Hålogaland: the first Chinese-built bridge in the Arctic

After winning a tender in ways unorthodox enough to land two engineers in jail, a Sichuan SOE has become the first Chinese company to be involved in a major transport infrastructure project in the Arctic region. A rather peculiar kind of partnership with a German bridge-builder helped a company whose previous activities abroad were concentrated in Eritrea to be chosen over established Western competitors to build the steelwork for large bridge in northern Norway. The fact that the project, started in late 2013, has gone unimpeded despite the freeze in Chinese-Norwegian relations after Liu Xiaobo’s Nobel provides an interesting data point to understand what exactly falls under the boycott.

An unprecedented success

In October 2013, Sichuan Road and Bridge Group (SRBG, 四川路桥), owned by the provincial government, won the tender to build the steelwork of the Hålogaland bridge near Narvik, some 200 km inside the Arctic circle. Over 1500 m long, the suspension bridge will be the second longest of its kind in the country and will shorten the travelling distance northwards from Narvik by 18 km. It was the first time a Chinese contractor was awarded such a project in the West, and SRBG’s first-ever contract in Europe.

SRBG has completed a number of technically impressive projects in China, such as the suspension bridge with the second longest mainspan in the world, the Xihoumen 西堠门 that links Zhoushan 舟山 to the mainland. In contrast to the multiple collapses of often just-built bridges that have made news in China in recent years, SRBG has a comparatively clean record. Serious damages to SRBG bridges have been blamed on exceptional natural conditions, such as the 2009 collapse of the Chediguan 彻底关 bridge SRBG was chosen to rebuild after the Wenchuan earthquake. (The new collapse was personally explained by company chairman Sun Yun 孙云 as due to the unforeseeable impact of an “enormous rock”.) But a company partially established by SRBG, Sichuan Chuanjiao Road and Bridge (四川川交路桥有限责任公司), has a decidedly less stellar record: the partial collapse in 2013 of the third Tuojiang 沱江 bridge Chuanjiao was building in Ziyang, eastern Sichuan caused five deaths. At the time, the chairman of Chuanjiao was Huang Jinping 黄金平, also a vice-general manager at SRBG. Huang would eventually fall victim to an investigation for “serious violations of discipline”, usually a euphemism for corruption.

Impressive though SRBG past achievements in bridge building already were, the Norwegian tender was an unprecedented success. Although the company’s activities abroad began as far back to 1979, their major operations so far have been in Cambodia, Yemen, Tanzania, Micronesia, and most saliently Eritrea, where SRBG have even diversified into gold mining. Winning contracts in at least some of those locations, Eritrea in particular, surely involves more government-to-government contacts to a greater degree than technically outcompeting other bidders. SRBG’s Hålogaland contract, the second cheapest contender for which was MT Høygaard, looked like the first such infrastructure project awarded to a Chinese company in Scandinavia.

An unorthodox partnership

The thing is, SRBG weren’t competing on their own. As I, and seemingly nobody else in a Western language, reported in 2013, SRBG won the tender in partnership with DSD Brückenbau, part of a German group with a long experience in steel construction in Europe, the Middle East and China. The exact nature of the partnership remained elusive: while Chinese reports mentioned SRBG had sought DSD’s help to enter the European market, the contract was formally awarded to a joint venture of SRBG with a little-known Serbian company that shared an address with a DSD subsidiary. The German connection was still obvious: the contract was officially signed on SRBG’s side by He Saizhong 何赛中, a senior engineer with a decades-long career in the German bridge-builder, not known to work for the Sichuan SOE.

The truth would emerge a year later, during a trial conducted in Saarbrücken, Germany. He Saizhong, the DSD engineer, and Frank Minas, a colleague, were accused of defrauding their employer by preparing the Hålogaland bid at DSD, only to eventually present it as their own. As I have learnt from Helmut Jakob, a journalist who covered the trial for local media, the two first convinced the company to act as a subcontractor, managing the project through a Serbian company they were connected to. In the end, DSD was completely left out of the project when the project management was taken over by a company led by the wives of the two engineers. He Saizhong and his colleague were found guilty of ‘breach of trust’ (Untreue) and sentenced to four years’ imprisonment. The Chinese company has not itself been accused of fraud.

