The Water and Sewerage Authority (WASA) slashed a whopping $43.7 million off a claim submitted by Kallco for work undertaken for the authority.
Kallco had made a claim for $77.7 million for services and materials supplied to WASA however, they refused to pay the sum as they discovered discrepancies in the invoices in relation to the conversion of cubic meters to tonnes and inconsistencies in the asphalt thickness.
WASA had hired Kallco for the restoration of roads.
However, WASA was unable to verify the claims being made and was subsequently forced to conduct an external audit report. They were only willing to pay the sum of $35 million based on what they were able to verify. Instead, WASA ended up paying Kallco $34 million in a settlement agreed upon by both parties last year.
Kallco had initiated legal action against the State-owned authority for monies owed for two contracts awarded under the People’s Partnership administration. The authority played hardball, standing its grounds and refusing arbitration, and insisted that the High Court determine the matter.
Kallco caved in on the eve of the trial and settled for the reduced sum which was highlighted in the September 26 edition of the Sunday Guardian headlined “WASA agrees to pay $34m to Kallco.”
The agreed figure was to be paid by WASA in two parts according to a July 2020 High Court order. Sunday Guardian was reliably informed that WASA issued a $20-million cheque dated July 24,2020, as its first payment to Kallco. A $14-million cheque dated October 14, 2020, was submitted as its final payment.
Chairman of Kallco Group of Companies Arvin Kalloo in a WhatsApp message to Guardian Media on September 22 stated 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.”
Since 2006, Kallco has been providing services to WASA and is still one of the authority’s contractors. However, since 2020, WASA has not awarded any contracts to Kallco.
‘Kallco agreed to accept a compromised sum’
Commenting on the settlement, WASA’s chairman, Ravindra Nanga told the Sunday Guardian, “From my understanding, the matter was settled where Kallco agreed to accept a compromised sum. While it is a victory for WASA in terms of accountability and doing what is proper and should be expected, I will not regard it as strictly speaking a legal victory, as the Court did not pronounce on the matter.
“It would have been a matter for the Court to decide whether Kallco could prove the whole claim of $70-plus million, or whether the Court would have accepted WASA’s external report as an accurate account of works actually done.”
In the end, Nanga said, “Kallco agreed to accept the sum offered by WASA, which was what was verified. What I am happy about is that WASA was able to successfully establish a credible defence and save the taxpayers tens of millions of dollars.”
The settlement by WASA followed extensive negotiations through external attorneys and was based upon verification by independent engineering auditor Rivelin Consultants Ltd in its final report dated November 26, 2019.
WASA was advised by Senior Counsel Ian Benjamin and junior advocate Tekiyah Jorsling that the authority should pay Kallco $35 million in full and final settlement of the claim, interests and costs.
In 2016, WASA established a Projects Valuation Unit to validate projects and invoice claims.
Nanga admitted that “these types of checks and balances are continued by the present board. It is simply taking WASA to a place where they should have been a long time ago, where invoices are properly verified prior to being paid. “As I have indicated in the past, there were very little procedures in place and what little procedures there were…were not being followed.
“We are in the process of cleaning that up and developing and implementing proper procedures to ensure that WASA’s interest is properly protected.”
Asked if WASA can blacklist contractors for shoddy work and what is the authority’s policy with regards to contractors who provide substandard work to the water company, Nanga said, “I will not say that WASA blacklists contractors. However, one of the criteria that is used to award a contract is the ability to complete the contract and to provide quality work.”
Nanga said if WASA has evidence of poor performance in the past or any other issues, “those will be factors that will be taken into account in awarding new contracts. For example, a contractor may have been facing issues in the past that they have taken steps to improve.”
Since the new WASA board assumed office in December 2020, Nanga confirmed, however, that “no award has been made to Kallco neither has any claim been brought to our attention from them since that time.”
Kallco’s Statement of Case was filed in 2018, Nanga said, “So it may have been possible that Kallco was still providing services at that time.”
As a public authority, Nanga said, they ought not to blacklist contractors.
