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
• ↓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.