Govt files $717M lawsuit against BK, Nafico for breach of contract
Botched Yarrowkabra school construction
The Attorney General’s Chambers have instituted legal proceedings against BK International Inc and the North American Fire and General Insurance Company (Nafico) for breach of contract in relation to the belated and ultimately botched construction of the Yarrowkabra Secondary School.
According to the Statement of Claim filed by Attorney General Anil Nandlall, SC, the Government is seeking a total of $717.8 million in damages from the respondents for BK’s breach of contract.
It has been pointed out in the claim that BK was issued a commencement order dated March 12, 2020 by the Education Ministry, giving that company a 12-month time frame to complete all works by March 11, 2021.
BK also provided a work execution schedule to both the Education Ministry and that Ministry’s consultant, and the contractor is expected to adhere to that schedule.
“In breach of its obligations under the contract agreement, the first named defendant (BK) failed to complete the scope of works in accordance with the contractual work execution schedule which was submitted,” the statement of claim states.
In fact, as at November 2020, only five per cent of work on the school was completed, which translated to the school not being completed in accordance with the contractual obligation. The Ministry has since pulled the contract from BK, and true to the Government’s word, legal proceedings have been instituted.
A breakdown of the Statement of Claim shows that the State is claiming $100 million in general damages for the breach of contract; $82.6 million as liquidated damages pursuant to the provisions of the contract; $82.6 million payable by BK under performance bonds issued by Nafico for the contract agreement; $165.3 million for advance payments; $137.1 million as restitution for works already paid for but not executed; $50 million for trespassing; and $100 million in aggravated damages for breach of contract.
Additionally, the State is asking the Court to issue an Order of Restitution against Nafico for all monies owing to the Government of Guyana on the advance guarantee and performance bonds. The State is also seeking interest in accordance with Section 12 of the Law Reform Miscellaneous Act, Chapter 6:02 of the Laws of Guyana, in addition to legal costs incurred for taking the defendants to court.
It was pointed out in the claim that, to date, the contract has not been awarded to another contractor, and as a consequence, the people of Yarrowkabra are without a school. Thus, BK’s actions have impacted the interest of the public and “the exigencies of the common good should prevent the first and second named defendant from being unjustly enriched based on the advances received under the contract.”
On December 31, 2019, the then A Partnership for National Unity/Alliance For Change (APNU/AFC) Government entered into a contract with BK International Inc to construct a secondary school at Yarrowkabra, Linden-Soesdyke Highway, to the tune of $826.7 million.
The school, the Ministry of Education had said, was intended to benefit 600 children in Yarrowkabra and neighboring communities along the Linden Highway. But construction made little progress under the former Government, and by the time the People’s Progressive Party (PPP) took office in August 2020, less than five per cent of the work was completed.
On November 1, 2020, Nandlall wrote BK International Inc, informing the entity that the contract was terminated with immediate effect. He noted that the company had committed a fundamental breach of the terms of the contract, and, as a result, the Government of Guyana exercised its right to terminate the contract.
In the said letter, the contractor was advised to remove all machinery and equipment from the site. On November 10, 2020, the consultancy firm visited the site and observed that the company was still progressing with works despite the contract being terminated.
In a letter dated November 11, 2020, the consultancy firm wrote the Managing Director of BK International Inc, Brian Tiwarie, informing him that pursuant to Clause 40.5 [Termination] “the contractor is to stop the works immediately, make the site safe and secure, and leave the site as soon as reasonably possible.”
In that letter, the consultants instructed the contractor to stop works immediately, and advised that any work done or materials ordered beyond the date of termination, November 1, 2020, is done at the contractor’s own risk.
The Ministry added that on November 19, 2020, Permanent Secretary of the Education Ministry, Alfred King, wrote BK International Inc, instructing the company to bring all work to a halt with immediate effect, and vacate the project site within 24 hours.
The Ministry has since installed its own security after taking possession of the site with the help of the enforcement arm of the State.
This publication had meanwhile done an interview with Education Minister Priya Manickchand earlier this month, and she had said the project was being reviewed, and would soon be retendered. (G3)