“I believe that I can speak on behalf of this board to say that we are monitoring all projects very closely and where there is shoddy work or work not executed in keeping with specifications, the contractor will be required to remedy the defect and payment will be withheld until it is remedied.”
Nanga admitted the new board met a weak project management system in place.
“We are taking steps to fix those issues in order to ensure that we do not have a repeat of this type of situation.”
Before becoming chairman, Nanga said he was a member of the Tender Committee and “these were the type of issues that we took into consideration when deciding whether to accept the evaluation committee’s report about the award of contracts or not.”
The Claim Form
A copy of Kallco’s 15-page Claim Form filed on September 5, 2017, commencing litigation against WASA showed the company was seeking $77,746,310.12 in outstanding payments for services and materials supplied.
Kallco’s claim was listed at originally $80,885,696.80 but later amended to $77.7 million.
The legal document stated on November 19, 2012, WASA (defendant) entered into a contract with Kallco (claimant).
Both WASA and Kallco formalised the terms and conditions of this contract by signing an agreement dated January 14, 2013, for the provision of road restoration services along with the attendant materials on an as and when required basis covering the period November 1, 2012, to April 30, 2014.
“The appendix to this agreement set out the value of services to be provided in accordance with the Ministry of Works and Transport approved unit rates for road restoration,” the document stated.
WASA, by a letter of award dated May 2, 2014, entered into a second contract with Kallco for the said services covering the period May 20, 2014, to October 31, 2015.
Both parties signed an agreement on August 7, 2014.
“The appendix to this agreement set out the value of the services to be provided in accordance with the Ministry of Works and Transport approved unit rates for road restoration as negotiated with the Asphalt Pavers Association.”
Kallco, the document stated, provided a series of road restoration services including relevant materials.
The works undertaken were clearing and grubbing, cleaning and brooming mechanically, supply place and compact crush run, bituminous prime coat material application and supply, spread and roll of bituminous surface course.
“Throughout the term of the agreements the services and attendant materials provided by the claimant as set out in duly generated invoices were approved by the following personnel of the defendant,” the document stated.
*WASA North-Kenneth Cordner-project manager.
*Special projects-Ricky Ramkissoon-project manager.
*WASA South and Batches 1-5-Ronald Bickram-project manager.
“All of the above-mentioned works were approved and signed off by director of operations, Steve Joseph. However, in and around September 2013, the defendant failed to make payments on invoices generated in this manner.”
Consequently, Kallco stated WASA failed and or refused to settle its outstanding invoices, outlining that the following sums remained due and owing.
*WASA North-$27,717, 219.13
*WASA special project $11,200,899.73 (This figure was originally listed at $14,340,286.57)
*WASA construction South-$1,908,989.71
This brought the total figure to $77,746,310.12
By letter dated June 13, 2016, Kallco’s attorney wrote WASA’s head of legal services Paula Fortune “indicating that an error had been made in relation to some of the invoices previously submitted for Batches 1-5 and as a result, the claim was updated to $49,305,680.62.”
They also provided WASA with Bills of Quantity in relation to the unpaid invoices.
“These Bills of Quantity were generated by the Defendant’s Project Manager-Operations Special Projects, Mr Rheal Thomas and forwarded to the Claimant via a series of emails dated September 30, 2014, November 30, 2014, December 16, 2014, January 15 and 27, March 9, July 2 and 21 and September 3, 2016,” the document stated.
On June 27, 2016, Fortune responded to Kallco indicating “that the verification works currently being conducted by the Defendant (WASA) had revealed discrepancies in the invoices in relation to the conversion of cubic meters to tonnes and as well as inconsistencies in the asphalt thickness.”
The Sunday Guardian sent a list of questions to Kalloo concerning the verification of claims conducted by WASA that revealed discrepancies in the invoices and why he settled for $34 million, less than half of his original claim.
Kalloo’s WhatsApp message on October 1 stated, “Thank you for your questions. However, the company is not interested in participating in this or any other story, and we are certain that you would understand that we simply wish to continue to focus on our operations.”