Govt slaps Leguan stelling contractor with over $360M lawsuit

…for breach of contract, 2-year project delay

The Government of Guyana has initiated legal proceedings against S Maraj Contracting Services for breach of a $413 million contract for the rehabilitation of the Leguan Stelling, which was supposed to be completed since 2019.

The contract was terminated in February 2021 after a special audit found that the company is incapable of successfully executing the project. According to a Statement of Claim released to the media on Wednesday, Attorney General and Minister of Legal Affairs, Senior Counsel Anil Nandlall, is suing both the contractor and insurance company Assuria General.
Nandlall, on behalf of the State, is seeking $100 million in general damages, $100 million in aggravated damages, and $81 million under the mobilisation bond. The state is also seeking $41.3 million as liquidated damages and $41.3 million for the performance bond.
“The Government of Guyana, through the Transport and Harbours Department, executed a written agreement with the (contractor) for the rehabilitation of the Leguan Stelling…the first named defendant submitted an agreed schedule of works to the project consultant, but failed to execute the works in accordance with the schedule, and has caused the project to be inordinately delayed,” the Statement of Claim has said.
“As a consequence of the failure of the First Named Defendant to comply with the programme of works submitted to the project manager, an assessment was done by the project consultant, Quintech Engineering Services, and it was discovered that (the contractor) had only completed minimal works relating to the rehabilitation of the Leguan Ferry Stelling, and works have been delayed (for) approximately two (2) years.”

Vacate site/forfeit payments
The Attorney General had written to the contractor, S. Maraj Contracting, last month ordering them to vacate the site and to forfeit all payments due. Based on the Statement of Claim and the damages being sought, it’s unlikely that the contractor had complied.
“By reason of the breach by the First Named Defendant, the State has suffered loss and damage, especially since the First Named Defendant was paid a Mobilisation Bond of $81.3 Million as the sum due, owing and payable by the First Named Defendant under the Mobilisation Bond issued by the Second Named Defendant for Agreement dated September 18, 2018,” the Statement of Claim has said.
The contract with S Maraj Contracting Services was signed on September 20, 2018 under the former Government. It has been reported that the contractor received close to $200 million in payments.
This is outside of the normal procurement practices, and is a breach of the Fiscal Management Accountability Act, a breach the audit report highlighted.
Presently, actual works and materials on site are estimated to be worth about $100 million.
Public Works Minister Juan Edghill had visited the site last month and met with both residents and contractors. Following that visit, Edghill had said the contractor had applied for an extension, but this would not be granted by the Government.
The lawsuit against S Maraj is only the latest in a series of contracts the People’s Progressive Party (PPP) Government has had to come in and revoke from recalcitrant contractors. Other contracts are already being litigated.
Last January, the Government instituted a lawsuit against Courtney Benn Contracting Services Limited and Caricom General Insurance Company, in which it is seeking in excess of $413 million in damages in relation to the breach of contract for rehabilitation of the St Rose’s High School.
The Government has also taken BK International and the North American Fire and General Insurance Company (NAFICO) to court over breach of contract in construction of the Yarrowkabra Secondary School. The Government is seeking over $717.8 million in damages. (G3)