Car­il­lion asked UK gov­ern­ment to step in over Qatar debt black hole

Hard-pressed con­trac­tor sought help to re­cover $200m owed on Doha project

Arab News - - BUSINESS - FRANK KANE

In ev­i­dence to Mem­bers of Par­lia­ment (MPs), Richard How­son, the for­mer chief ex­ec­u­tive, re­vealed that he wrote to Liam Fox, the min­is­ter for in­ter­na­tional trade, last May, warn­ing him of the prob­lem.

A copy of that let­ter, seen by Arab News, said that un­paid debts on a flag­ship project in Doha with Msheireb Prop­er­ties, a Qatar gov­ern­ment-owned en­tity, had be­come a se­ri­ous is­sue for the Bri­tish com­pany.

“The po­si­tion on that project has de­te­ri­o­rated sig­nif­i­cantly, and de­spite con­tin­ued ef­forts to en­gage with Msheireb and its ad­vis­ers at the high­est lev­els, we find our­selves in a po­si­tion of hav­ing to re­quest the as­sis­tance of HM gov­ern­ment to help the cur­rent im­passe, which is hav­ing a sig­nif­i­cant fi­nan­cial bur­den on our busi­ness both re­gion­ally and for the Car­il­lion Group as a whole,” the let­ter said.

Car­il­lion has cited the £200 mil­lion owed by Msheireb as one of the main fac­tors in its col­lapse.

“We re­main com­mit­ted to com­ple­tion of the project, but the lack of pay­ment since Oc­to­ber 2016 and the em­ployer's (Msheireb) re­cent pro­posal to in­tro­duce a third party con­trac­tor to as­sist in com­plet­ing the works at sig­nif­i­cant cost is sig­nif­i­cantly ham­per­ing our abil­ity to do so,” the let­ter con­tin­ued, ask­ing what sup­port Car­il­lion might ex­pect from the Bri­tish gov­ern­ment in get­ting the debts re­paid.

The let­ter also re­ferred to an April meet­ing be­tween Car­il­lion ex­ec­u­tives and Fox in the Bri­tish am­bas­sador's res­i­dence in Mus­cat, where un­paid debts from Oman were dis­cussed.

It has not been made pub­lic how much Oman owed Car­il­lion, but the com­pany has said that £314 mil­lion of the £845 mil­lion “black hole” re­vealed last July came from the Mid­dle East.

How­son told the MPs that he had briefed Fox on the “in­creas­ingly dif­fi­cult sit­u­a­tion” in Oman and Qatar in or­der to get his help “on turn­ing re­ceiv­ables into cash on those coun­tries.”

Philip Green, for­mer chair­man of Car­il­lion, said the col­lapse hap­pened be­cause the “bal­ance sheet was not able to with­stand the shock from four con­tacts that went badly wrong in 2017. The bal­ance sheet did not have the ro­bust­ness to with­stand it.”

Car­il­lion was also owed sig­nif­i­cant sums on three in­fra­struc­ture projects in the UK.

Keith Cochrane, an­other for­mer chief ex­ec­u­tive, said that the Qatar project was “a very spe­cific con­trac­tual sit­u­a­tion. We thought that the gov­ern­ment and the for­mer am­bas­sador would help us get a hear­ing on that mat­ter.”

How­son has pre­vi­ously told MPs he “felt like a bailiff” on his monthly trips to Qatar to try to re­cover money.

The con­tract at the cen­ter of the dis­pute is Down­town Doha, a $5.5 bil­lion (SR20.62 bil­lion) project to de­velop a cen­tral area of the city. The de­vel­oper is Msheireb Prop­er­ties, a sub­sidiary of Qatar Foun­da­tion, which de­scribes it­self as a “pri­vate, non­profit or­ga­ni­za­tion,” with Sheikha Moza Bint Nasser as its chair.

The project has been re­ported to be part of Qatar's preparations for the 2022 Fifa World Cup bid, but it was launched be­fore the coun­try was awarded the rights to run the big­gest foot­ball com­pe­ti­tion in the world, in De­cem­ber 2010.

Car­il­lion was brought on board in late 2011 for one of the early phases of the project.

Msheireb has de­nied that it re­fused to pay Car­il­lion for work on the project, which is now al­most com­plete, and claimed that money paid to the UK group was used to pay other bills.

The Car­il­lion ex­ec­u­tives were be­ing ques­tioned by mem­bers of Par­lia­ment on a joint com­mit­tee over­see­ing pub­lic ac­counts and ad­min­is­tra­tion.

How­son pre­vi­ously told a dif­fer­ent com­mit­tee: “But for a few very chal­leng­ing con­tracts, pre­dom­i­nantly in Oman and one in Qatar, I be­lieve Car­il­lion would have sur­vived.”

Msheireb in Doha did not an­swer a phone call seek­ing com­ment.

LON­DON: Car­il­lion Group, the Bri­tish con­trac­tor that went bust in Jan­uary with debts of around £1.5 bil­lion ($2.09 bil­lion), asked for Bri­tish gov­ern­ment as­sis­tance to get over­due pay­ments from Qatar in spring 2017, be­fore its fi­nan­cial prob­lems be­came pub­lic.

Bosses of the liq­ui­dated out­sourc­ing and con­struc­tion com­pany Car­il­lion (L-R) chief ex­ec­u­tive Keith Cochrane, chair Philip Green, fi­nance di­rec­tor Emma Mercer and chief ex­ec­u­tive of­fi­cer Richard How­son give ev­i­dence to a UK par­lia­men­tary com­mit­tee. (AFP)

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