Heavyweight Fight: NIPDEC vs. NHIC

With the Uff Commission about to resume, we are certain to be bombarded next week by further allegations against UDeCOTT some of which may be fair, while others may not be… the real shame however then as now will be that we will not be able to assess any of these allegations properly because of the apparent bias of Professor Uff and Commissioner Sirju about which I have complained before.

(http://robinmontano.blogspot.com/2009/11/uff-has-serious-questions-to-answer.html)

In the mean time, since the Uff CoE last sat, there has been a most interesting development concerning one of the parties of this particular CoE, Northern Hemisphere International (Caribbean) Limited (NHIC), which has received scant publicity in the national media.

I am referring to the National Insurance Property Development Company Limited (NIPDEC) legal victory against NHIC in the High Court on October 21, 2009. In broad terms the High Court confirmed an international arbitrator’s ruling that dismissed a $238 million claim that NHIC had filed against NIPDEC and to make matters worse for NHIC even ordered them to pay NIPDEC $9.1 million related to interest derived from overpayment.

One would think this is big news seeing as this company, which is the “Contractor of the Year 2009” according to the TT Contractors Association (which was co-founded by NHIC’s Chairman), has itself be subject of a CoE (related to the Scarborough hospital), and is one of the main (and loudest) proponents of action to be taken against UDeCOTT along with the JCC (which you might have guessed, was also founded by NHIC’s Chairman).

Anyway, let’s return to the matter at hand. In simple terms what happened was this:

(1) In May 2002 the NIPDEC tenders committee awarded the contract to build the Scarborough General Hospital to NHIC, whose winning bid for the project was for $135,9 million (Vat inclusive). Documents submitted to the court showed that the estimated profit margin at that time was relatively standard 12.5%. Completion of the project was scheduled for March 2005. Work started in March 2003;

(2) Because this was a so called design tender (as opposed to a design/build) bid that meant that one contractor (Stantec, an engineering consulting firm with over 10000 employees in 130 offices worldwide – http://www.stantec.com/) would develop all design and architectural elements of the project, while another (NHIC in this case) would be responsible for the actual construction. NHIC almost immediately began putting in claims for variations in the initial soil investigation and site survey, re-location of the building, re-alignment of the perimeter access road, construction of 2-tier retaining walls and importation of fill material. NHIC further flagged disputes in respect of the suitability of designs and drawings as well as the lack of utilities at the site;

(3) NIPDEC sees the cost for the project exploding over time and starts to ask questions rather than just to continue to sign blank checks for NHIC. At that point NHIC suspends work accusing NIPDEC of breaching the contract by failing to provide it with sufficient funds to do the project works (this is September 2005);

(4) In 2006 NHIC submitted a revised figure of $474.2 million to complete the project. Please note that this revised figure is more than $338 million over the original agreed sum of $135.9 million! This is 3.5 times the original estimate!!! The court documents also show that over the same time the revised cost estimates submitted at the arbitration by NHIC represented a percentage profit increase of more than 300%.

This brings us to a point where NHIC is no longer tenable as a contractor for NIPDEC, is asked to cease and desist and now claims payment for works performed (which of course is the right of a contractor, regardless of how bad the work performance is). That is usually when the lawyers get involved and this case was no different...

To make a long story short an international arbitrator, in November 2008, rejected NHIC’s claim of $283 million in works performed and found that the actual value of the work completed was $133.2 million. NHIC however had already been paid $135.9 million! Subsequently arbitrator further ruled that NHIC had to pay NIPDEC the sum of $9.1 million (exclusive of interest and cost). And finally this brings us to the appeal by NHIC to the High Court, which was dismissed on October 21st.

It has not been reported if NHIC has as yet paid the $9.1 million that it owes to NIPDEC and as such the people of Trinidad and Tobago.

A complete and much more detailed account of the affair can be found in form of Jerry Narace’s statement to Parliament from November 14, 2009, which can be found here:

(http://www.news.gov.tt/index.php?news=2467)

Did you understand all of this before reading this blog? Do you think that this is received the proper attention in the media? Incidentally, did you know the Chairman of NIPDEC is none other than Calder Hart, and that the Chairman of NHIC is, …you guessed it: Emile Elias? And do you believe Uff Commission will deal with this issue? Should they? And where is Transparency International in all of this? I haven’t heard a peep out of them!