ICC Claim

In October 1998 Shanghai Pudong New Area Links Executive Community Ltd, filed a claim for more than $US40million in damages in the International Commercial Court in Paris, against the Bouygues-Pomerleau Joint Venture. The claim was supported by an independent assessment of damage conducted by Laventhol & Horwath, and a comprehensive report of contract failures prepared by the Independent Project Engineer, Associated Engineering. Because they project was less than 10% complete on the contracted completion date, the claim included a claim for "gross negligence" which under FIDIC rules results in quadruple damages, for a total loss by the JV Contractor of more than $US160million, including costs. Pomerleau would have been liable for 40% of these losses, or more than $US64million, which would bankrupt Pomerleau, and have a significant impact on Bouygues.

In October 1998, the Asian Financial Crisis occurred. Russia defaulted on its bonds, and an early derivatives client of Bankers Trust, Long Term Credit Management, had to be bailed out the Federal Reserve to avoid further market destabilization. Unfortunately the fallout from the financial crisis caused the Hong Kong Stock Exchange to decline precipitously, and caused currencies across Asia to plummet.

It was at this time, whilst searching for new financing that we learned from Goldman Sachs that they had offered the investment capital to our Advisors, Bankers Trust Company, in early 1997, but that Bankers Trust had not communicated that offer to its client, namely Sealand Housing, instead advocating an investment syndicate where it could invest $US7million, much of which it had been paid in fees.