Gov't: JAMALCO sale talks to continue, despite probe

BY ALICIA DUNKLEY Observer staff reporter

Wednesday, June 09, 2010    

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THE Government says that current negotiations to divest its 45 per cent stake in JAMALCO to Chinese firm Zhuhai Hongfan will continue despite the fact that the Office of the Contractor General (OCG) has announced its intention to investigate the proposed multi-billion dollar deal.

On Monday, the OCG called for Prime Minister Bruce Golding, Energy Minister James Robertson as well as several other persons involved in the negotiations to provide it with sworn testimonies regarding the deal.

In a press release, the OCG said it had at least five major considerations which, when taken together, raised serious questions about transparency, value for money, competition, conflict of interest, propriety and the merit and impartiality of the prospective contract award to Hongfan.

It said among the considerations was the fact that the proposed equity divestment was not put to public competitive tender by the Government but was, instead, directly negotiated with Port Reliant and/or Hongfan; and that Port Reliant (Hongfan's agent), has refused to make a full due-diligence disclosure to the Government regarding itself, its agency agreements with Hongfan, its historical business activities and its beneficial ownership, in keeping with certain OCG requests which were directed to the mining and energy ministry.

Responding to questions from the Opposition spokesman on energy Phillip Paulwell yesterday, Robertson said that the Government had no plan to halt the negotiations despite the investigation.

"The Government has entered into a legally binding contract and we will not be halting. We will be co-operating fully with the contractor general. We are not in a position to halt, we have entered into a contract and it is a very good contract in the interest of the country," Robertson told Paulwell.

Robertson said the administration had been guided in its decision to divest JAMALCO by the fact that it had become a burden on the public purse due to increasing indebtedness which now stands at just under US$400 million.

"Under the International Monetary Fund Agreement the Government could not continue to finance these losses," said Robertson. "They had to be cauterised. The Government had to divest itself of its shares in JAMALCO."

According to Robertson, Hongfan made a better offer than that submitted by another major global player in the alumina industry.

However, the agreement has not yet been concluded as Alcoa has the right of first refusal and has until the end of this month to exercise that option.





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