Udecott tenders rules were breached

Tendering for MLA tower

14.5. The bidding process for the MLA Tower, which led to an award of the contract to Sunway Caribbean Ltd (formerly CH Development and Construction Ltd) involved two separate but potentially related areas of concern. First Udecott’s tender rules appear to have been breached so as to favour CH Development and Construction Ltd (CH Development) in a number of ways, with no proper explanation other than the fact that CH Development was a subsidiary of a substantial foreign company.

Secondly, it is suggested that a relationship existed between Mr Calder Hart and the promoters of CH Development, a relationship which was not reported to the Udecott Board and is denied by Mr Calder Hart, but upon which contrary evidence has been presented to the Commission.

14.6. CH Development and Construction Ltd (CH Development) was incorporated in Trinidad on October 19, 2004, as a wholly owned Trinidad subsidiary of an established Malaysian multi-national construction company, Sunway Construction Sdn Bhd (Suncon). On October 25, six days later, the company wrote to Udecott seeking pre-qualification for the LA Tower. The letter was signed by two directors, Leong Choong Chee and David Ng Chin Poh and bore the address and contact details of the new company including the fax number 868-624 8239.

On November 5, 2004 2002, Turner Construction International LLC (Turner), the appointed Project Manager, recommended pre-qualification of Suncon (the patent company) and on the same day a note was prepared for the board recommending that six companies be invited to

tender for the MLA Tower, including Suncon. Pre-qualification was approved by the board on November 8, 2004. The board also directed that where foreign firms incorporate subsidiary companies within Trinidad and Tobago and the subsidiary enters into a contract with Udecott “care must be taken to ensure that the parent company is contractually responsible for the performance of all the duties and obligations of the joint venture or subsidiary company”.

14.7. On January 31, 2005 CH Development (not Suncon) submitted a tender to Udecott along with five other tenderers. The six tenders were reviewed in a tender evaluation report prepared by Mr Derek Outridge of QES. The tenders submitted were as follows:

(1) Hafeez Karamath Ltd (HKL) $301,801,885

(2) Johnston International Ltd (JIL) $346,207,130

(3) CH Development and Construction Ltd $368,888,000

(4) Kier/Kee Chanona Joint Venture $381,417,123

(5) Carillion (Caribbean) Ltd $383,295,000

(6) NH International (Caribbean) Ltd $408,544,332

14.8. The Report states that all Six tenderers “complied substantially with the requirements of the tender instructions” although three tenderers did not submit their INS, BIR and VAT certificates. The Report recommended exclusion of the three highest tenders as being uncompetitively priced. Of the three lowest tenders, HKL was said to be very low when compared to the prices of other tenders. JlL is also said to be low but competitive. HKL was said to have a “considerable” current workload. JIL’ s workload was said to be “not tremendous”, however if they were to be awarded the Chancery Lane Development, their ability to undertake the present contract was questioned. In respect of CH Development, it was noted that they have “no current workload in Trinidad and Tobago”.

14.9. The Udecott Board at its meeting on April 5, 2005, “agreed with the recommendation of the Tender Evaluation Committee that a contract be awarded to CH Development and Construction Ltd (Sunway)” for the construction ofthe MLA tower and on April 6, Udecott sought approval for the award from the Permanent Secretary, Ministry of Finance.

This designation of the company was potentially misleading as the Board of Udecott had earlier been quite clear about the distinction between a foreign parent and a local subsidiary company. CH Development and Suncon remained distinct companies. In fact prior to the recommendation of the Tender Evaluation Committee, Udecott had requested Suncon provide a letter of undertaking “to support and finance CH Development under the contract for the MLA tower, should it be awarded to CH Development.” This is recorded in a document dated March 4, 2005 from Suncon setting out all extract of the directors’ resolution of the same date as follows:

“That authority be and is hereby given to any director(s) to sign the letter of undertaking and all other relevant documents drawn in connection therewith, for and on behalf of the company (Suncon) and that if necessary, the company’s common seal be affixed unto any relevant documents drawn pertaining thereto in accordance with the provisions of the company’s articles of association.”

