Gail Alexan­der

Don't mess with T&T. That was the mes­sage from At­tor­ney Gen­er­al Anand Ram­lo­gan yes­ter­day as he an­nounced that Gov­ern­ment had emerged vic­to­ri­ous with a $1.382 bil­lion set­tle­ment from British Aero­space En­gi­neer­ing?Sys­tems (BAE) over the can­cel­la­tion of an or­der for three Off­shore Pa­trol Ves­sels (OPVs).

"Gov­ern­ment has agreed to pay BAE?not one red cent,"?Ram­lo­gan added, an­nounc­ing the set­tle­ment of the two-year dis­pute. Ram­lo­gan said a diplo­mat­ic ini­tia­tive by the British Gov­ern­ment "bore fruit" in favour of the T&T Gov­ern­ment. The set­tle­ment, he said, was a sig­nif­i­cant prece­dent for T&T and cre­at­ed le­gal his­to­ry by suc­cess­ful­ly stand­ing up to one of the world's biggest mil­i­tary de­fence com­pa­nies.

Yes­ter­day, in a brief state­ment, BAE?said: "The set­tle­ment with the T&T Gov­ern­ment is at an amount con­sis­tent with pro­vi­sions held." It said af­ter the can­cel­la­tion the three OPVs were sub­se­quent­ly sold to the Brazil­ian Navy un­der a con­tract signed in De­cem­ber 2011 and the first ship was hand­ed over in June.

The Lon­don Fi­nan­cial Times re­port­ed yes­ter­day that BAE had reached a set­tle­ment in the "long-run­ning dis­pute with T&T." It added: "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." The FT al­so quot­ed an an­a­lyst, Robert Stal­lard, as say­ing the deal "should be seen as a pos­i­tive de­vel­op­ment be­cause it re­duced the com­pa­ny's po­lit­i­cal risk.

He not­ed that by 2012 BAE had re­ceived about £130 mil­lion as a work­ing cap­i­tal in­flow from Brazil and had car­ried a trade li­a­bil­i­ty of £125 mil­lion in de­ferred in­come rel­a­tive to the set­tle­ment. Stal­lard was re­port­ed as say­ing the set­tle­ment was like­ly to be for £125-£130 mil­lion.

"There should be a net nil re­sult in the work­ing cap­i­tal for the year as we un­der­stand Brazil has al­ready paid for the ships," he added. A sto­ry in the Glob­al Ar­bi­tra­tion Re­view, how­ev­er, quot­ed a sim­i­lar num­ber but in US dol­lars, not ster­ling. "BAE," it said, "has to­day agreed to pay US$131 mil­lion to the Gov­ern­ment of Trinidad and To­ba­go to set­tle ICC ar­bi­tra­tion pro­ceed­ings over a ship­build­ing con­tract."

At yes­ter­day's me­dia brief­ing, Ram­lo­gan, claim­ing vin­di­ca­tion against his crit­ics, said the ar­bi­tra­tion with BAE took place in?Lon­don in May, first on li­a­bil­i­ty and then on the as­sess­ment of dam­ages. Ev­i­dence was giv­en by the AG, Com­modore Gar­nett Best and Capt Mark Williams of the T&T Coast Guard. The agree­ment was reached on Tues­day.

Ram­lo­gan added: "Sub­se­quent to the ar­bi­tra­tion hear­ing, which we thought went pret­ty well, a diplo­mat­ic ini­tia­tive en­sued un­der the aus­pices of the British High Com­mis­sion and that ini­tia­tive has borne fruit but not in the way some peo­ple thought it would. It has in­stead borne fruit in favour of the T&T?Gov­ern­ment.

"BAE, as per the set­tle­ment agree­ment, has agreed to pay the Gov­ern­ment of T&T and the peo­ple of T&T the sum of $1.382 bil­lion in set­tle­ment of the claim against BAE. "The Gov­ern­ment of T&T?has agreed to pay BAE not one red cent for their claim of over $600 mil­lion against Gov­ern­ment.

"We are grate­ful to his Ex­cel­len­cy (British High Com­mis­sion­er) Arthur Snell for the diplo­mat­ic sup­port he had pro­vid­ed to us in his ef­forts to set­tle this mat­ter." Ram­lo­gan paid trib­ute to the le­gal team of Joe Smouha, Alan New­man, John Almei­da (of Charles Rus­sell?LLP), Neena Po­li­ah and oth­ers, in­clud­ing Jer­ry Hospedales,

He said there was no pos­si­bil­i­ty of an ap­peal against the set­tle­ment since all par­ties had signed on the set­tle­ment agree­ment. ?The first pay­ment to­wards the set­tle­ment will be over £100 mil­lion next Jan­u­ary and a sec­ond pay­ment next May. Be­cause Gov­ern­ment has paid off loans ear­ly, the State would have a wind­fall of $57.1 mil­lion which would have been in­ter­est pay­ments on the loan, he added.

