How to cash in public money. The Sinohydro recipe

Sinohydro Corporation Limited is a Chinese state-owned hydropower engineering and construction company, established in 1950. It is part of PowerChina International Group Limited, a Chinese group of state-owned companies. Sinohydro operates in Southeast Asia, South Asia, Africa, Latin America and Eastern Europe.

The first appearance in Romania of the Chinese company was in 2013 when the Ministry of Energy signed a letter of intent with Sinohydro Corporation for the construction of the Tarniţa-Lăpuşteşti hydroelectric power plant, which involved an investment of approximately € 1.3 billion. Only at the beginning of 2015, they discussed about the opening of a tender competition where Sinohydro entered together with three others Chinese companies and one from the Netherlands. But the project was abandoned by the Ministry of Energy in 2016. Although the interest of the Chinese has faded, the discussions to put the feasibility study for the Tarnița-Lăpuștești Pumped-Storage Hydropower Plant on the agenda of the Government meeting continued in the middle of last year were on-going last year. Thus, a project originating in the ’70s rolled from one Government to another and only resulted in feasibility studies of no use.

Sinohydro was awarded the first contract in Romania at the beginning of 2018 when, in association with Nord Vest Infrastructura şi Servicii SRL, it was assigned the modernisation of the road belt of Bucharest between A1 motorway and ND 7 and ND 2and A2 motorway: section ND 2 (km 12 + 300 ) and A2 A1 motorway (km 23 + 750).

The signed contract had a value of RON 233 million (EUR 52 million) excluding VAT and a duration of 123 months. The association between the Chinese giant and the tiny company from Baia Mare, founded in 2013, has raised many questions because Nord Vest Infrastructura şi Servicii SRL was not even able to honor its snow removal contract with Baia Mare City Hall in 2016.

Even more questions were raised once it was disclosed that the small company from Baia Mare was controlled by a politician, Mircea Dolha, with ties both to the social-democrats (a party that threw him out) and the liberals (which permitted him to get an MP mandate).

Almost two years later, though, after heavily disputed in court, the contract was awarded again, but to another company following a decision which ruled out Sinohydro’s offer.

A good deal (so far) for the Chinese was sealed in September 2018 when the Regional Directorate for Roads and Bridges Iasi signed a framework agreement with Sinohydro Corporation Limited for the execution of national road maintenance works in Vrancea County. The 3 year-contract value exceeds to RON 77 million lei (EUR 17 million), excluding VAT.

Cao Jianming, vice chairperson of the Standing Committee of China’s National People’s Congress, meets Liviu Dragnea, the speaker of Romania’s Chamber of Deputies, in May 2018. The latter is in jail now. Source: g4media.ro

Sinohydro also bid for several other contracts to be awarded by state companies.

Very active, Sinohydro Corporation Limited seems to have forgotten about its past problems. But the Chinese company was accused of fraudulent practices on public road contracts in Uganda, financed by the Development Bank of Africa. Sinohydro allegedly misled the tendering authorities in 2013 by presenting some unsuccessfully completed projects as a similar experience required.

Another problem of the Chinese company arose in 2010 in Venezuela. The local media wrote that five Chinese corporations were the beneficiaries of huge contracts awarded by Venezuela under Chavez, the contracts being awarded following payments made to the accounts of Diego Salazar’s consulting firm. It all started with the Banca Privada d’Andorra (BPA) which was accused by the Andorran justice of money laundering, together with a businessman from Venezuela. The bank’s documents showed that the businessman Diego Salazar was at the centre of the business between several Chinese corporations and the Venezuelan state. He is the cousin of Rafael Ramirez, Minister of Energy (2004 – 2012), the head of the state-owned oil company and one of Hugo Chavez’s relatives. The Andorran court has ruled that Sinohydro Corporation Limited paid $ 50 million for alleged consultancy to Salazar’s intermediary company just days before the Chinese company was awarded a contract with the Venezuelan Government to build the La Cabrera thermal power plant. Salazar was arrested and is being held in Caracas. The Andorran bank involved in this scandal was closed by court decision in 2015.

 

Read more about the Chinese companies in:

Ukraine

Moldova

Bulgaria