11/29/12

P3 corporations give award for crap financing deal


Nouveau CHUM

The Canadian Council for Public Private Partnerships has honoured the Centre hospitalier de l'Université de Montréal (CHUM), the Collectif Santé Montréal (CSM) and Infrastructure Québec with its 2012 "Gold Prize" for financing construction of the new CHUM.
Nouveau CHUM

Apparently, the award goes for the project with the worst financing.  As  Luc Fouquette, the Collectif's General Manager said, "This funding is also the very first for a PPP project in Canada with a BBB rating (BBB+ by DBRS and Baa2 by Moody's)." 

P3 financing is among its worst attributes, costing the public billions in extra expense compared to public financing.  The BBB credit rating is a new low  for P3 financing. Every single P3 that has been broadly marketed so far in Canada has enjoyed an A-level rating -- until this deal came along.   
Nouveau CHUM

This will add even more costs for taxpayers.  Investors, in contrast, should see a nice return.  Perhaps that's why the project won the "Gold Prize".  



P3 Rules Broken
Costly financing wasn't the only problem. The Montreal Gazette notes that contrary to P3 rules in Quebec, loopholes allowed major partners in the P3 consortium to bid on both the McGill and the CHUM hospital projects.


P3 Arrest

As noted a few days ago, the Quebec police have been investigating the McGill University Health Centre (MUHC) P3 project.  

Now they have arrested Pierre Duhaime on fraud-related charges concerning the MUHC P3. Duhaime is the former SNC-Lavalin Group Inc. president and chief executive officer. SNC-Lavalin led the consortium that won the MUHC P3 bid.   Riyad Ben Aissa –who led SNC-Lavalin's construction division and who is currently in jail in Switzerland for another corruption case involving alleged payments of $139 million by SNC-Lavalin -- also faces the same three charges: conspiracy to commit fraud, fraud and making use of forged documents.

The Globe and Mail reports Mr. Duhaime left SNC in  March amid allegations he approved $56-million in payments to unknown agents to secure contracts for the company.  One unconfirmed news report alleged that $22.5 million was connected with the MUHC deal. The company paid Duhaine $5 million in severance.  

SNC-Lavalin is involved in P3 projects in other provinces.

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