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Airport idle, jumbos take the highway

Dubbed the world’s emptiest airport, the Mattala Rajapaksa International Airport in Sri Lanka is designed to handle a million people a year.

Instead, most days just a handful of passengers pass through this vast, empty space. The $209‑million project’s cargo terminals were used to store rice after a bumper harvest — this brought in more revenue than flight-related activities at the time.

Building the loss-making airport cleared 809 hectares of forest and displaced about 200 elephants, which can now be seen trundling along the newly paved four-lane highway in the remote area of Hambantota on the southernmost tip of the island instead.

Also connected by the desolate highway is a seldom-used 3 000-seat cricket stadium and a world-class convention centre.

The $1.4‑billion Hambantota seaport (which earlier studies found to be unfeasible) has been proved a money-loser. According to the Sri Lankan press, it had handled just 44 ships between 2015 and August this year. Massive infrastructure projects have caused the Sri Lankan government to drown in debt.

The new R57‑billion deal by the Passenger Rail Agency of South Africa (Prasa) for the Moloto Rail Development Corridor will have at least one thing in common with all these infrastructure projects — it is financed by the Export-Import Bank of China (known as the Exim Bank) and will be built by the China Communications Construction Company (CCCC) and its subsidiaries.

The CCCC is a Chinese government-owned company listed on the Hong Kong and Shanghai stock exchanges with a market valuation of $34‑billion.

Controversially, this company has been linked to a number of corrupt activities in the past (see “Chinese company’s murky past looms large”) and has previously been blacklisted by two development financiers — the Asian Development Bank and the World Bank — for corrupt behaviour.

The World Bank’s blacklisting made the CCCC and its subsidiaries ineligible to do any road and bridge projects financed by the bank and spanned eight years. It was only lifted in January this year.

The World Bank recognised, however, that in 2009 China amended its law to make it a criminal offence for Chinese companies and citizens to bribe foreign government officials.

In a 2015 report, Transparency International found poor levels of transparency in large emerging-market companies. José Ugaz, chair person of Transparency International, at the time, made specific mention of the CCCC: “Time and again we see huge corruption scandals involving multinationals, such as … China Communications Construction Company, doing immense damage to local economies.”

Prasa is believed to have signed its deal with Exim Bank and the CCCC on the sidelines of a recent Brics (the Brazil, Russia, India, China and South Africa grouping) summit in China — without a board or even a permanent chief executive in place.

Prasa did not consult the treasury prior to signing the deal: it neither asked about government guarantees, nor did it seek permission to deviate from procurement law to enable the CCCC to handle the project.

A well-placed source told the Mail & Guardian that a study (seemingly completed in 2014) conducted into the Moloto Rail Development Corridor found it to be unfeasible. The transport department has ignored repeated requests for comment for the past two weeks.

At R57‑billion, the deal will be among the largest infrastructure projects the Exim Bank has funded in Africa.

“The Chinese view is: ‘You just tell us what to do and we will do it,’ ” said Ross Anthony, director of the Centre for Chinese Studies at Stellenbosch University. “The problem will usually lie with the host government, which perhaps may be trying to override some sort of internal process. Host countries should be held up to more scrutiny.”

Indeed, in the case of Sri Lanka, former president Mahinda Rajapaksa’s infrastructure drive was widely criticised. The Hambantota infrastructure projects continue to devour the country’s economy. As reported by Quartz, the country’s debt contracted with China amounts to $8‑billion, and 95.4% of all government revenue goes to debt repayment. In July, the Sri Lanka government signed a 99-year lease agreement for the Hambantota port with the China Merchant Port Holdings that will bring in more $1‑billion, which will go towards paying off the debt to China.

If it were an American firm in the mix, the focus would probably be on the South African side of the equation, said Anthony. “But there is a phobia about China and its processes.”

Although Chinese companies are increasingly honouring obligations to employ Africans for projects on the continent, Anthony said the Exim Bank was mandated to support Chinese jobs through the projects it finances abroad. This was not unusual, he said, as American and Nordic companies do the same. It is seen as a win-win for China and the host country it finances.

The state and companies aligned with it, such as the Exim Bank and CCCC, are “painfully aware” of the poor image they have in Africa, said Anthony, as China embarks on a “charm offensive” to move away from a corrupt image.

“Those companies, more than other Chinese actors, will seek to do things more above board … In terms of global governance and corporate social responsibility, Chinese companies are changing,” said Anthony.



Chinese company’s murky past looms large

In 2009, the World Bank debarred the China Communications Construction Company (CCCC)for its involvement in bid rigging on a Philippines road project. The company, through its subsidiary, received the harshest penalty of the firms involved; for eight years they would be ineligible to do road and bridge projects financed by the World Bank Group.

The CCCC and a subsidiary, China Harbour Engineering Company (CHEC), were also banned by the Asian Development Bank after they bribed the former Bangladeshi prime minister’s son, Arafat “Koko” Rahman, for a project to build a port in Chittagong. Rahman was reportedly jailed for laundering millions of dollars in bribes taken from the CHEC.

In 2011, the former chairperson of China’s Hebei Port Group, Huang Jianhua, was sentenced to death for taking bribes from the CCCC, the CHEC and others. According to reports, the Chinese authorities found the CCCC had given Huang a house after he arranged for the firm to win a 2008 bid for a construction project at the Huanghua Port Wharf in China.

But Ross Anthony, director of Chinese studies at Stellenbosch University, said the Exim Bank and the CCCC were involved in a number of projects in the developing world, and cautioned that it was important to bear this in mind when reading Western media which tends to highlight controversial cases.

The CCCC did not respond to a request for comment. 

 

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Lisa Steyn
Lisa Steyn is a business reporter at the Mail & Guardian. She holds a masters degree in journalism and media studies from Wits University. Her areas of interest range from energy and mining to financial services and telecommunication. When she is not poring over annual reports, Lisa can usually be found pottering about the kitchen.

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