A modest highway through Polish potato fields proved to be too much for one of China’s biggest builders.
At one meeting, the Chinese ambassador, according to one witness, promised Covec would fulfill its obligation for the sake of “Chinese honor.” When the group reconvened the following afternoon, the ambassador delivered a different message, this person said, saying China’s government had limited leverage with an “independent company.” The Chinese ambassador didn’t respond to requests for comment.
The roads chief at GDDKiA, Mr. Witecki, says that on June 9, Covec’s president Mr. Fang told him work could resume for another $320 million. That would have made the total cost 70% higher than Covec had bid for the project.
The next day the Polish Government fired the Chinese company. The Chinese were shocked.
Since I don’t know if this article is accessible behind WSJ’s paywall, I’ll sum up.
The Chinese firm “Covec” has built many projects in China, the Arabian peninsular and Africa, and in those areas they bring in whatever Chinese workers, equipment or materials that they need. Especially in Africa, they are not used to being held to account by local governments or anyone else. Environmental laws and regulations? What’s that? The required paperwork to validate the work was being done as contracted were not written. (Inspectors don’t just drive up and look at a newly built bridge then drive back to the office and OK the check. They need to examine the paperwork that shows the origin and quality of the material used.) In Poland, they did not prove to be adept at negotiating with sub-contractors, nor did they seem to truly understand what the costs of the building equipment and materials from European suppliers would actually cost. Also, “Where are the frog tunnels?”, (translated from the Chinese) “THE WHAT?”
So in the end it became obvious that the winning Chinese bid was based on …well, nothing at all. Just a belief by the Polish Government that the first, large infra-structure project in the European Union by a major Chinese construction firm would be backed in full by the Chinese government. Which seems like what was going to happen, until the full costs of correcting the fiasco were realized.
Oh! The construction completion bonds that Covec had to cover a non-completion judgement? Held in Chinese banks, in China. There now doesn’t seem to be any way to actually get that money out of China.
IN BY CHINA, gotta love it.