Companies

Chinese firm makes fresh claims in Sh1.8bn Garden City dispute

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Garden City Mall opened its doors to the public for the first time on May 28, 2015. PHOTO | FILE

The Chinese contractor that built the Garden City Mall in Nairobi has accused the establishment’s owners of colluding with one of its sister companies to trick the court into awarding a Sh1.8 billion payment they are seeking.

Sinohydro Corporation has claimed in court that GC Retail is colluding with its sister company and Garden City project manager Mentor Management Limited (MML) to authenticate a Sh1.8 billion claim by the mall owners for delays in completion of construction works.

The Chinese firm says it recently discovered that GC Retail has majority shareholding in MML.

Sinohydro adds that it would have objected to MML’s hiring as project managers if it had been provided with the information before construction of Garden City began.

Sinohydro is challenging reports from MML that have been filed as evidence that GC Retail deserves a Sh1.8 billion payout for delays in completion of construction.

It says the reports cannot be relied on because of the conflicted relationship between GC Retail and MML.

“Failure to disclose the above outlined conflict of interest in the project dispute shows that the determination being relied on by GC Retail in their affidavit was therefore generated as a collusion between GC Retail and MML. A determination made by a person who has a direct interest in the matter cannot be a basis of making any claim,” Sinohydro says.

READ: Garden City owners now sue Chinese builder of mall

The Chinese firm adds that Michael Turner, a director of GC Retail is also a manager at MML, which shows how close the two firms are.

GC Retail is seeking to cash a Sh600 million performance bond from Equity Bank that was issued as a guarantee for compensation in the event that the mall owners were dissatisfied by the construction works.

The dispute has sucked in Equity Bank, which Sinohydro has accused of colluding with GC Retail. The mall’s owners have also slapped Sinohydro with a Sh1.2 billion claim in penalties for delays in completion of construction.

Sinohydro sued Garden City Retail and Equity Bank in October to stop them from cashing the performance bond until the dispute over delays in completion have been determined by an arbiter.

Documents the Chinese firm has filed in court show that GC Retail owns 99 shares in MML, while Mauritian firm Fieldhall Limited owns one share in the project manager.

GC Retail officially opened the mall on May 28 despite the significant amount of outstanding works and disruption to the mall’s tenants.

Sinohydro was to initially complete construction in October last year, but sought an extension to January before asking for a May 2015 deadline.

Sinohydro is yet to complete the works and Garden City says it has been forced to contract another firm to take over the project.