He said there would be fur­ther sav­ings from the op­er­a­tional costs of the OPVs, whose re­cur­rent costs would have been $32 mil­lion an­nu­al­ly. Asked if the out­come meant the mes­sage on such is­sues was "don't mess with T&T,"?Ram­lo­gan said: "Yes, it is."

He added: "It has a very pos­i­tive im­pact that T&T?is about se­ri­ous busi­ness and not a Third World ba­nana re­pub­lic. "It means for all in­ter­na­tion­al con­trac­tors, we will re­spect your con­trac­tu­al oblig­a­tions and we want you to ho­n­our ours and if you don't, we are pre­pared to stand up and stand our ground to deal with the mat­ter, no mat­ter how pow­er­ful you are.

"It al­so says to my crit­ics they should think twice be­fore they open their mouth to crit­i­cise or con­demn. I'm very se­ri­ous about my job." Ram­lo­gan slammed Op­po­si­tion Leader Dr Kei­th Row­ley, PNM?MP Colm Im­bert and oth­er crit­ics who said Gov­ern­ment would lose the ar­bi­tra­tion. He said an Oc­to­ber 28 news­pa­per sto­ry on the is­sue was "com­plete­ly false, base­less, en­tire­ly mis­con­ceived and lack­ing fac­tu­al premise."

The back­sto­ry

The ves­sels were or­dered by the PNM ad­min­is­tra­tion in April 2007 in a to­tal fi­nan­cial com­mit­ment of $2.192 bil­lion. The PP?Gov­ern­ment can­celled the ves­sels four months af­ter as­sum­ing of­fice in 2010

Prime Min­is­ter Kam­la Per­sad-Bisses­sar cit­ed tech­ni­cal de­fi­cien­cies and de­lays. She said dam­ages of over $61 mil­lion were over­due and payable by BAE to Gov­ern­ment and Gov­ern­ment would be­come en­ti­tled to, among oth­er things, a full re­fund of mon­ey paid to BAE for the un­de­liv­ered ves­sels. BAE went im­me­di­ate­ly to ar­bi­tra­tion, claim­ing $611 mil­lion?from T&T. The Gov­ern­ment coun­ter­sued for $1.4 bil­lion in dam­ages.

Why the OPVs were can­celled?

In Sep­tem­ber 2010 when Gov­ern­ment an­nounced the can­cel­la­tion of the OPVs, the Prime Min­is­ter's Of­fice said the Gov­ern­ment was ex­er­cis­ing its con­trac­tu­al rights in can­celling the con­tract.

The of­fice said the con­trac­tu­al rights were de­signed to pro­tect the Gov­ern­ment in cir­cum­stances where the Gov­ern­ment was left with no oth­er rem­e­dy and be­cause of BAE's se­ri­ous and per­sis­tent de­lays and tech­ni­cal de­fi­cien­cies, Gov­ern­ment had con­clud­ed that it was in its best in­ter­ests to ex­er­cise this right.

With a con­tract of this size and im­por­tance, and with ma­jor de­lays al­ready an­nounced, it was in­cum­bent on the new Gov­ern­ment to re­view the OPV?project, the of­fice?said. Gov­ern­ment said dur­ing the ear­ly months of 2010, con­cern had been raised over the ca­pa­bil­i­ties of the OPVs com­bat sys­tem.

BAE, it said, had pro­posed Gov­ern­ment take de­liv­ery of the de­fec­tive ves­sels de­spite com­bat-sys­tem de­fects that might prej­u­dice the ves­sels' op­er­a­tional ca­pa­bil­i­ty.

PNM CON­FUSED

Con­fus­ing. That was PNM?MP?Colm Im­bert's take on the Gov­ern­ment/BAE set­tle­ment. "It's con­fus­ing. When you read the ar­ti­cle on it in the Fi­nan­cial Times, it gives the im­pres­sion BAE?was suc­cess­ful in ar­bi­tra­tion, and the AG is say­ing T&T was suc­cess­ful. So I won't com­ment un­til I?get to the bot­tom of this."

Op­po­si­tion Leader Kei­th Row­ley, deputy leader Mar­lene Mc­Don­ald and PNM?PRO?Faris?Al-Rawi didn't an­swer calls to their mo­bile phones. PNM?MP?Amery Browne said: "I'm seek­ing fur­ther facts on the mat­ter. God knows the Trea­sury needs mon­ey."