Response to Odebrecht consortium’s demand for an additional 700 million dollars to complete the Punta Catalina coal plants that are two years behind.
Monday, August 28,2017,
Santo Domingo, D. N.
Monday, August 28,2017,
Santo Domingo, D. N.
The only option the government has before Odebrecht after it confessed last December that it bribed public officials in the Dominican Republic with $92 million dollars between 2001 and 2014 is the application of Law 340-06 on Public Contracting.
Articles 11,14,36,65 and 66 of this law provide for the termination of contracts of companies that commit acts of corruption or are related thereto, and the lifelong disqualification of their status as contractors or bidders of the Dominican State,”without liability to the contracting entity” (Article 66.4).
If Odebrecht has had the audacity to demand an additional 700 million dollars from the government of Danilo Medina to complete the construction of the Punta Catalina coal plants now with a two-year delay, it is because the country is being held hostage by this transnational company and victim of its own corruption, a participant and accomplice in the corruption of this company that turned the country into an international money laundering center and a brothel for national and foreign officials.
It is impossible to believe in the government’s refusal to comply with Odebrecht’s demand and not to think that this refusal will be nothing more than feeble bargaining for the consumption of advertising of an unavoidable payment that will come from the citizen’s ribs.
The government, instead of applying the Public Contracts Law, concluded an approved agreement between the Attorney General’s Office and Odebrecht, with the purpose of protecting it from criminal prosecution of its crime of corruption, maintained the contracts of this company, especially Punta Catalina, and has continued to give it millions of dollars for this work, as if nothing had happened.
Danilo Medina preferred to lose around 300 million dollars pending disbursement of the European bank pool loan and to issue 500 million sovereign bonds, before abandoning his relations with Odebrecht, whose corrupt practice in the Punta Catalina project is the cause of the decision of these banks.
The complicity story with Odebrecht in Punta Catalina began with a fixed bidding process to favor it and sending a contract that violated the terms of reference of this bidding process to to the National Congress, diluting the turnkey nature of this contract, incorporating a cost escalation clause, No. 9.1. and assigning an exemption of all types of taxes through clause 12.1.3.
This pairing between the government and Odebrecht continued when this company was unable to meet its contractual commitments because of its corrupt behavior.
Danilo Medina and his government, instead of denouncing and annulling the contract for breach, covered the lack of financing from the National Bank for Economic and Social Development of Brazil (BNDES), with domestic resources.
They did not care about violating the Constitution of the Republic and the national budget law to allocate a large part of the savings from the Oil Tax for the construction of Punta Catalina and seriously endanger the stability of the Bano de Reservas with loans that did not comply with any legal requirement, in order to settle commitments with local contractors and suppliers of this work.
If Dominican workers’ pension funds were spared from this predatory attack to raise funds to be invested in Punta Catalina, it was due to opposition from European banks, especially the shareholders’ meeting of the French bank Société Genérale, who threatened to withdraw their financing in the event that the government spent $600 million of these funds on this project. In Europe, it is forbidden for pension funds to be used in the construction of coal plants and other investments related to this fossil fuels.
Odebrecht’s demand for more money, in addition to dramatically exposing the government’s vulnerability to this company to the public, has confirmed the denunciations that the final cost of this project would far exceed the contract price and has denied that Punta Catalina’s construction is at a level of 70% of its schedule.
These two additional disclosures, the additional cost overrun on the contract price and the delay in the work schedule, leave no arguments to those who oppose an independent audit of this project and a new tender on the basis of natural gas.
The overvaluation of Punta Catalina is not limited to these new additional 700 million dollars claimed by Odebrecht. An audit is necessary to accurately quantify the overvaluation existing to date for the construction of Punta Catalina, in order to demand its reimbursement and to prosecute the culprits and beneficiaries of this overvaluation.
If the government implements the Public Contracts Law, it would not have to comply with Odebrecht’s demand for an additional 700 million dollars in payment and could open a new bidding process based on natural gas to conclude Punta Catalina before 2020 and at a lower cost than the total cost stipulated by Odebrecht for these coal plants.
The great benefit of converting Punta Catalina’s natural gas is to avoid the very serious contamination from coal and a considerable amount of carbon dioxide emissions into the atmosphere.
The National Committee to Combat Climate Change, CNLCC, reiterates once again the application of Law 340-06 on Public Contracting to Odebrecht, for which reason this company must be immediately expelled from the country.
Likewise, an independent audit of the overvaluation of Punta Catalina and the call for a new bidding process based on natural gas to complete the construction of this project.
It is a demand that we made with the knowledge that the authorities’ complicity with Odebrecht’s corruption prevents it from being satisfied, not because it is impossible, but because of the permanence in power of a government as guilty as this company, of the corruption committed in Punta Catalina.
NATIONAL COMMITTEE TO COMBAT CLIMATE CHANGE, CNLCC