THE EDITOR: The Joint Consultative Council for the Construction Industry (JCC) is alarmed at the manner in which the Government has chosen to deal with the winding up of the Education Facilities Company Ltd (EFCL), as reported in the press recently. The EFCL owes well over $600 million to its creditors, of which the majority comprise monies owed to contractors and consultants, most going as far back as 2015.

Acting on behalf of the Ministry of Education, the EFCL engaged private companies to provide goods and services for which they did not have the funds set aside to pay. The financial hardship imposed on companies by this refusal of the ministry/EFCL to pay legitimate debts after their own several due diligence audits, and even after lawful judgments, since 2016 has forced some private companies to downsize and others to simply fold up.

According to the Ministry of Finance, 'the matter is now before the court and a liquidator appointed by the court will be charged with the responsibility of asking creditors to prove their claims and adjudicate on them. It is only when that stage is reached that the Government can give consideration to such matters.'

The fact remains that while many contractors and others have already sought and secured judgment against the EFCL in the courts, some with lower value judgments have chosen to levy on the EFCL assets, which are virtually nil and were left trying to liquidate furniture. The Government is repeatedly on record promising that all legitimate debts incurred by the EFCL will be paid. It appears however that the Government holds itself above the law and is using the Companies Act to sidestep its responsibility to pay legitimate debt.

The EFCL was created and funded by the Government to satisfy the need for works and services by the Ministry of Education. In a liquidation scenario, where the assets of a state-sponsored company like the EFCL cannot cover such enormous debts, payment can be made at a discounted rate by the liquidator as he has to pay off all of the creditors based on the EFCL's asset value.

It appears that the Government has taken a decision to wind up the company instead of dealing with the legitimate debts (ordered by the courts) and other creditors over the past six years. This is an extremely dangerous precedent to set in a country where we have over 50 Special Purpose Companies, like the EFCL, all of which have had a track record over the years of not paying contractors; forcing them to go to the courts and/or paying them very late with persistent impunity.

It is also instructive to note that our recently minted procurement legislation does not contain penalties for state entities that will continue to issue contracts to private companies without secure funding and adequate cash flow arrangements. The construction industry may now have to lobby for amendments to the procurement legislation to make this unfair practice by the Government punishable.

The JCC nevertheless appeals to the Government to commit and set aside the full