SHAL­IZA HAS­SANALI

The Wa­ter and Sew­er­age Au­thor­i­ty (WASA) has agreed to pay lo­cal con­struc­tion firm Kall­co Lim­it­ed $34 mil­lion in “full and fi­nal set­tle­ment” of a law­suit over non-pay­ments for ser­vices ren­dered.

This is con­tained in a Sep­tem­ber 14, 2020, High Court or­der ob­tained by the Sun­day Guardian. The par­ties have agreed for the set­tle­ment was to be made in two pay­ments—an ini­tial sum of $20 mil­lion with an agreed bal­ance of $14 mil­lion.

It states: “The de­fen­dant has paid to the Claimant the sum of TT $20 mil­lion up­on the ex­e­cu­tion of the said Court Or­der dat­ed Ju­ly 27, 2020.

“The De­fen­dant shall pay to the Claimant the agreed bal­ance of $14 mil­lion with­in sev­en days from the ex­e­cu­tion of the In­stant Court Or­der.”

The law­suit will be of­fi­cial­ly dis­con­tin­ued once full pay­ment is made.

An­oth­er doc­u­ment ob­tained by Sun­day Guardian showed that WASA made the first pay­ment to Kall­co on Au­gust 3, 2020. It is un­clear whether the $14 mil­lion bal­ance is still out­stand­ing.

WASA list­ed five in­voic­es for work un­der­tak­en by Kall­co to­talling more than $8 mil­lion. Three in­voic­es with the num­bers 2909, 2911 and 2912 dat­ed June 23, 2015, were for $4,909,838.85, $636,113.53 and $550,460.15 re­spec­tive­ly. The re­main­ing two in­voic­es, dat­ed June 30, 2015, and bear­ing the num­bers 2927 and 2930 were for $502,665.46 and $1,419,772.64, re­spec­tive­ly.

Kall­co se­cured sev­er­al con­tracts from gov­ern­ment agen­cies for the con­struc­tion of roads and bridges, as­phalt paving, road re­in­state­ment and dredg­ing works.

In a brief tele­phone in­ter­view last week, chair­man of Kall­co Group of Com­pa­nies Arvin Kalloo con­firmed that WASA had set­tled a por­tion of its out­stand­ing bills with the com­pa­ny but re­fused to di­vulge the sum in­volved. Kalloo ad­vised that we send him writ­ten ques­tions and a list was sent via What­sApp on Wednes­day, in­clud­ing whether the com­pa­ny had ini­ti­at­ed le­gal ac­tion against WASA, how long the pay­ments had been de­layed and the rea­sons why WASA had re­fused to pay the com­pa­ny.

Kalloo promised to re­ply by the next day. A copy of WASA’s $20 mil­lion pay­ment to his com­pa­ny was al­so sent for his pe­rusal.

How­ev­er, in an about-turn, Kalloo re­spond­ed that “in the in­ter­est of avoid­ing pro­longed and cost­ly lit­i­ga­tion the mat­ter was set­tled on the eve of the tri­al in an amount I am not at lib­er­ty to dis­close.”

On Fri­day, Kall­co’s com­mu­ni­ca­tions de­part­ment agreed to an­swer the ques­tions by the end of the day. Of the 14 ques­tions sent, the com­pa­ny on­ly an­swered two, stat­ing that they are still a WASA con­trac­tor and had been pro­vid­ing work to the au­thor­i­ty since 2006.

Kall­co is one of sev­er­al con­trac­tors that has tak­en le­gal ac­tion against WASA for monies owed. In May, the cash-strapped util­i­ty lost its bid to de­lay pay­ment of a $140 mil­lion debt to T&T Se­cu­ri­ty Ser­vices Ltd for pay­ments un­der two con­tracts from 2010 and 2014.

A 62-page Au­gust 2020 WASA Fi­nan­cial Sta­tus Re­port lists Kall­co as one of five com­pa­nies still owed by WASA.

