Home > Corruption, Papua New Guinea > Road Contracts awarded to Crooked Companies blacklisted by the World Bank

Road Contracts awarded to Crooked Companies blacklisted by the World Bank

Prime Minister O’Neil holds himself out as a moderniser, a leader who plans to centralise and utilise the nation’s vast natural wealth, to build the pillars of a strong, independent national economy, i.e. education, health, roads, transport, infrastructure, industry, technology, law and order. His critics, mostly foreign, stare incredulously at the O’Neill government, as their sweetheart deals dry up.

Yet anyone who has taken the time to seriously glance northwards would know that those nations who have broken with neoliberal dictates, by implementing a strong state-led  development model, that focuses on fostering national industries, are the only countries who have successfully broken the cycle of dependency and poverty. To its credit the O’Neill government stands tall as arguably the first government in PNG willing to give this a serious go; his predecessors have proven all too willing to drink the foreign advisers’ coolaid, while at the same time lining their pockets through corruption and backroom deals.

But serious challenges remain. In particular, the PNG state bears the scars of dependency; a despondent civil service, all too prepared to take brown paper bags full of money – to be fair, with sky rocketing inflation this has become something of a necessity for PNG’s emerging middle class – and a political elite so consumed with frauds and scams, they have sign away the family silver to foreign multinationals for bargain basement prices.

O’Neill must stare down this reality, and combat it with all the resources at his command. One area in which this is particularly vital is roads. Along with telecommunications, utilities and urban planning, a well organised roads networks will be vital to a healthy, independent national economy that benefits not only big capital, but just as importantly – if not more importantly – those millions of small farmers who want to get their goods to market.

Road procurement then is no laughing matter. Accordingly, PNG Exposed has been scrutinising a number of recent contracts awarded to construction companies to build major roads and highways (see Post Courier 12/4/2013 and  18/1/2013). Collectively these awards amount to almost K1 billion. Yes, lets underscore and italicise that figure, K1 billion,  it is a sobering amount.

Sadly, following investigation many of the most lucrative contracts have been awarded to companies slammed for corruption, bribery and fraud by the World Bank, Transparency International, the Auditor General and the Public Accounts Committee. We outline key cases in the table below.

If the Prime Minister is to earn his reputation as a moderniser, roads procurement is a good a place to start as any. Prime Minister, PNG Exposed asks, why is a major artery of PNG’s economic health, being clogged up with contractors who the World Bank won’t touch?

Seizing back control of PNG’s mineral wealth is only one pillar for a truly independent PNG, it is absolutely vital every one of those dollars wrestled from foreign interests is used wisely, prudently and transparently, to fund the critical infrastructure future generations will need to make PNG the great nation it can be.

Company PNG Contract Corruption Allegations
China Harbour Engineering Company PNG Ltd  K318 million for 18.7 km of road.(K196,000,000 – Gerehu, Hanuabada and K122,000,000 – Gerehu, Nine Mile). China Harbour Engineering Company’s parent company, and all its subsidiaries (including its PNG subsidiaries), have been blacklisted until 12/1/2017 by the World Bank for all contracts related to roads and bridges, owing to “fraudulent practices” (Source: World Bank 2011).The courts in Bangladesh found that China Harbour Engineering Company paid bribes to the son of the Bangladeshi Prime Minister, who was then sentenced to six years in prison. (Source: The Hindu 2011)

In 2012 an Audit was conducted by the Jamaican government into two major infrastructure projects, one of which was awarded to China Harbour Engineering Company. The Minister for Transport, Works and Housing claimed, “The report from the forensic auditor has unearthed wanton disregard for the conventions and procedures established by the Government of Jamaica for project implementation, administration and management. These breaches of existing procurement guidelines have drained precious budgetary resources and undermined the very foundation of public institutional integrity” (Source: Caribbean Analysis 2012).

China Habour Engineering Company negotiated with the Cayman Islands Premier to build and run a major port facility. This deal was stopped, when the UK government blew the whistle over the procurement arrangements. Later it was revealed the process had been fast tracked by the Premier, in violation of legal process (Source: CayCompass 2013).

Global Constructions Ltd(Note: Current Works Minister, Francis Awesa, was a Managing Director and major Shareholder at Global Construction Ltd) K85,000,000 for Gordons Industrial Road Stage 2. According to Transparency International (TI), in 2001/2002, the People’s Democratic Movement (PDM) appointed one of its ‘cronies’ CEO of the National Capital District (NCD). TI then note, “The later awarding of a contract to expand the city’s road system to a Global Construction company (GC) immediately after the appointment of the PDM-sponsored CEO, Mr. Kipit, raised several implications, including that of manipulation of the tendering procedures. GC had experience only in the Southern Highlands province and had little exposure to civil engineering in urban cities like Port Moresby. There were also established companies like Curtin Brothers and Barclay Brothers, who had wealth of experience of civil engineering in PNG, but were overlooked for the construction job in the city. GC is also a company rumoured to have substantial share ownership among some members of the ruling PDM party” (Transparency International 2003).In 2002 the Public Accounts Committee found that a NCD road contract bid by Global Constructions Ltd was altered by an NCD official, so Global Construction’s quote was cheaper than its rivals. (Post Courier, 25/10/2002)

It is alleged that Global Constructions was given a K10 million contract in breach of the Public Finance Management Act. (Source: Post Courier 2012)

Global Construction has also been subject to criticism in social media forums, see here.

