Road works in Poland lead to dead end for Siac and Sisk
Little did Irish construction giants think the winning of multimillion euro tenders to build motorways and bridges would end in disaster
In December 2010, as a shocked Ireland digested its EU/IMF bailout, the mood among the Irish in Poland was one of quiet optimism.
The 150-year-old family business, the granddaddy of Irish construction, was making a daring leap, taking advantage of the European single market to go where the work was.
And what a lot of work there was in Poland: with two years to go to its joint European Championship with Ukraine, the central European country was racing to close the massive gaps in its investment-starved infrastructure.
As part of a seven-year, €37.6 billion investment programme, the country needed a national network of motorways – fast. Sisk and fellow Irish construction company Siac looked at Poland – and leapt. “We see the future here: there’s enough work for 30 years,” said Mr Sullivan in 2010.
Poland was experiencing a construction boom and, as I wrote in 2010, “it seemed the Polish capital had inherited all the cranes that [had] vanished from the Dublin skyline”.
This week, Mr Sullivan was in a dark mood. “I would definitely not recommend companies [to] bid on public contracts in Poland but avoid them like the plague. You’ll be screwed,” he said. “I sometimes think they actively try to bankrupt companies.”
On Wednesday, the Siac group secured interim examinership in the High Court. Directors said their difficulties stemmed from the Irish downturn and outstanding payments of about €113 million from its Polish activities.
As Siac secured examinership, Mr Sullivan was packing his bags and leaving Poland, where Sisk accounts list €90 million in outstanding payments. Rather than take a slice of the Polish construction pie as planned, Siac and Sisk have seen visits to lawyers replace visits to sites.
The story began in 2010 when Siac won a €400 million tender to build 35 km of motorway and bridges between the towns of Kruz and Debica. Work had started on the project when its lead partner PBG, a publicly-listed firm and Poland’s third-largest construction company, went bankrupt.
Siac cancelled the project last November after a dispute with the Polish directorate for national roads and motorways (GDDKiA) over what Siac viewed as failure by the Polish authority to fulfil the terms of the contract. The Irish company is seeking compensation and has referred the case to the European Commission – part-funder of the project.
The collapse of PBG also hit three contracts it had with Sisk and Limerick-based Roadbridge to build 92km of roads. One was completed, the other two were only partially completed.
Cronyism and corruption
After the PBG collapse, Sisk exited the project, citing difficulties working with the Polish road authority.
“In all our years, in all the countries where we’ve worked, we’ve never came across a client as awkward and unprofessional as the Polish roads authority,” said Mr Sullivan, director of Sisk’s Polish operations.
Sources familiar with public contracts in Poland say that, after post-communist years marked by cronyism and corruption in public life, the pendulum has swung the other way with an acute fear in public bodies of making decisions – particularly involving large infrastructure projects.
Mr Sullivan says this reflects his experience dealing with GDDKiA. Rather than seek an amicable solution, he said, officials preferred to let courts decide.
It was a culture shock from Ireland where, he says, the National Roads Authority (NRA) resolves disagreements quickly and behind closed doors.
“Here, they immediately go to the media and start an incredible campaign of vilification, leaving your suppliers and subcontractors wondering if they will get paid,” said Mr Sullivan.