China Harbour, government respond to sanctions debate

China Harbour Engineering Company and the Cayman Islands government, who are in negotiations over a cruise berthing facility development, have released separate statements saying that China Harbour has never been involved in any activity that has attracted sanctions by the World Bank, nor has it been under investigation by the World Bank.

The statements were made in response to the comments by the Office of the Contractor General in Jamaica, which had noted that China Habour’s parent company China Communications Construction Company and all its subsidiaries, including China Harbour, have been debarred by the World Bank until January 2017 from bidding for road and bridge projects funded by the development bank.

The contractor general raised the question whether the Jamaican government was aware of the debarment and if it had influenced the decision making in awarding a $400 million contract to China Harbour, the contractor general said.

The Cayman Islands government, which is holding negotiations with the company over the construction of cruise berthing facilities in George Town, cruise facilities in West Bay and to improvements to the Spotts dock area, said its research had confirmed that China Communications Construction Company and all its subsidiaries were debarred from World Bank funded projects as a result of CCCC becoming the designated successor to China Road and Bridge Corporation.

However, the government commented it had found no evidence that CHEC committed any misconduct or illegal acts that resulted in sanctions by the World Bank.

China Harbour also emphasised that the issues surrounding the debarment are “not a new matter”. The World Bank sanctions were related to China Road and Bridge Corporation and then applied to its parent China Communications and Construction Company when it took over CRBC in 2005, China Harbour said.

The affair dates back to 2002 when CRBC bid for a World Bank funded road project with the government of the Philippines. In January 2009, the World Bank announced that CRBC was engaged in collusive practices in relation to the road project in the Philippines and as a result was debarred together with six other firms and one individual. “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,” China Harbour said.

The development company added CRBC has since disputed the allegations, insisting they have no factual or legal merit. In addition, CRBC has received no claim or allegation from the Philippines government or the owner of the project, China Harbour said.

In July 2011, the World Bank changed its sanctions regime to recognise that companies might reinvent themselves to avoid penalties by prescribing that successor organisations would be subject to the same sanctions applied to the original firm.

“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 government said in its statement.

“The far reaching effect of the World Bank debarment of CRBC only relates to CHEC because it is a subsidiary of CCCC 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, the government said. “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.”

The government concluded, “there is therefore no indication that valid grounds exist for discontinuing our dealings with CHEC”.

CHEC also maintained that it operates worldwide in accordance with the laws and regulations of countries and maintains the highest ethical standards of integrity and corporate governance.

The government further stated it believes the Chinese developer offers the best value for money to the Cayman Islands “because CHEC is the only company to offer the Islands terms that would enable it to attain realistic value for the leveraging of its assets”.

The government maintained it remains vigilant and will only conduct business with companies that can pass the closest scrutiny and conduct appropriate due diligence before any binding final agreements are signed.