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Govt. insists it has Hand in Hand bond

Jun 08, 2010 News

…accuses Kaieteur News of distortion

The government yesterday issued a statement saying it wished “to draw the attention of the pubic (sic) another outrageous fabrication,” published by Kaieteur News, namely the newspaper’s page one story yesterday entitled “Hand in Hand withholds bond until heavy equipment is imported.”
The Government said that it views with great disgust what it called this newspaper’s “continued engagement in fabricating and misleading the public on the Amaila Falls Road project.”
This newspaper quoted one of the Directors of Hand in Hand Insurance Company as saying that the US$3 million the company is prepared to post as bond for the road contractor, Makeshwar Fip Motilall, will not be effected until there is some collateral provided by the contractor, namely the heavy duty equipment he is scheduled to be importing to construct the road leading to Amaila Falls.
According to the government, following execution of a Lump-Sum Design and Build Agreement between the government and Synergy Holdings Inc. in March this year, Government (represented by the Ministry of Public Works) received and currently holds two validly issued bonds from Hand in Hand Mutual Fire Insurance Co. Ltd., dated March 31, 2010, namely: Advance Mobilisation Bond for 10 per cent of the contract sum and a performance bond for 10 per cent of the contract sum.
“The GoG wishes to unequivocally state that neither of these Bonds is conditional on the Contractor importing project equipment or of providing any other form of collateral to the Guarantor, Hand in Hand.  Such arrangements are strictly the business between Synergy and Hand in Hand Fire Insurance Company,” the government stated.
Hand in Hand however said that it was providing the bond because the government was behind the project, and that it never conducted a due diligence.
The statement refused to say who negotiated the bond and why.
It also refused to say on whose behalf the bond was issued, except to say that any agreement for collateral was an internal affair.
The government declared that it has consulted with Hand in Hand confirming that the bonds are valid and properly issued and that yesterday’s headline “is a total falsification.”
In any event, the government said an issuer of bonds to the Government cannot unilaterally withdraw such bonds once issued.
“As a general rule, the bonds are a third party guarantee that is not linked to the party requesting same (the contractor, Synergy in this case),” the government stated.
There was no explanation why Hand in Hand would grant a bond to the government without the involvement of the contractor. The director had said that the bond would have been negotiated by the contractor.
He added that unless the contractor provided the heavy-duty equipment as collateral, there would be no money provided for the bond.
The government accused Kaieteur News of publishing “many misleading articles” on the Amaila Falls Hydro Project and other similar projects, drawing the conclusion that the newspaper “is not concerned with the facts but wishes to pursue the fabrication, falsification and distortion of information, all to create sensational headlines and/or support opposition groups.”
However, Head of the Privatisation Unit and NICIL, Winston Brassington, had said that he was not going to speak to Kaieteur News on the issue. Hand in Hand Insurance Company also refused to comment on the bond issue.
When asked about a due diligence, Mr Brassington said that it was not for the government to conduct a due diligence.
He suggested that before granting the bond, Hand in Hand would have conducted the due diligence.

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