PLAYERS BEHIND SHS 70 BN UNRA – SALINI DEAL NAMED (redpepper 15.03.2013)
PLAYERS BEHIND SHS 70 BN UNRA – SALINI DEAL NAMED
Details have emerged showing how Italian based Salini Construttori S.P.A Directors tried screwing up the Ugandan legal team to unfairly obtain shs 58 bn from Uganda National Roads Authority (UNRA). The case, in which Salini was suing Uganda/UNRA in the ICC International Arbitration Court in London, concluded recently in Uganda’s favor. Consequently, Uganda/UNRA saved up to shs 70 bn which Salini was demanding for in both breach of contract and legal fees. Sitting as a tribunal, the ICC commercial court Judges pitched camp in Kampala. The arbitration panel was led by John Beechey who is the chairman of International Chamber of Commerce Arbitration Center. This was the first time such a prolific jurist was coming to Uganda to preside over a matter from here. Beechey’s panel also had UK-based Keating Chamber’s Dr. Robert Gaitskell, a renowned expert on international construction law and Paul Hannon who is an expert on international arbitration and construction. Salini sued for international arbitration, claiming damages after it failed to complete the 21 km long Kampala Northern Bypass road on time. Having started on 19/05/2004 Salini was supposed to complete by 19/11/2006. They blamed their failure to deliver on time on the fact that UNRA turned midway and set for them standards higher than the original contract stipulated. In the end, they did the road up to 2009 and specifically blamed UNRA for altering the Asphalt specifications stipulated in the original contract, making it impossible for them to deliver on schedule. Salini falsely claimed that BCEOM’s resident engineer, who was supervising the works on UNRA’s behalf, altered the original specifications. In suing UNRA, Salini’s claim was that the project was unachievable on time because of faulty designs arising from alterations occasioned by BCEOM resident engineer. Asphalt is the thick black layer applied beneath tamarack stones to strengthen the road. Salini sued demanding additional payment due to costs arising from delays they alleged were caused by UNRA’s alteration of the original designs.
Salini’s case sparked panic amongst government officials who feared the tax payer’s money (over 70bn) was going to be lost. Although majority of them where genuine, some senior officials at the works ministry saw an opportunity to cut backdoor deals with Salini out of court. The shrewd authorities at works ministry hoped to negotiate kickbacks from Salini and share whatever amount the Italian firm would fleece from UNRA in a negotiated settlement. Lawyers at Attorney General’s chambers also came under unprecedented pressure to prevail on UNRA to withdraw the case. The mafia works ministry bosses reached a point of threatening to make individual AG lawyers and “obstinate” UNRA officials personally pay the Shs. 58,469,713,721 damages Salini was demanding for and another Shs.5Bn in court costs. On realizing the huge tasks ahead of them, AG lawyers along with UNRA Corporation Secretary Marvin Baryaruha brought on board private lawyers from Kampala Associated Advocates (KAA) who were led by former Director Civil Litigation Joseph Matsiko who successfully argued the case against Salini.
Other private lawyers came from Soliz House based Synergy Solicitors & Advocates whose Bernard Katureebe and Alex Kibandama actively took part in the case. Utilizing its international network, KAA, which is among private law firms UNRA contracts on retainer basis, brought on board renowned UK-international arbitration lawyers Andrew Rigney QC and Philip Aliker. The AG team was coordinated by Christopher Gashirabake, a senior lawyer. Besides assembling good legal arguments, KAA lawyers also contracted Prof. Knaptong from UK whose great experience in asphalt consultancy engineering ensured there was more than enough technical evidence against Salini. Through its international partners, SNR Denton, KAA was able to successfully argue that it was necessary for the Arbitration Tribunal to hear the case from Uganda. This demystified many things including exposing arbitrators to the fact that Uganda was after all not as remote a country as Salini Directors were arguing. Arguing from home ground also psychologically boosted the UNRA legal team. Salini Directors insisted on either London or Paris from where they would be able to bully the Ugandan legal team. They justified this saying Uganda was full of Tse-Tse flies and had no decent hotels to host professionally high profile jurists like Beechey and his panel. For a whole week, international arbitrators sat at Serena hotel where they listened to arguments culminating into a ruling which stated that Salini wasn’t entitled to the billions it was claiming. Even during the closed sessions in Kampala, Salini Directors kept begging UNRA lawyers to accept out of court settlement. Asked to comment on what the unprecedented case meant for future road construction projects, a UNRA top official said “Besides setting precedence, this case has demystified international construction firms which have always used bullying tactics to arm twist Uganda and herd our negotiators into unfavorable contracts.” This is the first time Ugandan lawyers/government has won such a high profile arbitration case against well established European Construction giants. Besides the UNRA case, KAA lawyers led by ex- Solicitor General Peter Kabatsi are thickly involved in the ongoing Tullow-Heritage arbitration case in London from which Uganda is pursuing $313m in capital gains tax.