$2b debt heads to court… More contractors moving to sue govt for $

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The government could soon face more legal action over outstanding payments to contractors.

Certain small and mid-sized contracting firms are considering legal action on possibly taking the central government or agencies to court over non-payments.

Some contracting firms are under pressure from financial institutions with respect to increased overdrafts or loans which were previously accessed.

Certain more vulnerable contractors have sold or leased equipment, retrenched workers and sharply cut back on other expenditure.

Some are pitching hard for the few contracts in the State and private sectors and are also canvassing in the region for possible other opportunities.

Work has been halted in recent months on virtually all local infrastructural projects.

“The situation is dire,” said the owner of a mid-sized contracting firm, who said he is “constantly doing a juggling act” with his bank and has had to send home long-serving workers.

He said that heavy equipment purchased a couple years ago are up for sale or lease.

The contractor said: “I am looking for any opportunity to keep the ship afloat.”

Another contractor said he has had preliminary discussions with his attorney on the possibility of filing suit against the government.

But he admitted that that was not a short-term measure.

“I have a serious cash flow problem,” he stated.

“The bank is on my case.”

Other public contractors are known to be exploring legal action.

Large companies are also affected, but indications are that they are still attempting to buffer the setback and are hoping for early payments.

The critical situation stems from the non-payment from the government and certain of its delivery agencies for construction work undertaken before the change of administration last September.

The total debt has been put at around $2 billion.

The government has not made any payments, and on Thursday Finance Minister Colm Imbert said: “We just don’t have the money.”

A government audit in the debts has been underway for the past two months.

The issuance of government bonds has been proposed as one solution to the debt crisis.

Hundreds of construction workers, both skilled and unskilled, have been displaced in recent months.

Contractor Namalco, based at La Brea, recently sued government agency Estate Management Business Development Company (EMBD) for $1.3 billion for alleged breach of contract.

Namalco claims that EMBD failed to abide with its contractual obligations.

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