Court 'digs' new financial hole for troubled EPCM Consultants

Multinational risks paying millions in indemnity payouts

- By Bongani Mdakane

It never rains but pours, complete with hailstones, for the embattled multinational EPCM Consultants.

The Pretoria-based engineering firm and its subsidiary, EPCM Tanzania came out of the Pretoria High Court licking their wounds after their court application to interdict Guardrisk Insurance was dismissed with costs by Judge Omphemetse Mooki recently.

The applicants (EPCM Consultants and EPCM Tanzania) wanted to prevent Guardrisk from making an insurance payout to Standard Chartered Bank SA (SCB SA) or Standard Chartered Bank Tanzania (SCB Tanzania) for performance guarantees or counter-guarantees.

In this complex transaction, TSK Tanzania Company required risk coverage in case something went wrong with the project it had awarded EPCM Tanzania. TSK Tanzania approached SCB Tanzania in the East African country for a guarantee; in turn, SCB Tanzania then went to SCB SA for underwriting, which went to Guardrisk to cover that risk, with the local EPCM providing surety and guarantee.