US$18M Specialty Hospital embarrassment… “Bankrupt” Indian firm disappears; court grants $900M judgment

Jan 24, 2015 News

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Months after suing Indian firm, Surendra Engineering Corporation Limited (SECL), for failing to deliver on the US$18M Specialty Hospital, a local court has ordered the company to pay over $900M.

But there is a problem. The company, at one time a highly favored one, cannot be located.

Court officials, since the claim for damages were filed in October by the Ministry of Legal Affairs, went to the Berbice registered office listed by Surendra to serve the writ. The Ministry even resorted to published notices of service in the Guyana Chronicle newspaper on two consecutive occasions- December 13 and 20 December, 2014, to no avail.

The matter was set to be heard last Wednesday in the Commercial Court. However, no defendant or representatives made an appearance.

The matter was again called yesterday with Surendra a no-show once more.

The court went ahead and granted judgment in favor of the Government of Guyana in terms of the special damages of US$4,285,440, which amounts to $899,942,440 and interest thereon; costs of US$10,714.50, which amounts to $2,250,043.

What makes the matter more interesting is that Surendra, in India, has filed for bankruptcy, according to records seen by Kaieteur News.

It will raise the very real question as to how Government will recover the monies.

It may very well have to look towards Surendra’s mining concessions in the hinterlands…almost 25,000 acres, according to reports.

According to the Ministry yesterday, in a statement on the judgment, on 14^th September, 2012, the Government of Guyana through the Ministry of Health entered into a contract with SECL, a limited liability company incorporated in India and registered in Guyana.

Under the contract it was agreed that the company would provide services in relation to designing, building, equipping, testing, delivering, installing, completing and commission of certain facilities for the Surgical Specialty hospital in Turkeyen, Georgetown. The consideration or cost of the contract was US$18,180,000.

On 27^th December, 2012, Surendra Engineering was given an advanced payment of 20 percent of the contract price, which amounted to US$3,636,000. On 18^th November, 2013, an additional payment of US$649,440 was made.

Surendra eventually failed to submit payment receipts to account for the advanced payment of US$4,285,440.

“Instead, the company submitted fabricated, unsigned and inflated invoices with no evidence of actual payments made to support the expenditure claimed. In addition, the advance payment guarantee expired on 11^th March, 2014, and the company failed to renew same in accordance with the terms of the contract.”

After being informed of the expiration of the advance payment guarantee, the Ministry said that Surendra then attempted to submit one from a company in Trinidad and Tobago called ‘Worldwide Bankers Re Company Ltd’.

“However, pursuant to queries by the Government of Guyana, it was informed by the Central bank of Trinidad and Tobago that ‘Worldwide Bankers Re Company Ltd’ is not a registered insurance company under the Insurance Act of Trinidad and Tobago.”

Government moved then to terminate the contract on the grounds that Surendra failed to renew or provide the advance payment guarantee; engaged in fraudulent practices and failed to satisfactorily perform its obligations under the terms of the contract.
The Office of the Attorney General/Ministry of Legal Affairs, on 15^th October, 2014, filed a writ of summons in the High Court naming Surendra as the defendant.

Government was claiming damages in excess of $100M, special damages in the sum of US$4,285,440; interest at the rate of six percent per annum from the date of filing to the date of judgment and at the rate of 4 percent until fully paid and costs in the sum of US$10,714.50.

The case has been a hugely embarrassing one for the Ministry of Health and the Government which has been banking on the hospital as one of its flagship projects.

Government had refused to listen to urgings of the Opposition that Surendra was not capable of building the hospital which would have offered specialty treatments that patients, in normal circumstances, would have had to seek overseas.

Surendra itself is no stranger to controversy and has reportedly been blacklisted by the Guyana Sugar Corporation from its list of contractors.
Surendra had been the contractor on the US$12.5M Enmore sugar packaging factory.

The company has also been embroiled in the US$4M contract to supply 14 drainage pumps but has reportedly failed to fulfill its obligations. Government has not come clean on this project, but Attorney General, Anil Nandlall, last year admitted that Government was reviewing that pump contract.

The Surendra case would bear striking resemblance to that of Synergy Holdings, a company that Government awarded a US$15M contract to build roads to the Amaila Falls Hydro Electric Project in Region Eight, but was also sacked by Government for non-performance. Government had also been warned over the competence of that company but like Surendra, refused to heed advice.

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