Canadian engineering firm SNC Lavalin Inc. could be in hot water for allegedly "duping" AMA Group Holdings Corp. (AMA Group), its former local partner for the extension of the Light Rail Transit (LRT) Line 1.
AMA Group filed last year a case against Lavalin in Singapore in accordance with the Arbitration Rules of the Singapore International Arbitration Center on the ground of unilaterally terminating the former despite the joint venture agreement.
The two conglomerates forged an agreement on April 14, 1999, collaborating in the preparation, execution and implementation of LRT Line 1 Project with an estimated project cost of $600 million.
In the agreement, AMA provided technical, organizational, and legal assistance for Lavalin to secure the project.
The project is a joint venture undertaking of the Light Rail Transit Authority (LRTA), with the private sector, headed by Lavalin, AMA Group, and Marubeni. It is a 12-kilometer extension project that aims to expand the existing light rail transit service (LRT Line 1) from Baclaran to Bacoor, Cavite.
Controversy arose when Lavalin allegedly illegally terminated its partnership after AMA Group advised the former, based on NEDA, DOTC and Flagship previous findings, that it can not access the Special Yen Loan Package (SYLP) of the Japanese government if it is pursued as a joint-venture undertaking. The SYLP are very concessional funds and joint venture projects should be lined up for Japanese EximBank financing.
The SYLP, otherwise known as Obuchi Fund, is a soft loan which carries an interest rate of less than one percent and payable over 40 years with a 10-year grace period.
However, Lavalin apparently made it appear that the AMA Group advocated the said funding strategy on a government-to-government basis that would prejudice the interest of Lavalin in getting a sizeable contract from the project.
According to AMA, it was not deviating from the basic relationship with Lavalin, and that AMA group had been working to give Lavalin a first crack in the venture provided that it is most advantageous to the government.
In a related development, the AMA Group also filed on Jan. 21 a case of estafa against officers of SNC Lavalin International Inc. namely, Robert N. Tribe, Robert S. Adachi, Patrice M Pelletier and Mel Samson.
AMA Group said it has invested and spent a considerable amount of time, goodwill and money amounting to P5 million as actual damages, and loss of business opportunity in the amount of P1.2 billion (or five percent of the total project cost).
"Lavalin had only used AMA Group to its own advantage by making it as a leverage to be able to contract and deal vis-a-vis with the Philippine government and to be in a position to corner the LRT Line 1 Extension Project," the AMA Group said.