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Latino Daily News

Sunday August 19, 2012

Spanish Construction Company Claims Dominican Government Seized Assets

Spanish Construction Company Claims Dominican Government Seized Assets

Photo: San Pedro de Macoris-La Romana highway in DR

Click Here to Enlarge Photo

A Spanish construction company accused the Dominican government of seizing its assets and not complying with an international arbitration ruling requiring it to pay $45 million in compensation.

Concesionaria Dominicana de Autopistas y Carreteras, or Codaxa, which also has U.S. and Dominican shareholders, accuses the Caribbean country’s “recent governments” of “systematically” failing to comply with the terms of a 2001 concession contract for the construction, maintenance and operation of the San Pedro de Macoris-La Romana highway.

CEO Roberto Garcia told Efe Friday that a representative of the Public Works Ministry - escorted by a group of soldiers - expelled the company’s staff from the highway last Saturday.

That action followed a ruling by the Paris-based International Chamber of Commerce establishing the amount of compensation owed to the firm.

In that arbitration award, handed down in late May, the ICC said the Dominican government had failed to comply with “the main contractual clauses and that the Public Works Ministry’s accusations were “reckless,” Garcia said.

The Spanish firm said the contract required the Dominican government to provide it with guarantees against exchange rate risk - necessary because currency fluctuations could affect repayment of a loan taken out to finance the project - but that it failed to comply with that obligation.

The government also failed to meet its obligation to create a “shadow toll” to make up for what the company was prohibited from charging users in the form of direct payments, paralyzed construction of two toll stations and did not comply with a plan to expropriate land for the construction of the highway, Garcia told Efe.

According to the executive, former Public Works Minister Victor Diaz Rua, who stepped down from his post on Thursday, had pressured the company since 2008 to sell the highway to other companies.

Codaxa took the matter to an international arbitration panel, which issued a ruling ordering the Dominican government to pay compensation by a July 31 deadline and the company to return the highway.

Garcia said it has tried to meet with government representatives since the arbitration ruling was announced but has received no response.

These circumstances have forced the firm to begin the process of firing its more than 200 workers, all of them Dominican, he added.

Asked about the dispute, the former public works minister said the company had pledged to build the San Pedro de Macoris-La Romana highway but only completed one stretch of the road with state funding.

“They didn’t complete anything, they’re a bunch of swindlers,” Diaz Rua said in remarks to local media.

Responding to those accusations, Garcia said Diaz Rua “lies in everything he says” and recalled that the company invested $7 million in expectation that the government would keep its promises.

Garcia said that the company has the support of the Spanish Embassy and that it hopes that under the administration of new President Danilo Medina, who was sworn in Thursday, “the illegal behavior of the outgoing government will be corrected.”