AG: T&T wins $1.3b claim against UK firm
By Asha Javeed (T&T Express).
An arbitration between UK-based BAE Systems and Trinidad and Tobago over the cancellation of an order for three offshore patrol vessels (OPVs) has been settled in this country's favour for the sum of $1.382 billion.
That's $272 million less than what the State was seeking when it filed a counter-claim during the two-year-long negotiations.
After the People's Partnership Government cancelled the OPV order on September 16, 2010, BAE Systems initiated arbitration proceedings hoping to recover $611.032 million from the State as it had taken a 100 million pound sterling charge on its books.
In turn, T&T had issued a counter-claim of $1,654 million for the boats, which were valued at 155 million pounds.
Describing the outcome as "victorious", Attorney General Anand Ramlogan said this country had demonstrated that it is serious about business and it is no "third world banana republic", in which international companies can "simply come and get away with murder".
He was speaking at a media briefing at his Cabildo Chambers in Port of Spain yesterday after BAE, which is a publicly-traded company on the London Stock Exchange, posted news that a settlement had been reached "at an amount consistent with provisions held".
However, Ramlogan insisted Trinidad and Tobago would not have to pay "one red cent" to the British company.
Two weeks ago, Ramlogan said he had tabled a note to Cabinet on whether the Government would accept the $1.3 billion from BAE, with the recommendation that the Government not pay any sums to BAE.
Ramlogan said the Government's first act, after it receives the first of two tranches of payment in January 2013, will be to settle the multimillion-dollar loans to BNP Paribas and Lloyds, which the People's National Movement (PNM) government took to buy the OPVs.
He said the balance of $1,042 million on the loan, if settled early, could save the state $57 million in interest.
After repayment of the loan, the Government will have $340 million, which Ramlogan said will be handed over to Finance Minister Larry Howai to use at his discretion on budgetary promises.
He said the Government was also able to save the country money in two instances—first, a $32 million recurrent expenditure of maintaining the OPVs annually and, second, out of an estimated legal bill of 7 to 8 billion pound sterling for the arbitration, the Government had only spent about 1.5 to 2 billion pound sterling.
At the same time, the Attorney General could not say how much money has been lost on the OPV deal because of "abysmal" record-keeping.
"Some of the expenditure was lost in the cracks of the projects, given the span of time. Large crews were housed in Great Britain and were receiving training. There were costs— infrastructure created to accommodate the OPVs, etc. A lot of money was spent," he said.
He noted that the case had concluded earlier because liability had been established on BAE's part and, thus, the settlement was signed on November 13, with no room for appeal on BAE's part.
Ramlogan said it was on his advice that the Government agreed to the cancellation of the OPVs, which the former PNM administration had entered into with BAE in April 2007.
His decision was informed by the delays in delivery of the OPVs—the first OPV was scheduled to be delivered in May 2009 and the second was supposed to be delivered in February 2010... but none were delivered.
He said, too, there was a serious problem with the combat system, and the Government was not prepared to accept the vessels in the defective condition, which led to the cancellation.
The boats were subsequently sold to the Brazilian navy for 60 million pound sterling.
"After careful consideration and after receiving sound legal and technical advice, this Government cancelled the OPV contract. We didn't just get up one day and decide on a 'vaps' to get out of the contract. We acted carefully because we inherited very expensive contract obligations from the PNM," he said.
Questioned on the interpretation of BAE's statement on the matter, Ramlogan responded: "To the extent that that has been put out there, I think that is most unfortunate."
The Financial Times yesterday reported that "the deal should be seen as a positive development because it reduced the company's (BAE) political risk."
"I am not concerned about BAE because we know what the facts are. I can well understand, it's a publicly listed company. Of course, they would want to protect the integrity of the stocks on their stock exchange, and they will want to protect the integrity of the reputation of their company. That's par for the course. I don't hold out that there'll be any ill will about that because I am here to clarify the position and state the facts."
Asked whether the country's borders were now more vulnerable without the vessels, given that T&T is a transhipment hub for drugs and guns, Ramlogan answered: "Where is the evidence of that? Has the murder rate, for example, tripled as to what obtained under the PNM? There is no empirical evidence to support that."
At the moment, the Government is also engaged in three other arbitrations—on behalf of Methanol Holdings in London, England; on behalf of Petrotrin in New York, USA; and with the Hyatt Corporation in Chicago, Illinois, USA.
British High Commission welcomes agreement The British High Commission has welcomed the agreement between BAE Systems and the Government of Trinidad and Tobago on the offshore patrol vessel (OPV) contract. In a release yesterday, the High Commission said "it noted the announcement of the settlement between BAE Systems and the Government of the Republic of Trinidad and Tobago on the offshore patrol vessel contract. "We welcome the agreement between BAE Systems and the Government.
This comes as the culmination of several months of negotia- tions. We commend the Government's continued determination and commitment to reach an amicable settlement and the similar determination shown by BAE Systems. "The British High Commission in Trinidad and Tobago will continue to work with the Government of Trinidad and Tobago in its efforts to strengthen this nation's security and justice systems," the release ended.
BAE, Govt in secret deal for more boats.
Although the Government is claiming to have won an arbitration battle with British Aerospace Engineering Systems (BAE), one of the world’s largest military defence companies, indications are that a secret deal between the parties is in the works for T&T to acquire several second-hand boats. “Information is there may be a secret deal going on between the Government and BAE for the purchase of second-hand military vessels,” a well-placed source, requesting strict anonymity, told the T&T Guardian yesterday.
“Reports are that BAE leased the vessels to another country and the lease came to an end. If it is true the Government plans to buy these second-hand vessels from BAE, it means there is some deal going on in conjuction with the arbitration,” said the source. “There may be more to the $1.382 billion settlement the Government got from BAE. There may be far more to the story than we think,” the source said.
Attorney General Anand Ramlogan, contacted for a response on the matter, only said, “Talk to National Security Minister Jack Warner. I don’t want to comment on matters that concern his ministry.” Meanwhile, the Opposition PNM is likely to contact BAE in a bid to get more information on the arbitration matter, which it says is “very confusing and contradictory.”
PNM MP Colm Imbert was a member of an inter-ministerial committee for the purchase of military assets (the OPVs) in the last administration. Asked if he had contacted BAE on the current issue, he replied, “I have not contacted them as yet.”
Imbert said he is not satisfied all the information on the BAE settlement coming from the Government is correct and he’s checking to make sure all the facts are in order. He said reports from the international press are different from those coming from the Government. “The international press is saying BAE won the arbitration and was paid by the Government. The Attorney General is saying these reports are a fabrication.”
Further compounding the confusion is the question of the real cost incurred by the Government in the OPV matter, Imbert said. “The legal costs are significant, but they pale in comparison to the costs incurred in training Coast Guard officers to use the vessels, and other costs, as well. Research leaves me to believe the AG is not talking about a lot of expenses the Government can’t recover. “But any objective assessment of the costs must include all expenses. It’s far more than is being indicated by the Government,” said Imbert, who is promising to reveal more details soon.
The Financial Times report on Wednesday said BAE must have been relieved at the settlement. “The settlement brings to a conclusion a disagreement that arose when Trinidad cancelled an order for the three boats following cost overruns and delays. “The decision in 2010 came so late in the development phase of the contract that one of the three boats was ready to be delivered, prompting BAE to take a £100 million charge. “Even so, the settlement will come as a relief to BAE, which has been under pressure from investors. BAE said the settlement was ‘at an amount consistent with provisions held.’”
