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Logo of Phnom Penh Post newspaper Phnom Penh Post - Chinese firm to continue road project despite breach

Chinese firm to continue road project despite breach

Chinese firm to continue road project despite breach

THE Ministry of Public Works and Transport (MPWT) will allow a Chinese construction

company to continue building an Asian Development Bank (ADB) funded road in Kratie

province despite the fact the company has breached its contract.

The China-Jilin International Economic and Technical Corporation (JIC) signed a contract

with the MPWT September 2000 to build an 83-kilometer long section of road, number

7E, linking Snuol with Kratie town. The $11 million cost was loaned to the government

by the ADB.

Earlier this year, however, JIC sub-contracted the construction of 65 kilometers

of the road to a South Korean firm, East Toyo Construction (ETC) without the knowledge

of the ministry. That was a breach of contract, agreed the bank and the ministry.

"[JIC] should not subcontract the project without asking permission from the

Cambodian government," said Anthony Jude, deputy head for the ADB.

The problems emerged when lawyers for ETC contacted the media December informing

them ETC had ceased work after discovering differences between the agreed specifications

that the road was contracted to be built to.

The court prosecutor in Kratie, Penh Vibol, said he knew of three different sets

of specifications, but had no idea which was the correct one.

He has issued a warrant to withhold the passport of the president of JIC on suspicion

of document falsification and breach of contract. Vibol said JIC president Cao Min

Hong would face a jail term from five to 15 years if convicted.

However, the MPWT said its investigation found no evidence JIC had deliberately faked

the specifications. Chhin Kong Hean, director-general of the MPWT, said his ministry

had decided therefore that it would not stop JIC continuing with the project.

"My minister has found nothing wrong with the technical problems," said

Kong Hean after a two day visit to the site with Minister Khy Taing Lim December

16. "We know JIC very well, so we will not stop the company from working."

ETC's attorney said the company would sue JIC for $1 million in compensation for

labor costs, transport and rental of construction equipment.

While the dispute between the two companies continues in court, the ADB said it was

the ministry's problem. Jude said the dispute had nothing to do with the ADB. he

said the bank would conduct an internal investigation into the matter.

"[The government] is the employer," Jude said. "It borrowed the money,

and it is responsible to make sure the money is used properly."

Chea Vannath, president of the Center for Social Development, said all parties, including

the ADB, shared responsibility.

"This is irresponsible," said Vannath. "I think the responsibility

lies with everyone, because the project needs monitoring and evaluation. To ensure

transparency and accountability, the ADB should monitor the project appropriately,

and MPWT should take legal action [against JIC]."

Vannath said corruption was common in road construction and said that when problems

occurred the parties involved regularly blamed each other.

SRP MP Son Chhay, who was sacked September as chairman of the National Assembly's

public works commission, requested the ADB and World Bank introduce a strict policy

to monitor projects rather than allowing the government to do so alone.

Chhay said that in 1999 he wrote a complaint letter to the ADB and World Bank - they

fund most road construction in Cambodia - regarding the fact that all loans

are granted directly to the government, rather than going through National Assembly

debate as required by the Constitution. He got no response.

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