14.10 Pursuant to this resolution Suncon, on March 7, 2005 issued a letter addressed to Udecott headed “Letter of Undertaking” stating: “As requested by Udecott and for the tender of CH Development and Construction Ltd being considered, we Sunway Construction Sdn Bhd...undertake to support and finance CH Development and Construction Ltd of the undertaking under the contract for “the proposed construction and completion of the Ministry of Legal Affairs Tower for the Urban Development Corporation of Trinidad and Tobago, Port-of-Spain, Trinidad” should CH Development and Construction Ltd be awarded the contract. “

14.11. On April 28, 2005, a letter was sent by Udecott addressed to Sunway Construction Berhad (Suncon) and CH Development and Construction Ltd stating that “Your tender dated January 31, 2005 has been accepted” It concludes “Please sign the attached copy of this letter to confirm your agreement with its contents”. The letter is signed by Winston Agard, Chief Executive Officer, and is countersigned by Mr Poon Kon Hoo “for and on behalf of CH Development and Construction Ltd”. There are various copies of this document in the files which appear to show that the letter, at some point countersigned on behalf of CH Development and Construction Ltd, was faxed from Udecott and faxed back to them on April 29, 2005. One copy of the letter clearly shows one of the fax numbers as 868-624 8239 against which is the name Calder Hart.

14.12. The sequence of events disclosed by the fax documents themselves have been analysed on a number of occasions. In Closing Oral Submissions Counsel for Udecott quoted and adopted an analysis which had been published in the press.

The same analysis was adopted in Udecott’s written submissions and earlier in final submissions on behalf of Mr Calder Hart. The analysed sequence of events was as follows:

(i) The Udecott Letter of offer addressed to Sunway Construction and CH Development and Construction was sent by Udecott to Mr. Hart’s personal fax number (624-8239) at 10:02 on April 29, 2005.

(ii) The same letter was sent from Mr Hart’s personal fax number to a Sunway fax number (632-6825) at 11:59 on April 29 2005.

(iii) The letter (at some point signed on behalf of CH Development and Construction) was sent from the Sunway fax to Udecott at 12:06 on April 29, 2005.

14.13. On June 16, 2005, a letter was sent to Udecott for the attention of Mr Calder Hart, by Mr Poon Kon Hoo, a director of a new company called Sunway Construction Caribbean Ltd. The letter states: “Further to our meeting June 15, 2005 we would like to seek your consideration and approval to address the above (letter of award — MLA Project) to Sunway Construction Caribbean Ltd, formerly CH Development and Construction Ltd, a wholly owned subsidiary of Sunway Construction Sdn Bhd.”

The letter goes on to state that a joint appointment to Suncon and its subsidiary company would give rise to tax issues for the parent company in Malaysia. It is then stated that Sunway Construction Sdn Bhd “has issued a letter to confirm that SCSB will undertake full support for SCCL in all aspects for this project”. It is to be noted that the “letter of support” referred to and other similar expressions of intent from Suncon did not materialise into any recognisable form of guarantee by which Suncon bound itself to be “contractually responsible for the performance of all the duties and obligations of the Joint Venture or subsidiary company” as had been expressly required by the board at the meeting on November 8, 2004.

14.14. Finally, by letter of June 22, 2005 Udecott wrote to Sunway Construction Caribbean Ltd advising (in terms similar to the earlier award letter of April 28, 2005) that “Your tender has been accepted” for the MLA tower. Again the letter requested counter-signature to confirm agreement. The letter appears to be countersigned by Mr Poon Kon Hoo (who also countersigned the letter of April 28,). Sunway Construction Caribbean Ltd was shown as having a different address and fax number to CH Development. In a subsequent letter May 26, 2008. Mr Poon Kon Hoo wrote to Mr Calder Hart to clarify that the former directors of CH Development and Construction Ltd, Messrs. Leong Choon Chee, Ng Chin Poh and Lee Hup Ming had all resigned, and that the current directors of Sunway Construction (Caribbean) Ltd were Messrs. Kwan Foh Kwai and Poon Kon Hoo.

14.15. The involvement of Mr Calder Hart in the foregoing transactions seems clear. Yet it should be recalled that at the relevant time (and up to September 2005) the CEO was Winston Agard who was succeeded by Ricardo O’Brien up to September 2006. Throughout this period Mr. Calder Halt was the (non-executive) chairman. Mr Calder Hart’s direct involvement with tenderers, in his capacity as Chairman, is unusual to say the least. Mr Agard, at the request of the Commission, made a statutory declaration dated June 9 2009. He confirmed that, as CEO, he was unaware of the application of CH Development and Construction for pre-qualification in October 2004. The declaration states:

“I am of the opinion that had the award of contract to CH Development been wrong in law because the subsidiary was a separate legal entity, this would have been pointed out by the legal department of Udecott. My understanding was that the evaluation committee and the board of Udecott were of the view that they were treating essentially with Sunway and not its subsidiary since it was obvious to all that the subsidiary company was newly registered in Trinidad and Tobago and did not have a track record”.