The oth­er four com­pa­nies still to be paid are:

• ↓Toshi­ba Wa­ter So­lu­tions—$7,772,805.10

• Lead Con­trol—$2,944,392.10

• GEM—$1,836,141.94

• ↓Su­per In­dus­tri­al Ser­vices—$1,340,846.21

Bil­lions in un­ver­i­fied debts

In an in­ter­view with Guardian Me­dia in March, Pub­lic Util­i­ties Min­is­ter Mar­vin Gon­za­les ad­mit­ted that WASA had spent hun­dreds of mil­lions of dol­lars in road paving con­tracts, ri­valling the Min­istry of Works and Trans­port’s paving bills and re­sult­ing in huge kick­backs for friends and fam­i­ly of WASA em­ploy­ees.

Last De­cem­ber, the min­is­ter said WASA had near­ly “$600 mil­lion of un­record­ed li­a­bil­i­ty...mean­ing that $600 mil­lion in debts are owed to con­trac­tors, with WASA not hav­ing the ca­pac­i­ty to ver­i­fy those bills due to mis­man­age­ment.”

On Jan­u­ary 6, 2016, two weeks af­ter then chair­man Rom­ney Thomas or­dered an au­dit in­to cer­tain ir­reg­u­lar­i­ties in the op­er­a­tions of WASA, a fire broke out at its St Joseph’s head­quar­ters.

The blaze de­stroyed the records de­part­ment where in­voic­es, bills and files which were re­lat­ed to gov­ern­ment con­tracts award­ed for wa­ter projects and pri­vate de­vel­op­ment en­ter­pris­es were kept.

Gon­za­les said sev­er­al con­trac­tors had tak­en WASA to court “and WASA has been los­ing these mat­ters be­cause the records at WASA can­not sub­stan­ti­ate the debts.” A re­view of the util­i­ty’s fi­nan­cial re­port sub­stan­ti­at­ed what Gon­za­les had said.

WASA has sig­nif­i­cant out­stand­ing li­a­bil­i­ties owed to con­trac­tors for works ex­e­cut­ed with­out con­tracts or pur­chase or­ders and for li­a­bil­i­ties that have not been en­tered on their Or­a­cle sys­tem.

“These un­record­ed li­a­bil­i­ties will be­come due and payable when ver­i­fied and record­ed,” the re­port stat­ed.

In March 2018, WASA em­barked on a project to quan­ti­fy un­record­ed in­voic­es from the Al­cie to Or­a­cle sys­tem.

“This project was cru­cial to en­sure that the au­thor­i­ty’s fi­nan­cial state­ments present a true and fair view of to­tal li­a­bil­i­ties in com­pli­ance with In­ter­na­tion­al Fi­nan­cial Reg­u­la­to­ry Stan­dards and au­dit rec­om­men­da­tions.”

Ac­cord­ing to the re­port, “as of Au­gust 14, 2020, WASA es­ti­mat­ed its to­tal con­trac­tor in­debt­ed­ness at $1.849 bil­lion.” A break­down showed val­i­dat­ed ac­counts payables of $216.3 mil­lion while the un­val­i­dat­ed amount was put at $104.9 mil­lion. Of the al­most $2 bil­lion owed, $321.3 mil­lion ac­count­ed for val­i­dat­ed and un­val­i­dat­ed in­voic­es sub­mit­ted by con­trac­tors.

In­voic­es in the pur­chas­ing de­part­ment that had not yet been sub­mit­ted to ac­counts were $1.2 bil­lion. An­oth­er $2.7 mil­lion in in­voic­es sub­mit­ted by user de­part­ments to pur­chas­ing de­part­ment had not yet been re­ceipt­ed and in­voic­es to­talling $234.8 mil­lion re­ceived by user de­part­ments from con­trac­tors were still to be record­ed or ver­i­fied for pro­cess­ing.

