrower, whereas other lenders use confidentiality clauses that impose such obligations primarily on the lender. Such an example, according to the CGD would be the Loan Market Association’s confidentiality agreement, which says that “Each Finance Party [defined as lenders] agrees to keep all Confidential Information [enumerated items] confidential and not to disclose it to anyone, save to the extent permitted by Clause 36.2 (Disclosure of Confidential Information) [and Clause 36.3 (Disclosure to numbering service providers)], and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.”
To that end, the CGD asserted that with the mix of confidentiality, seniority and policy influence in China’s lending contracts, sovereign debtor’s crisis management options can be limited and debt renegotiations can also become complicated. Most importantly, it called attention to the fact that with such heavy confidentiality obligations, citizens in lending and borrowing countries alike cannot hold their governments accountable for what are essentially secret debts.
Jun 17, 2021Works at the Guyana Football Federation (GFF) National Training Centre located at Providence, East Bank Demerara is progressing satisfactorily with the current phase nearing completion. Updating the...
Jun 17, 2021
Jun 17, 2021
Jun 17, 2021
Jun 17, 2021
Jun 17, 2021
Kaieteur News – I am quoting directly from Donald Ramotar’s letter on me in the Kaieteur News of yesterday. I will... more
Freedom of speech is our core value at Kaieteur News. If the letter/e-mail you sent was not published, and you believe that its contents were not libellous, let us know, please contact us by phone or email.
Feel free to send us your comments and/or criticisms.
Contact: 624-6456; 225-8452; 225-8458; 225-8463; 225-8465; 225-8473 or 225-8491.
Or by Email: [email protected] / [email protected]