CHEC still favoured by Mac
(CNS): The premier’s office has said it has no problem doing business with China Harbour Engineering Company (CHEC) and will be continuing negotiations regarding cruise berthing facilities in George Town. The statement comes in the wake of revelations that the firm was sanctioned by the World Bank because of issues relating to corruption. The premier said he does not believe CHEC has any connection to the circumstances that led to the sanctions and no reason to discontinue the dealings with the Beijing firm. The statement came in the wake of other regional news reports that a former port chairman in China was sentenced to death for taking bribes from CHEC and its parent company, CCCC..
Mounting media coverage here in the Cayman Islands and other countries in the Caribbean where CHEC is doing business, not least in Jamaica, is causing growing concerns about the Chinese firm as a suitable business partner for public sector developments. The Cayman Islands governor has also made it plain that the UK will not sanction the proposed port deal with CHEC at present, not because it objects particularly to the firm itself but because of the failure of the premier to follow international best procurement practice when selecting the company.
Nevertheless, speaking through his office Friday afternoon, McKeeva Bush made it clear that he was pressing on with the port talks with CHEC, despite public opinion and the UK’s position.
“It is evident that CHEC is far removed from any wrongdoing that resulted in the original sanctions placed on CRBC by the World Bank,” the statement read. “The far reaching effect of the World Bank debarment of CRBC only relates to CHEC because it is a subsidiary of China Communications Construction Company, which inherited the debarment from its predecessor. Neither CHEC nor its parent company CCCC has been sanctioned by the World Bank for fraud or any other misconduct actually committed by those companies.
“In view of these findings, CIG does not see cause to believe that CHEC is legally or morally responsible for the actions which led to the original debarment of China Road and Bridge Corporation by the World Bank. There is therefore no indication that valid grounds exist for discontinuing our dealings with CHEC,” the premier said in the statement
The premier’s office pointed to the “many years of discussing and negotiating” over the port project and reiterated that the government still believes that CHEC offers the best value for money to the Cayman Islands.
“Namely because CHEC is the only company to offer the Islands terms that would enable us to attain realistic value for the leveraging of our assets,” it said. “The Cayman Islands Government remains vigilant and will only conduct business with companies that can pass the closest scrutiny. CIG has conducted and will continue to conduct appropriate due diligence before any binding final agreements are signed.”
The latest scandal relating to CHEC arose earlier this week after the Jamaican Contractor-General raised his concerns about that country doing business with CHEC while it remained under a World Bank ban. The ban on any projects involving World Bank funding was imposed on China Communications Construction Company and all its subsidiaries, including CHEC, because CCCC was the designated successor to China Road and Bridge Corporation (CRBC), which was accused of corruption. Under the bank's rules successors on projects where wrongdoing has been found continue to carry the can and are therefore subject to the same sanctions.
The World Bank states: “This action is based on recent changes in the World Bank sanctions system to clarify that successor organizations – through purchase or reorganization – will be subject to the same sanctions applied to the original firm.” As CCCC is the designated successor entity to China Road and Bridge Corporation (CRBC) the bank confirmed the ban remains in place.
In a release this week from its regional office, Zhongdong Tang, Regional Director for CHEC in Latin America, said the firm was not involved in and has never been involved in any activity that has attracted any sanctions by the World Bank. “CHEC itself has never been under any investigation by the World Bank,” it said.
The accusations of fraud were made against CRBC, which maintained that there was no factual or legal merit to the allegations. Tang said CCCC initiated discussions with the World Bank to arrive at a resolution of the issue. “At the time of the debarment in January 2009, the sanction was imposed on CRBC and not on CCCC or any other subsidiary of the company,” he added but acknowledged that the sanctions came about in July 2011, based on banks new position that successor organisations would be subject to the same sanctions to the original firms.
“CHEC operates successfully worldwide in accordance with the laws and regulations of countries and maintains the highest ethical standards of integrity and corporate governance,” Tang stated. “As recognised by the World Bank itself, the Government of the People’s Republic of China has passed several laws which hold companies organised under Chinese law such as CCCC and CHEC, to the highest anti-corruption standards. CHEC’s overseas operations continue to abide by these very high standards.”
According to other media reports, the former Chairman of China’s Hebei Port Group, Huang Jianhua, was sentenced to death earlier this year for taking bribes from CHEC and CCCC. Chinese authorities say Huang was given a house worth more than US$628,000 after he arranged for them to win a bid in 2008 for the construction project at the Huanghua Port Wharf in China.
Executives of CHEC and other sister companies allegedly also gave Huang US$10,000 in three payments. Investigators were said to have found "a trail of corruption by CCCC” and at least two of its subsidiaries, including CHEC.
Meanwhile, in another international case relating to the Chinese firm, Arafat ‘Koko’ Rahman, a son of the former Prime Minister of Bangladesh, Khaleda Zia, was jailed last year for laundering millions of dollars in bribes taken from CHEC.
See full statements from the premier’s office and from CHEC below.
|STATEMENT BY CHINA HARBOUR ENGINEERING COMPANY ON THE ISSUE OF THE WORLD BAN1 (1).doc||100.5 KB|
|CHEC-World Bank Statement 8 June 2012.pdf||74.78 KB|
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