Some of the ser­vices con­trac­tors sup­ply to WASA in­clude trans­port­ing and dis­tri­b­u­tion of truck borne wa­ter sup­ply, road paving, rental of equip­ment and ve­hi­cles, chem­i­cals, in­stal­la­tion of stop corks, pipelines and valves, se­cu­ri­ty and main­te­nance of grounds.

The re­port stat­ed that con­trac­tors have been ag­gres­sive­ly fol­low­ing up pay­ments, some have tak­en le­gal ac­tion and oth­ers are com­mu­ni­cat­ing their in­tent to do the same.

“Due to sev­er­al con­trac­tors with out­stand­ing bal­ances ini­ti­at­ing le­gal ac­tion, in March 2019 ap­proval was sought and ob­tained from the board to set­tle out­stand­ing payables to­talling $30.8 mil­lion via month­ly in­stal­ments of $1.2 mil­lion,” the re­port stat­ed.

The re­port al­so showed that WASA pro­grammes such as the Na­tion­al So­cial De­vel­op­ment and Adopt-A Riv­er pro­grammes have been chal­lenged by is­sues re­sult­ing in de­layed pay­ments to con­trac­tors, sus­pen­sion of works and de­lays in projects.

“Some of these con­trac­tors have sought le­gal ac­tion to have their debt paid. This has re­sult­ed in board ap­proved pay­ments be­ing made from re­cur­rent funds to set­tle these debts. These ad­di­tion­al pay­ments ex­ert ad­verse pres­sure on the au­thor­i­ty’s cash flow,” it stat­ed.

Fund­ing un­der the Na­tion­al So­cial De­vel­op­ment Pro­gramme was al­so ex­haust­ed. The last re­lease of $1.1 mil­lion was re­ceived on Feb­ru­ary 20, 2015.

“How­ev­er, there are out­stand­ing li­a­bil­i­ties owed to con­trac­tors for com­plet­ed projects in pri­or years and pay­ment of re­ten­tion.”

In June 2020, Cab­i­net agreed that NCB Glob­al Fi­nance Ltd be award­ed a man­date to pro­vide a $125 mil­lion fixed-rate loan for the fi­nanc­ing of li­a­bil­i­ties.

One of WASA’s 14 point plans to deal with its fi­nan­cial woes is to make a min­i­mum pay­ment of $140.4 mil­lion per quar­ter to con­trac­tors. As of Ju­ly 31, 2020, WASA had paid $464.6 mil­lion to con­trac­tors.

Chair­man: WASA sad­dled

with un­ver­i­fied bills

WASA chair­man Ravin­dra Nan­ga said the pay­ment to Kall­co last Au­gust which “pre­dates this cur­rent board, ap­pears to be part of a set­tle­ment that was ar­rived at based on a court mat­ter that was ini­ti­at­ed by Kall­co.”

Nan­ga could not pro­vide par­tic­u­lars on Kall­co’s court mat­ter but said: “It was based on out­stand­ing in­voic­es.”

He said WASA is sad­dled with sev­er­al un­ver­i­fied bills and has en­gaged an ex­ter­nal con­sul­tant to au­dit those bills.

“And this board is be­ing guid­ed by that au­dit in pay­ing in­voic­es. Where the con­trac­tor con­tin­ues to claim un­ver­i­fied in­voic­es, this board’s po­si­tion is that they will have to go to court and prove that is out­stand­ing, once they are un­able to ver­i­fy the in­voice.”

Nan­ga said as a re­sult of these un­ver­i­fied bills WASA’s board man­dat­ed that all con­trac­tors be re­mind­ed about the prop­er pro­ce­dure to be fol­lowed for in­voic­es.

“Pro­ce­dures have been put in place to en­sure this is­sue of un­ver­i­fied in­voic­es does not re­oc­cur. If they do, the man­ag­er in charge will be held ac­count­able,” he said.