How Chinese companies cheated during the construction of highway sections in FBiH

 

Fokus.ba came into possession of official documentation from the FBiH Highway about how Chinese companies cheated in the past period during the construction of certain sections of the highway in the territory of the FBiH, that is, during applications for tenders. Specifically, we are talking about the companies Sinohydro Corporation Limited, Powerchina Roadbridge Group Co. and China Gezhouba Group Co. LTD. All of them are already known for corruption scandals, frauds and non-fulfillment of contracts on a global level.

 

In the past period, the mentioned companies were chosen as contractors for the sections of the Počitelj - Zvirovići highway (Počitelj bridge), and were candidates in the tender for the Medakovo - Ozmica sections and the Prenj tunnel.

 

What is in the solutions?

According to the decisions of the FBiH Highway from May 16, obtained by Fokus.ba, two Chinese companies with which a contract was previously signed on the construction of the Počitelj bridge on the Počitelj-Zvirovići subdivision were disqualified for a period of two years, because they violated the contract.

 

These are the companies Sinohydro Corporation Limited and Powerchina Roadbridge Group Co. Ltd. These companies were an integral part of the consortium, together with the Azvirt Limited Liability Company from Azerbaijan, with which a contract for the construction of the Počitelj bridge worth 54,942,837 KM or 28,114,889 euros (without VAT) was signed in June 2019.

Four years later, as stated in the FBiH Highway decision, it was established that Sinohydro Corporation Limited and Powerchina Roadbridge Group Co. Ltd flagrantly breached the contract in that the work on the span construction of the bridge was not carried out by them, but by a subcontractor, i.e. the company Hering from Široki Brijeg, which, it was pointed out, should not have happened under any circumstances.

 

As explained in the decision, in the special conditions of the signed contract, it is stated that the contractor is prohibited from subcontracting works on the span construction of the bridge, while, on the other hand, the subcontractor can only perform works up to the maximum value of 15 percent of the contract. In this case, it was stated, the value of subcontracted works was much higher than 15 percent.

 

Namely, on May 10, Autoceste FBiH contacted the supervising engineer from the company IRD Engineering S.r.l. - Italy, which confirmed that the work on the span construction of the Počitelj bridge was completely carried out by Hering, and that no approval was issued for such a thing from the investor (Autocesta FBiH).

 

Commentary from Hering

The director of the company Hering Ladislav Bevanda briefly stated for Fokus that they have neither direct nor indirect contacts with Autoceste FBiH and that he knows nothing about it.

- That, if it is, is the least damage that people from Autocest FBiH do - commented Bevanda briefly.

Also, by the time of the statement of the supervising engineer, which was on May 12, the deadlines for the completion of the construction of the Počitelj bridge were blatantly breached in 218 days, since everything, according to the contract, was supposed to be completed on October 6, 2022.

By the way, it was only on July 6 of this year that the connection of the span structure of the Počitelj bridge was completed, while the complete works on this facility, i.e. the subsection of the highway, have not yet been completed.

In Autocesta's solution, when it comes to the disqualification of the Chinese companies Sinohydro Corporation Limited and Powerchina Roadbridge Group Co. Ltd states that it represents a ban on participating in all tenders and any other business in which Autoceste FBiH is an investor for a period of two years, not taking into account current construction contracts.

Due to certain ambiguities of this solution, i.e. open questions such as what will happen next with the construction of this subdivision because two of the three contractors have been eliminated, we turned to Autoceste.

When it comes to the Počitelj bridge, as they stated for Fokus from this public company, the work is being carried out without interruption based on the concluded contract, which is still active.

 

They stated that they implement all protection measures in accordance with the agreed provisions. After the final connection of the span structure of the bridge, as they pointed out, preparatory works are underway for the construction of waterproofing of the bridge, drainage, road construction, concrete and safety fences and other works.

 

Money from the EU

However, additional weight is given to this problem by the fact that the construction of the Počitelj-Zvirovići subdivision is also financed from the funds secured under the loan agreement concluded with the European Investment Bank (EIB) in the amount of 100 million euros and by grants from the European Union in the amount of five million euros that are provided within the framework of the Connection Agenda through the Investment Framework for the Western Balkans (WBIF).

 

Taking into account that this is EU money, the implementation of which is strictly monitored, it is evident that the decision of the FBiH Highway is the result of the reaction of the EU institutions.

Sinohydro Corporation Limited and Powerchina Roadbridge Group Co. Ltd are companies that are already blacklisted by the World Bank and the African Development Bank for corruption and fraud. However, this did not prevent the mayor of East Sarajevo, Ljubiša Ćosić, as recently announced by Inforadar, from signing a Memorandum of Cooperation with them related to the construction of a tunnel through Trebević that would connect East Sarajevo with Pale.

 

The third company that was disqualified, when it comes to the business of the FBiH Highway, is China Gezhouba Group Co. Ltd.

Along with it, the Turkish company Ozaltin lnsaat Ticaret ve Sanayi Anonim Sirketi was also disqualified. According to the solution in Fokus' possession, both companies submitted false documentation during the application for last year's tender for the construction of the Medakovo-Ozimica section as well as the Prenj tunnel.

- For the Medakovo - Ozimice procurement procedure, it was stated in the form and confirmation that the company China Gezhouba Group Co. Ltd participated with 50% in the Joint Venture, as a partner, while in the form for the procurement procedure for the construction of the Prenj Tunnel for the same project, it was stated that the company was the sole contractor for the project in question. Upon inspection of the submitted certificates and an extract from the contract, and the translation of the same by a court interpreter for the Chinese language, it was found that according to the submitted contract, China Gezhouba Group Co., Ltd. was not a member of Joint Venture at all, but China Gezhouba Group Fifth Engineering Co. Ltd., while according to the confirmation of the successful realization of the contract, the Joint Venture partner was neither China Gezhouba Group Co. Ltd., nor China Gezhouba Group Fifth Engineering Co. Ltd, already the third company of China Ge zhouba Group Road and Bridge Engineering Co. Ltd - is stated in the decision of Autocesta FBiH.

 

Turkish companies

When it comes to the Turkish company, it was established that, contrary to its statements in the tender documentation, it did not complete the project in Turkey "Giresun Ayr. – Dereli – Sebinkarahisar Susehri Ayr. Motonvay" nor were the correct statements about that project, which was confirmed by the General Directorate of Motorways in Turkey.

 

Finally, on March 9 of this year, the contract for the construction of the Medakovo-Ozmica section was signed with another Turkish company, Cengiz Insaat Sanayi ve Ticaret A.S. worth 361.7 million euros (without VAT).

Since the EU participates significantly in the financing of this section, Autoceste FBiH referred to the regulations of the European Investment Bank and the European Bank for Reconstruction and Development.

By the way, China Gezhouba Group Co. Ltd is part of a conglomerate of companies that also includes China Gezhouba Group Corporation (CGGC), with which the Government of RS signed a contract for the construction of the Dabar Hydroelectric Power Plant in 2016, a project worth 131 million KM that has not yet been realized.

It is also part of the consortium for the construction of the already failed Block 7 Tuzla Thermal Power Plant project, which Fokus wrote about in detail.

Through an official e-mail, we addressed all the mentioned Chinese companies for a comment, but we did not receive it until the conclusion of this text.