SRT finds Hopewell 'loophole'

SRT finds Hopewell 'loophole'

Launches fresh bid to avoid B25bn payout

A train passes a column of foundation pillars, left, from the 1990 Hopewell project that was officially terminated in 1998. (Photo by Patipat Janthong)
A train passes a column of foundation pillars, left, from the 1990 Hopewell project that was officially terminated in 1998. (Photo by Patipat Janthong)

The Transport Ministry and the State Railway of Thailand (SRT) are fighting their corners over a court order to pay a huge compensation sum to Hopewell (Thailand) for terminating a contract for the company to build a 60-kilometre-long elevated highway and rail tracks in 1998.

Nitithorn Lamluea, a lawyer representing the SRT's working panel on the dispute, said attempts are under way to persuade the Finance Ministry to petition the Administrative Court to seek the nullification of the contract the Transport Ministry signed with Hopewell in 1990.

He said the SRT panel believes that the contract should be declared illegitimate because the company which inked the deal was Hopewell (Thailand) and not Hopewell (Hong Kong).

Under a cabinet resolution, the Transport Ministry was authorised to sign the contract on the government's behalf with Hopewell (Hong Kong), according to Mr Nitithorn. Since it was not a legitimate partner, Hopewell (Thailand) had no right to sue the SRT for compensation, he said.

Moreover, Hopewell (Thailand) did not have the required permit to conduct transportation operations and services, so it could not register with the Department of Business Development, he said.

In April this year, the Supreme Administrative Court ordered the Transport Ministry and the SRT to pay Hopewell 25 billion baht in compensation -- made up of an 11.8-billion-baht principal plus 7.5% in annual interest -- for wrongfully terminating the contract.

Mr Nitithorn said the SRT panel has submitted petition letters to four state agencies at the Finance Ministry, asking them to delay paying the compensation.

The Comptroller-General's Department, the Budget Bureau, the Office of the Auditor-General, and the Permanent Secretary's Office of the Finance Ministry are responsible for handling compensation money in the dispute.

Mr Nitithorn said the panel has urged the agencies to report this new finding to the cabinet so the Finance Ministry can take the matter to the Administrative Court.

Earlier, it was reported that the Transport Ministry found 20 irregularities in the elevated road and railway project and would file a lawsuit with the Administrative Court hoping to get the contracted nullified.

The ministry alleged that Hopewell (Thailand) had violated the terms of reference when signing the contract, however the move was halted after the company made a last-minute offer to negotiate.

The Hopewell contract was signed on Nov 9, 1990, when the late Montri Pongpanit was transport minister in the Chatichai Choonhavan government. When the 30-year concession was granted in 1990, investment in the project was estimated at 80 billion baht.

The contract was officially terminated on Jan 27, 1998, by the Chuan Leekpai-led Democrat government, when Suthep Thaugsuban was transport minister. The construction was only 13% complete by the agreed deadline.

After the contract's termination, the dispute was heard by the Arbitration Tribunal, which ruled in favour of the contractor. The SRT sought the Administrative Court's intervention and the court overruled the Arbitration Tribunal's ruling.

However, the SRT lost the legal battle in the Supreme Administrative Court, which upheld the Arbitration Tribunal's decision made over a decade ago.


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