T&T wins: BAE to pay government TT$1.382B

File: AG Anand Ramlogan - BAE to pay T&T TT$1.382B

British aerospace giant BAE has agreed to pay the Government of Trinidad & Tobago TT$1.382 billion as a result of the conclusion of diplomatic discussions that followed the end of arbitration hearings.

Attorney General Anand Ramlogan Anand Ramlogan made the announcement to reporters Wednesday afternoon.

"This afternoon, I am pleased to announce that those discussions have been fruitful," he said. 

"BAE Systems and this Government have reached a full and final settlement of the dispute between them in relation to the OPV contract in the sum of TT$1.382 BILLION. We are pleased that the dispute has been settled amicably. BAE has agreed to pay the Government of Trinidad and Tobago this sum," he added.

In his statement to the media Ramlogan gave a background to the matter including the deal the previous government made to buy three Offshore Patrol Vessels (OPVs), the problems with the contract and the reasons why the government canceled the agreement as well at the opposition's reaction to the government's decision to kill the deal. 

He noted that Opposition Leader Keith Rowley even suggested that T&T could never win a case against BAE. He quoted Rowley's statement from Hansard:

“I will tell you, Mr. Deputy Speaker, we are not the only ones who cancelled contracts at BAE, eh...I expect that if the Government continues along this path, cancels this contract, that we will, in fact be heading for the courts and we would not have many legs to stand on because we are talking about delays.” 

It turns out Rowley was wrong. The AG's full statement is reproduced below:

When the People’s Partnership was elected with an overwhelming mandate to serve the people, it signalled a desire for radical change by the people. It was a democratic expression of frustration and a resounding rejection of some of the many ill policies of the former administration.

Far too much was spent on grand projects that were not relevant to the needs and problems of our nation. In many respects, they were based on delusions of grandeur and the oversized political ego of a government that has lost touch with the people. 

A government which continued to ignore the growing concern about the commitments to massive financial expenditure that would encumber our children’s future. 

My Government has been committed to readdress this failed policy but with this it has had to recognise its responsibilities in accordance with the law and maintain this country’s reputation in accepting its liabilities where it was right and appropriate to do so even where it would not have entered into a particular contract or project.

COST AND RECURRENT EXPENDITURE

Among the many mega projects was the purchase of three off shore patrol vessels (OPV). On the 5 April 2007, the former administration had signed a contract with VT Ship Building (BAE Systems) under which, BAE systems were designed and construct three OPVs and provide training and maintenance for them. 

The total financial commitment at the prevailing exchange rates then for this project was TT$2.192 BILLION. Once these vessels were delivered, tax payers would have to finance a recurrent, annual expenditure of TT$32 million per annum. This represents the operational costs for all three vessels per annum. 

No doubt, this figure would have progressively increased as the vessels as a result of deterioration and problems associated with everyday use.

PROBLEMS

When we came into office in 2010 there were serious problems with the OPV project. The first OPV was scheduled to be delivered in May 2009 and was therefore over 1 year late. The second OPV was due in February 2010 and was also overdue.

Apart from the delay, there was a serious problem with the combat system which didn’t conform to the contract specification. This delay, together with the continuing failure on the part of BAE to remedy the deficiency prompted the Government to serve a notice of cancellation on BAE to terminate the contract on September 16, 2010.

THE CLAIM

We were not prepared to accept these vessels in a defective condition. The risks were too many and too great. In response, BAE served a notice of
arbitration on the Government, claiming damages in the sum of TT$611.032 million plus interest and costs. Trinidad and Tobago filed a counter claim in the sum of TT1.654 BILLION.

The Government was prepared to stand up for its rights- the rights of the people- against the one of the largest military defence companies in the world. We were ridiculed for doing this by the Opposition.

ACTED ON ADVICE

After careful consideration, and after receiving sound legal and technical advice, this Government cancelled the OPV Contract. We didn’t just get up one day and decide on a “vaps” to get out of the contract. We acted carefully because we inherited very expensive contract obligations from the PNM. 

How could a responsible Government ignore such advice? How could we justify to the people that we failed to act on advice, while throwing good money after bad? The Opposition themselves would have been the first to criticise us if we did so!

ROWLEY on OPV

Dr. Keith Rowley even said that we should have been scared to challenge BAEs. Imagine that! A man who wants to be the Prime Minister of this country was telling us that we should be afraid to insist that the country gets what it paid for! 

On the said Friday October 22, 2010, Dr. Rowley championed the cause of BAE highlighting the fact that the Sultan of Brunei has recently lost a similar Arbitration against BAE and were forced to pay BAE:

“I will tell you, Mr. Deputy Speaker, we are not the only ones who cancelled contracts at BAE, „eh‟. 

"The Sultan of Brunei attempted to do the same thing on a €700 contract, and if we think that BAE will give us a pass or give us a bligh, especially since the Prime Minister has made the case for BAE lawyers, I expect that if the Government continues along this path, cancels this contract, that we will, in fact be heading for the courts and we would not have many legs to stand on because we are talking about delays.”

In July 19, 2011, the Member for Diego Martin West was still confidently spewing wrong information about this matter. 

