Collapsed school builders ‘received 98 per cent’ of fees due

Sammon payments for school building projects not ’paid on’ to subcontractors, committee told

Sammon Contracting entered examinership in April, citing the ‘devastating collapse’ of Carillion as the main cause in its High Court application. File photograph: Alan Betson

Sammon Contracting entered examinership in April, citing the ‘devastating collapse’ of Carillion as the main cause in its High Court application. File photograph: Alan Betson

 

Sammon Contracting received 98 per cent of payments for their work on school building project, that stalled after the firm entered liquidation in June, an Oireachtas committee has heard.

The €100-million contract to build five schools, and an institute of education was jointly run by UK firm Carillion, who sub-contracted the construction to Kildare firm Sammon.

The liquidation of Carillion in January, and then Sammon in June, have delayed the school projects by several months. Sammon entered examinership in April, citing the “devastating collapse” of Carillion as the main cause in its High Court application.

Gerard Cahillane, deputy director of the National Development Finance Agency (NDFA), told the Joint Committee on Finance that Sammon received 98 per cent of payments it was owed under the Public Private Partnership (PPP) contract. The NDFA provides advice to the State on public investment projects.

The uncertainty around the projects had led to fears three new school buildings due to be opened in September, would not be completed in time.

The committee heard new contractors are now on the three sites, and the schools – Loreto College, in Wexford, and Coláiste Raithín and St Philomena’s Primary School, in Bray, Co Wicklow – are on track to be completed by August and open in September.

Three further buildings are scheduled to be finished by December – Eureka Secondary School, Kells, Co Meath, Tyndall College in Carlow, and Carlow College of Further Education.

In 2012, the State entered into the PPP deal on the school projects, jointly run by construction firm Carillion, and the Dutch Infrastructure Fund (DIF).

The agreement was DIF would finance the construction, managed by Carillion. The private firms would then be repaid by the State over 25 years. Under the contract the firms would also be responsible for the maintenance of the six buildings for the 25-year period.

160 subcontractors

Sammon had been subcontracted by Carillion for the building works, and in turn they employed around 160 subcontractors, the committee heard.

Sinn Féin finance spokesman Pearse Doherty said some subcontractors who worked for Sammon were left with thousands in unpaid invoices, and some would have to close their businesses.

“It’s absolutely a sin, that we will have companies closing that have been in family hands for generations,” he said.

Mr Cahillane told the committee that money was “fully drawn by the end of December” by Sammon.

“We have now learned some of it wasn’t paid on [to Sammon’s subcontractors]”, he said.

Committee chair John McGuinness was critical that while the PPP contract guaranteed payments would be made to Carillion’s subcontractor, which was Sammon, there were no guarantees that ensured payments to Sammon’s subcontractors.

Children will be sitting in schools built by subcontractors who were never paid for their work, he said.

A tendering process concluded last month, to find another builder to finish the schools, several of which were very near completion.

Negotiations are ongoing to secure a suitable firm to take over responsibility for the maintenance element of the PPP contract for the 25-year period.

The disruption following Carillion’s collapse has cost the taxpayer “zero”, Mr Cahillane said, as State payments only begin after the schools are finished.

The responsibility to complete the project rests on the private partners, under the contract.

The Department of Education has to date paid around €4 million on some preparatory site costs, of the overall €100 million project.