‘Fip’ Motilall’s Amaila Falls road penalty…Hand-in-Hand yet to pay govt. Performance Bond

Jun 05, 2012 News

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The US$1.5M Performance Bond that the Government had laid claim to, in relation to Synergy Holdings Inc and Hand-in-Hand Mutual Fire Insurance Company Ltd is still to be paid.
Project Engineer Walter Willis told this publication when contacted that he has not be given the relevant clearance to make any pronouncements on the issue.
Subject Minister Robeson Benn while being unable to pronounce definitively on the matter, confirmed that the payment by the Hand-in-Hand Mutual Fire Insurance Company Ltd has not been effected as yet.
This money, which on the surface appears payable to the government, is not automatic upon claim, said a source close to the imbroglio. The source has confirmed that Motilall’s performance bond expired on July 2011.
That bond was negotiated and brought into force when the contract with Motilall was signed in January 2010, with a duration of eight months.
This means that for the latter half of last year, Synergy Holdings Inc. was operating with an expired bond, pursuant to its stipulations.
The bond did carry a stipulation that claims could be made for six months following its expiration.
Government did lay claims prior to this deadline, but according to a senior official close to the matter, “This doesn’t mean that the claim is automatically valid. All aspects of compliance have to be thoroughly checked.”
The source, knowledgeable on the issue of insurance, explained that Hand-in-Hand will have to conduct investigations on every aspect of the claim before it is accepted or rejected completely.
Reports that the government and Synergy Holdings Inc still have some balancing up to do to determine who owes whom, could also affect the outcome of the claim made by the government on the performance bond.
Motilall, following the announcement of the termination of the contract with Government, had claimed that he was owed in excess of US$1M.
Subsequently, Head of State Donald Ramotar said that he was yet to ascertain who owes whom as it relates to the project, but suggested that Guyana had limited its exposure.
Winston Brassington, the Head of the National Industrial and Commercial Investments Limited (NICIL), who has played an integral role in the project, subsequently in a pronouncement to clear the air on the termination of the contract said, “One important consideration that determined the contract being awarded to Synergy was based on Synergy having the lowest evaluated price.”
Contacted yesterday, Brassington said that he is no longer affiliated with the project and that the point man to contact would be the project Engineer, Walter Willis.
Hand-in-Hand had also issued a mobilization bond to Synergy Holdings, but this too expired.
Hand-in-Hand in its financial report for the company in 2010 had listed under Contingent Liability, the Amaila Falls Hydropower Road project.
In that report it was stated that the Government of Guyana had granted to contractor, Synergy Holdings Inc., the authority to construct the road to Amaila Falls and the Transmission Line Clearing Project.
It said that on March 31, 2010, Hand-in-Hand on behalf of Synergy Holdings Inc., issued advance Mobilisation and Performance Bonds totaling US$1.54 million each.
“At the onset, these bonds were collaterized by a guarantee from WM Fogarty’s Ltd to the extent of US$500,000 for the initial four-month period.”
The Financial Report for Hand-in-Hand also said that the “Advance Mobilisation Bond which expired on November 18, 2010, has since been released by the Government of Guyana.”
It further states, “The Hand-in-Hand Mutual Fire Insurance Company Ltd remains responsible for the current performance bond, which is to be secured by counter guarantees in the form of: Escrow Account to the extent of US$500,000; Debenture on the machinery/equipment for the difference.”
Hand-in-Hand in an official announcement following the termination of the contract had stated that “the position of an insurance company with regard to any insurance policy or claim is strictly confidential and would not be disclosed by the insurance company unless required by law or legal process.”
The insurance company had also stated that “If a claim is made under a performance bond, it goes through our claims verification and investigation process…This process is performed in respect of each and every claim regardless of size.”
Large claims are submitted to the Board of Directors of Hand-in Hand for its consideration.
“The Hand-in-Hand is very happy to settle any claim it is determined to be liable to pay.”
It took more than two years of intense media scrutiny and exposure coupled with the then imminent failure on the part of Motilall before the Government moved against him and terminated the contract.
When asked about due diligence at that time, the administration, in the person of Brassington, had told media operatives that this was left up to the institution that backed him with the bonds, namely Hand in Hand.

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