Let me quote from Express dated July 19, 2011: "Tell the country what is happening with the arbitration. What are the issues that are being arbitrated and whether in fact it is correct to say that the Government in now facing an option of taking the vessels, the very vessels they determined to be lemons," said Rowley.

IMBERT ON OPV

And he wasn’t the only one in the Opposition who was suffering from foot-in- mouth disease. On June 15 of this year, Colm Imbert said that this Government had lost the Arbitration and was liable to pay hundreds of millions of dollars to BAEs. 

Permit me to quote the Honourable member who, at the material time, was ironically responding to allegations about the reckless, wasted expenditure on the purchase of the MV Su “It is my understanding that the Government has lost the OPV arbitration and the country may be liable to PAYOUT monies to BAE systems in the sum of hundreds of millions of dollars”

The entire Opposition repeatedly predicted that we would have to pay hundreds of millions of dollars to BAE because we were wrong to cancel the contract. 

Listen to the member for Arouca/Maloney on June 4 2012: “Can the Minister of Finance tell us... how much money we would have to pay in the Arbitration? Can the Minister of Finance tell us that? Because I am sure we would have saved a lot of money by maintaining the contract for the OPVs”

In an Article published in the Trinidad Guardian on Monday October 29, 2012, entitled “Rowley: Battle for Tobago begins”, it is stated as follows:
Wading into Ramlogan on the OPV issue, Rowley said the Government “hid” funding in the National Security‟s budget allocation to fund payments for the OPV settlement. He said he had asked the minister during the budget debate what a certain million dollar funding was for and he was told “equipment.”

GUARDIAN LEAD STORY

And condemnation, criticism and vilification was not confined to the other side. On October 28, 2012, in an Article published in the Sunday Guardian, it was stated as follows:

“Attorney General Anand Ramlogan has gone to Cabinet requesting $1.3 billion for a settlement with respect to the cancellation of the three offshore patrol vessels (OPVs). Meanwhile the arbitration over the OPVs is still ongoing. 

"The Sunday Guardian was informed that on Thursday Ramlogan took a note to Cabinet seeking approval for the money and that the matter was considered.

"When the matter was brought before Cabinet some ministers raised concerns about it, while others openly objected as they questioned why the payment should be approved, since the arbitration was still in progress. At least three ministers were reportedly vocal during the meeting, questioning the haste and timing of the request.

"The meeting got so heated, sources said, that Dookeran walked out, saying he wanted no part of the decision to make the money available. When contacted, some Cabinet ministers confirmed the decision, but refused to go on record when questions were posed to them.

"One irate Cabinet source questioned why the Government would want to pay $1.3 billion in arbitration fees rather than paying $1.5 billion for the three OPVs instead.”
This Article goes into extensive details of an alleged Cabinet Meeting, attributing detailed statements to Ministers thereby placing doubt and mistrust in the minds of the public in relation to the Government’s handling of this matter.

THE TRUTH ABOUT THE ARBITRATION

Today I will provide the truth and the facts of this matter to the nation. It will be up to you, the citizens of this nation, to decide who should be trusted.
The Arbitration was tried in London in May 2012. Evidence was given on behalf of the State by me, Commodore Garnett Best and Captain Mark Williams.

Subsequent to the Arbitration hearing, the parties, as a result of a diplomatic initiative, engaged in discussions. 

This afternoon, I am pleased to announce that those discussions have been fruitful. BAE Systems and this Government have reached a full and final settlement of the dispute between them in relation to the OPV contract in the sum of TT$1.382 BILLION. We are pleased that the dispute has been settled amicably. BAES has agreed to pay the Government of Trinidad and Tobago this sum.

BENEFITS

And let me now say, for the benefit of the nation, and the Members opposite who were so sure how this matter would turn out: The settlement amount is TT$1.382 BILLION.

After repayment of the monstrous billion dollar loan which the PNM took for this Project, GORTT will end up with a surplus of TT$340.09 million. This is money that could build hospitals, roads.

Further, after we pay off the loan, money we would have spent on allocated for repayments can be used for other things.

Because we have paid off the loans now, we will save TT$57.149 million in interest.

And let us not forget the operational costs for the three OPVs which would have been approximately TT$32 million per year. The Member for Diego Martin West said in Parliament on the 22 October 2010 that the Vessels could have lasted up to 40 years.

Trinidad and Tobago has therefore emerged victorious in this dispute. This settlement is a significant victory for the people of Trinidad and Tobago. Far from having to PAY BAE any money we have come out of this transaction with TT$1.382 BILLION. 

After repayment of the outstanding balance on the loans, there will be a surplus of TT$340.09 million which can go towards the construction of our hospitals and police stations.

We have saved this country a recurrent expenditure of TT$32 million per annum that would have been a yoke around the necks of our children in the years to come. We have enhanced our rich diplomatic ties and relations with the Embassy and Government of the United Kingdom. 

Indeed, we are grateful to His Excellency, Arthur Snell for the diplomatic support he has provided to the Attorney General in his efforts to settle this matter.

I also wish to pay tribute to the professionalism, dedication and hard work of my legal team especially Joe Smouha, Alan Newman, John Almeida of Charles Russell LLP, Beena Poliah, Commodore Garnet Best and the public officers such as Captain Mark Williams, PS Jennifer Boucaud-Blake and Jerry Hospedales who worked towards a favourable outcome of this matter.