Paga Hill Development Company(Note: Former Deputy Prime Minister, Michael Nali, is a shareholder in this company) Amount unknown, Paga Hill Ring Road Paga Hill Developent Company’s Chairman and Secretary, Gudmundur Fridriksson, is alleged by the Public Accounts Committee to have acquired a 13.7 hectare plot of land at Paga Hill through “corrupt dealings”. His other company CCS Anvil has been slammed in 2 Auditor General reports and 3 Public Account Committee reports. The most serious accusation involves the alleged theft of K2 million from deceased estates when working for PNG’s Public Curator’s Office. (Source: International State Crime Initiative 2012)
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  1. Neil Nicholls
    April 15, 2013 at 1:46 pm

    No, this one takes the biscuit!

    From: PNGexposed Blog >To: nagnich@yahoo.com >Sent: Monday, April 15, 2013 11:55 AM >Subject: [New post] Road Contracts awarded to Crooked Companies blacklisted by the World Bank > >pngexposed posted: “Prime Minister O’Neil holds himself out as a moderniser, a leader who plans to centralise and utilise the nation’s vast natural wealth, to build the pillars of a strong, independent national economy, i.e. education, health, roads, transport, infrastructur” >

  2. JUDY
    April 15, 2013 at 9:23 pm

    Liked every word you have written in this article but I have this to say about it,I am disgusted with what every politician and what have done to PNG and including this present members and Mr Oneil.They continue to sale our and give away our birth rights to foreigners each and every day.I am sick of them,they can all go and jump into the lake three times and come twice!Bunch of idiots,they are.

  3. Jimmy Henry
    April 16, 2013 at 8:34 am

    When are we THE PEOPLE going to do something????? Viva La Revolution!!!!!!!!!!! DAMN IT!!!!!! ENOUGH!

  4. Fifaia Hunter
    April 16, 2013 at 8:46 am

    Well said in this Blog, it’s about time we rid of all these minsters for good, and elect younger and more visionary leaders who uphold the law, stand firm with Godly principles, and full of integrity.
    Only if such leadership is established, then we shall see changes. I am sick and tired of these corrupts practices by our very elect leaders!

  5. April 16, 2013 at 9:29 am

    Our leaders simply do not have a long term vision for his country. What they are offering are only short-term or temporarily measures driven by their own greed of wealth creation. Whatever they put now will deteriorate very quickly over the years. They will spend money on the same roads again awarding the contract to the same contractor. Remember this – we have visionless leaders who are driven by their own desires of personnel wealth creation.

  6. Bainip
    April 16, 2013 at 7:07 pm

    Interesting. Given that Paga Hill Development Company has neither been awarded a road contract, nor been black listed by the World Bank, one wonders why Lasslett would mention them in this article. Lame at best. #KLasslett’sDesperate #NoIntegrity

  7. patriot
    April 26, 2013 at 2:17 pm

    i think it is safe to put some form of trust in the current government, we can see ‘more’ tangible development and ‘anything’ more than what we have had is progress, this is good enough.
    one comment i have is; when a new government comes in for example the O’Neil-Dion, even if they are clean with good intentions, they must tread carefully.
    the thing about corruption is it has grown to imense rates here and the ties are unbelievably strong, it is embeded in our consciousness because the people of PNG accept too much, they learn to live in ruin because they do not know better (because of the lack of education).
    a new leader cannot be too radical because PNG is still very dependent on the foreign world. a new PM cannot come in with a hacksaw and say, ok i am cutting all you bastards off! we need to ease out of the grasp of corruption.
    in the meantime, Papua New Guineans, be supportive, call the wrongs and commend the good deeds.
    lets work together.
    one country. one nation Papua New Guinea!
    Planti love olgeta!

  8. patriot
    April 26, 2013 at 2:22 pm

    but yes, damn those dirty deals. check out some news on the Financial Inclusion going on with this government, giving grants to NDB etc… to help the percentage of the populace that are not ‘financially included’ and small to medium PNG-owned businesses.
    i would love to see your opinion on it. love the gist of this article by the way! good job!

  1. November 17, 2013 at 5:51 pm
  2. January 22, 2015 at 12:09 pm

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