“I did not know who the directors were of CH Development nor was I aware of a relationship between Mr. Hart and CH Developments’ directors. To my knowledge Mr. Hart never declared such relationship to the Board” It is true, as pointed out by Udecott in their final submissions that this evidence was uncontested, largely because it was submitted after the close of hearings dealing with the MLA Tower. But whatever Mr Agard’s opinion, it is perfectly clear that CH Development and Sunway were, in fact and in law, separate companies, a point that was clearly appreciated by the Board on November 8, 2004.

14.16. Counsel for the lCC, in final submissions to the Commission contended that, in the award of the MLA Tower contract to Sunway Caribbean Ltd, Udecott had breached its own tender rules in the following respects:

(i) In 2004 when CH Construction applied to Udecott for pre-qualification, shortly before invitations to tender, CH Construction was without any assets

(ii) On November 10, 2004 when it received an invitation from Udecott to tender for the Ministry of Legal Affairs Tower CH Construction had no VAT Certificate, no NIB Certificate and no PAYE File Number, each of which was required. The lack of a VAT Certificate in particular had, in other cases, caused the rejection of tenders.

(iii) In awarding the contract Udecott wrongly took into account the financial strength of Sunway Malaysia and ignored the fact that CH Construction was not pre-qualified.

(iv) CH Construction could not have satisfied the pre-qualification criteria set by Udecott and therefore could not have been in a position to properly obtain a contract.

(v) Udecott failed to obtain a parent company guarantee from Sunway Malaysia, notwithstanding that CH Construction had no assets.

14.17. Counsel for the lCC further contended that the award of the MLA Tower contract to Sunway Caribbean Ltd demonstrated that Mr Calder Hart had an ongoing relationship with CH Construction which had not been revealed to the Udecott Board. The matters relied on are the following:

(i) The letter dated October 25, 2004 from CH Construction to Udecott which lists Mr Hart’s fax number.

(ii) Mr Hart’s explanation that this was due to an error, was implausible because the tender was submitted three months after the first letter was sent.

(iii) It is unlikely that such an error could have gone unnoticed for three months; faxes to CH Construction would have been arriving at Mr Hart’s home.

(iv) No evidence has been given to suggest that Mr Hart ever wrote to CH Construction to ask for an explanation.

(v) It appears that the letter of acceptance to CH Development was sent from Udecott to Mr Hart’s home fax number and sent on from Mr Hart’s home fax number to Sunway.

14.18. Mr Calder Hart was cross-examined in relation to the above matters, when he gave the following evidence. With regard to the identity of the companies, he stated that Udecott did not see Sunway and CH Developments as separate legal entities. Mr Calder Hart drew a distinction between the tender process and the prequalification exercise It was suggested that, despite advice of Mrs Deborah Peake, Udecott had deliberately and openly, within months of the C&E experience, confused the identities of Sunway and CH Construction. Mr Calder Hart’s response was:

“Well, in my view, that deals with an award where the issue of the financial capability of the company is at question. Because of the fact that they have had to use — I think Mr Fitzpatrick related to two, well three items that it had been failed on; and if you look at those three elements, those are areas, when you are going to award a contract to a tenderer, you’d have to ensure, obviously, that they are capable of delivering and executing the project. So, from the standpoint of the pre-qualification exercise, pre-qualification is there to determine that, in fact, all those resources are going to be available to whatever project you intend to tender on.

Mr Chairman: But it still follows that from the advice you received, that you’ve got to consider them as separate companies?

Mr Hart: Well we didn’t consider them as separate companies because what we saw ourselves as doing was approving Suncon.”

14.19. With regard to the form of undertaking which had been offered by Suncon, Mr Calder Hart was asked whether he had taken legal advice. His response was:

Q: “The Board did not seek any legal advice as to whether this document had the effect that they wanted?

A. It would not appear so.

CH did give the ten percent performance bond required under the contract telms, in the sum of US$5,855,600, but no other parent company guarantee was offered. This was in clear breach of the requirement of the Udecott Board as determined at the meeting on November 8, 2004.