Hospital construction faces delays due to ‘financial turbulence’ of contractor | THE DAILY HERALD

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~ Brison calls on Lee to halt construction plans ~

 

PHILIPSBURG–The construction of St. Maarten General Hospital, for which ground was broken on Monday, is facing “a slight delay on the timetable” due to “financial turbulence” being experienced by the parent company of the Italy-based construction entity contracted to build the new hospital.

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  Authorities have assured that the project outcome will not be endangered. The development has resulted in United St. Maarten Party Member of Parliament (MP) Rolando Brison calling on Health Minister Emil Lee to halt construction plans for the new hospital until he is certain that taxpayers’ money and the viability of the hospital’s future are safe.

  St. Maarten Medical Center (SMMC) said on Tuesday that it had been notified by Italian construction company INSO that its parent company Condotte d’Acqua has filed for Extraordinary Administration, a restructuring procedure aimed at satisfying creditors and safeguarding the continuity of the business and the employees.

  Condotte’s financial turbulence was mentioned by several speakers, including Health Minister Emil Lee and SMMC’s General Director Kees Klarenbeek, during Monday’s ground-breaking ceremony for the construction of the new hospital.

  Despite these current circumstances, tripartite members (Health Ministry, SMMC and Social and Health Insurances) “have confidence” that the project is properly insulated from any financial shocks, thereby safeguarding SMMC, its lenders and St. Maarten.

  “Until clarity is established, no money will be transferred to INSO by SMMC by its own initiative, that of Minister of VSA, and the lenders, which includes the SZV. This may result in a slight delay on the timetable,” SMMC said in a press release issued on Tuesday after several questions on the matter had been posed by The Daily Herald.

  According to SMMC, INSO, the lenders to the SMMC and the World Bank have been in positive cooperation towards reviewing the project’s current financial safeguards, the objective being to ensure a successful start and quality completion of the new hospital.

  “In 2016, SMMC contracted INSO as the general contractor to design, build and maintain the new hospital. We value the professionalism of the international company INSO.

  “Sufficient financial safeguards are in place in the business plan of the new hospital project. SMMC ensures that payments will only be made when construction works are indeed completed at each stage, after proper verification by SMMC’s contracted engineering firm. This arrangement protects the lenders of the project as well,” Klarenbeek said in the release.

  Lee: “With any major project such as this, there should always be consideration for unforeseen risks and we are happy to know that the business and project plans were drafted in such a detailed manner that these can be addressed effectively, without endangering the desired project outcome.

  “The tripartite feels that perhaps this situation is a blessing in disguise as, if the construction of the new hospital had started already and this would have arisen then, it could have ended in financial losses, contrary to now – before the start of the construction – financial safeguards can and have been put in place to insulate the new hospital project and its lenders from any turbulence evolving from a parent company’s financial woes.”

  Condotte is a construction company that has been active since 1880 with a current annual turnover of 1.3 billion euros. The company is going through financial turbulence due to the crisis that has affected the Italian construction business in general in recent months. Condotte is embroiled in disputes with Italian state entities over expenses from carrying out public works and has filed for protection.

  As a result of the extraordinary administration measure, the courts have appointed an administrator, headed by Gianluca Lucisano, a former officer of the Guardia di Finanza with the role to protect INSO. SMMC is working with the administrator to ensure that the new hospital project can proceed without any risk. The new hospital project managers have been in contact with the Italian administrator to ensure the project can move forward with clarity and surety.

  “In the continued manner of upholding transparency and integrity concerning the new hospital project, it should be noted that the Condotte administrator has yet to make a decision on the way forward for INSO, and it is likely to either sell INSO as a healthy going concern, or to use the good company of INSO and its also profitable hospital maintenance company SOF, as part of a restructured Condotte.

  “Various options are weighed to ensure the safety of our healthcare and our country’s investments, which includes the use of the World Bank Trust Fund set up by the Netherlands and overseen by the Minister on behalf of Government,” SZV interim Chief Executive Officer (CEO) Glen Carty said.

