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The fact that the ACP confided in Parsons Brinckerhoff to do the cost study for the third locks is cause for concern The canal expansion's "Big Dig" by Miguel Antonio Bernal The cost estimate for the third set of locks in the Panama Canal expansion project was done by the American construction firm Parsons Brinckerhoff International. This company has had a consulting contract with the ACP since 2002. Recently the contract was renewed for 10 more years, that is, for the entire life of the project --- if the "yes" side wins. It's one of the world's largest and oldest companies. However, lately it has been in the news as the party responsible for the worst transportation construction debacle in US history. For some 15 years Parsons Brinckerhoff International was, in a consortium with Bechtel, in charge of a traffic tunnel project in the city of Boston, better known as the "Big Dig." This project overshot its budget by 460% --- by $12 billion, so far --- and has been a spectacular failure. A few months ago, shortly after the tunnel system was said to be done and opened for traffic, an immense slab fell down from a tunnel ceiling and smashed a car and its driver. The investigation established that the materials used to hold the slab up were of a quality and price much lower than the company should have used --- what they said they used and what they charged the state for having purportedly bought. It was a fraud turned deadly, and that's only one of many improper practices that US courts found that the company had engaged in. Nearly two years ago, in November of 2004, La Prensa columnist Betty Brannan alerted us from Washington, in an article entitled "An instructive case: from the Big Dig to the Big Ditch." "In 1985 the figures offered to the public indicated that the 'Big Dig' would cost $2.6 billion. By 1990 the cost estimate had gone up to $5 billion. In 1994, before beginning construction, the project administrator, James Kerasiotes, gave his assurance that it wouldn't cost more than $7.7 billion. But those numbers were fraudulent.... In 1999, with the construction more than half done, the cost revealed to the public was more than $10 billion, but Kerasiotes was still trying to hide the fact that the true cost would surpass $12 billion. The state of Massachusetts saw itself obliged to issue bonds to cover the additional cost, but it did so based on the fraudulent figures provided by the administrator, who was a public employee but who worked very closely --- according to the accusations --- with the companies in charge of the project. "Faced with this, the Securities and Exchange Commission began proceedings against Kerasiotes for fraud and negligence. He lost his job but was spared from going to jail. Meanwhile, the project's cost kept increasing. The final cost, according to current figures: $14.6 billion, without taking into account the repairs that will have to be done to prevent flooding. If this is what happened in Boston, what can we hope for in Panama?" In April of 2000, the Federal Highway Administration reported that the company had defrauded the federal government, which was paying for part of the project, to the tune of $1.4 billion in overcharges. As a result of this report, the company was subjected to investigations by the US Senate, the anti-corruption unit of the FBI and the Securities and Exchange Commission. By way of voluminous proof, the investigators established that the company made false financial statements and in this way hid the project's true cost from bond purchasers. In August of 2000, an investigation by the Boston Herald revealed that two Massachusetts governors and various ranking state officials had relatives or cronies on the company's payroll, and on the payrolls of subcontractors, and that these people did no work but collected salaries that were ultimately paid for with public funds. In March of 2001 another report, this time by the state's Inspector General, concluded that the company conspired with state officials to conceal the true cost of the project from the public, bond purchasers and the bond market. Over the years Parsons Brinckerhoff International has demonstrated that it's very capable at manipulating federal, state and municipal boards of directors that hire it and try to watch over it. In 1994 an investigation by the Los Angeles Times (where the company built tunnels for the municipal transit authority) found that a few members of the authority's board of directors had taken more than half a million dollars from the company. This sort of generosity might explain why the ACP has hired --- this time for 10 years!!! --- a company with such a recent history. It's more than likely that if the expansion project comes to be approved, Parsons Brinckerhoff International will apply for the contract to do the locks. Thus we can expect immense costs, large scale corruption and terrible damages to the canal. The fact that the ACP confided in Parsons Brinckerhoff to do the cost study for the locks is cause for shock and concern. In a worldwide study called "Underestimating Costs in Public Works Projects --- Error or Lie" the Danish professor Bent Flyvbjerg has found that to underestimate costs and overestimate traffic is a tradition in the industry of designing and building large transportation projects. The objective is to assure that the project begins and that the contract is won. When the public is told that it's going to cost much more than expected, it's too late. Isn't that right, Mr. Alemán Zubieta?
Miguel Antonio Bernal is a law professor at the University of Panama, host of the Alternativa radio show and its new website, president of the Colegio de Abogados Honor Tribunal (the national bar association's disciplinary committee), a member of the Violet Legion (an honor society of intellectuals named by French presidents) for his work as correspondent for Le Monde Diplomatique and a noted Panamanian human rights activist.
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