Panama Canal Construction Consortium Facing Criminal Investigation

by Ship & Bunker News Team
Tuesday January 12, 2016

The Grupo Unidos por el Canal (GUPC) overseeing the expansion of the Panama Canal is facing an investigation after a criminal complaint was filed against it for inflating cost overrun claims, local media reports.

The complaint was filed by Juan Carlos Arauz, vice president for the National Bar Association, with Panama's Attorney General's Office, and in a statement he said the investigation would focus on "the possible defrauding of the nation's resources" through the presentation of "unjustified" economic claims by the consortium.

GUPC is led by Spanish construction company Sacyr Vallehermoso.

The complaint acknowledges the possibility that the International Chamber of Commerce's International Court of Arbitration could rule that GUPC is justified in seeking additional payments of up to $3.5 billion for the overruns and cause "serious harm to the Panamanian state."

News of the investigation coincided with Panamanian President Juan Carlos Varela last week publicly declaring that the expansion will be finished by May of this year instead of April, as was previously announced.

He also said, "I am calling on the contractors for the expansion project to hold dialogue with the Panama Canal Authority, to allow work to be completed, to leave legal disputes in the hands of the competent authorities and to avoid mediatized differences that in no way help the image of the contractors, the Canal Authority and the Republic of Panama."

Internal squabbles have plagued the expansion project for several years now: in February of 2014, a dispute between GUPC and The Panama Canal Authority (ACP) over who should pay for what was then $1.6 billion in cost overruns led to work being halted on the then-$5.25 billion project.

In October of 2015, Jorge Quijano, the canal's chief administrator, said he was considering legal action when cracks in the concrete of one of the interior chambers was discovered and threatened to delay to canal's opening.

This was followed by GUPC shifting blame for potential delays onto the ACP.