 

MP Brison

  Brison said in a separate release that INSO’s parent company allegedly has amassed more than US $833 million in debt with an apparent $6 billion in order-backlogs. According to Brison, documents from the Courte de Roma show that another affiliate company, Condotte, as well as INSO, has been seeking urgent reprieve from creditors who are demanding funds that it simply cannot pay, or work it cannot perform.

  Brison said he has uncovered information about the precarious financial situation and potential bankruptcy of INSO’s parent company.

  “I have been investigating various aspects about the building of our hospital, and was very concerned to find out by various sources in Italy about the very volatile situation the parent company of INSO finds itself in. My fear is that St. Maarten may find itself as one of these creditors, and our hospital finds itself as part of the $6-billion-dollar work backlog,” he said. 

  Brison said a September 18, 2018, report of Italian media agency Affar Italiana, showed the company with more than $833 million in debt, while only having $233 million in assets. “Other legal documents I have attained show the company with a reported $6 billion in order backlogs. Will St. Maarten’s hospital also be lost in this huge amount of backlog the conglomerate has amassed?” he asked.

  Brison added that the negative situation is further compounded by the fact that the National Investment Bank, an entity that is directly linked to the ENNIA Group currently being investigated and restricted by the Central Bank, is involved in the financing of this hospital.

  “So, your construction company and financier are both facing potential bankruptcy? Is it the intention to use public funds to bail these companies out?” he questioned.

  He said the right thing to do, and the only thing to do, is for the Minister to halt plans until he is certain, without any doubt, that taxpayers’ money and the viability of the hospital’s future are safe. If the Minister does not give Parliament sufficient confirmation that public funds and this project are not at risk, Brison said he will be calling for a Parliamentary inquiry into the entire process of the building of this hospital and anything related thereto.

  Another report shows the conglomerate filing to the Courte de Roma in March of this year for a blank agreement to avoid financial action from creditors. Around that time of year, managing director Duccio Astaldi, cousin of Paolo Astaldi, the owner of the company, was arrested for its alleged involvement in a round of bribes for road infrastructure in Sicily.

  “It is also surprising as to what level of screening was conducted in selecting this company. It is very strange how the World Bank can quickly approve loans in tens of millions for the hospital without doing necessary due diligence, yet we hear of the immense difficulty local companies are having in complying with the procurement standards of the World Bank.

  “One young professional told me she had literally given up. Is there a level playing field when it comes to procurement for our own local and foreign companies?”

  A letter with various questions has been dispatched to Lee: “Has any due diligence been done before continuing with this company? Is it wise to continue with a company that may not have the financial backing it needs to build something as important as our hospital?

  “These facts have been available for months. I would be surprised if Minister Lee was not aware of this, and nonetheless, the ground-breaking still continued. Was this just a charade by the Minister and the government to push forward with this hospital and INSO? The Minister went as far as advocating transparency and integrity during his speech at the ground-breaking. Are we fooling the people of St. Maarten and sending a false message?” Brison asked.

  “Millions of guilders of our own social premiums and pension funds are being pumped into a company that is facing serious financial issues, as both the SZV and APS confirmed they are involved with the financing of the hospital.

  “St. Maarten, these are your hard-earned social premiums and savings potentially going into a black hole of debt. The lack of urgency of the Minister is a slap in the face to the millions our local workers pay each month to safeguard their health and their future, but just to cut a ribbon he proceeded nonetheless.

  “A hospital for our country is of utmost importance, but what good is a hospital project if the one contracted to build is facing bankruptcy? Minister Lee’s M.O. [modus operandi – Ed.] for too long has been to deflect, confuse and deny. He has become a master at this. For this reason, I only came out publicly with this information after having conducted my own very detailed investigation. The facts are clear, and the Minister has a lot of answering to do.”

Source: The Daily Herald https://www.thedailyherald.sx/islands/83295-hospital-construction-faces-delays-due-to-financial-turbulence-of-contractor

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