Although He Saizhong’s central role in the project should have made it clear to everyone from the beginning that the well-known German company was in some way behind SRBG’s bid, the Norwegian public roads authority (Statens vegvesen) have denied they were misled by the way the offer was presented. Einar Karlsen, a project manager for the project, told me in March that, although DSD had been originally mentioned as a possible subcontractor, the German company “was not important” in the evaluation of the bid. It is possible that the evaluation was only based SRBG’s past merits, but the fact that the offer was prepared at DSD by a DSD team, together with reports that SRBG had sought to partner with the German company, make it safe to conclude that SRBG did indeed benefit from the unorthodox way the offer was prepared. A source suggests it was He Saizhong who facilitated the Sichuan company’s partipation in the project.

An unimpeded deal

Construction is going ahead, seemingly unhindered by the German trial and the imprisonment of the contractor’s “representative”, and is expected to finish in 2017. Norwegian reporting on the bridge, an important project for the region, appears to have made no mention of the trial in Germany before an article published in a local newspaper last September (paywalled).

The defrauded German company and the now imprisoned He Saizhong are not the first to be sacrificed for Sichuan Road and Bridge to win contracts. In 2008, a manager with SRBG had admitted to bribing an official to earn the company the contract for the Xinlongmen 新龙门 bridge near Chongqing.

The fact that SRBG’s participation in a major project in Norway was not blocked by Chinese authorities is a telling detail about the unofficial boycott imposed on Norway after the award of the Peace Nobel prize to Liu Xiaobo in 2010. This could be the result of a publicity calculation. Most known aspects of the boycott can be interpreted as ways of showing the Norwegian public they were being punished: it became harder for Norwegians to get Chinese visas, salmon shipments were rejected; real-estate tycoon Huang Nubo 黄怒波 could not buy a 100 hectare plot in the north of the country until relations get better. Not letting SRBG bid to build their bridge would have simply meant a European competitor would build it.

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Eritrean mining official visits Sichuan Road & Bridge

Alem Kibreab, an high-ranking official from Eritrea’s Ministry of Mines and Energy, paid Sichuan Road and Bridge Group a visit last month. SRBG, though primarily builders of roads and bridges, as their name suggests, also have an interest in mining, specifically in Eritrea, a country where they have been active for quite a few years now.

A year ago, they signed an agreement to look for gold and other metals, and now they are talking about a second exploration project with copper as the main ore. SRBG’s is not the first Chinese mining venture in Eritrea: SFECO‘s gold project is much better known.

This blog doesn’t quite have an Eritrean focus. I often talk about SRBG because, in their capacity as bridge builders, they are building the steelwork for Hålogaland bridge in Norway, the first work of Arctic transportation infrastructure with Chinese involvement that I’m aware of.

a bridge too far: four years’ jail for ‘Sichuan Road & Bridge representative’ in Hålogaland bridge deal

A Chinese engineer who helped Sichuan Road and Bridge Group (SRBG, 四川路桥) win a tender to build the steelwork for a large bridge in Norway has been found guilty of embezzlement and sentenced to four years’ imprisonment by a German court, the Saarbrücker Zeitung reports.

As I’ve been repeating for a year now, SRBG won that tender in some sort of partnership with DSD, a German based group of companies with extensive experience in bridge building. Only that partnership was remarkably little talked about, and its nature remained unpublicised: the steelwork contract had been awarded to SRBG together with a little-known Serbian company somehow connected to a local DSD subsidiary. The nature of this partnership, it would now seem, wasn’t entirely clear to DSD themselves.

He Saizhong, a Chinese engineer who worked with DSD for years, was involved in preparing the Hålogaland bid for DSD, but then presented it as including SRBG and the Serbian company as bidders, with DSD only as a subcontractor and a company run by his and his accomplice’s wives in charge of managing the project, it emerged during the trial. Through this clever bypass operation, Mr He and his partner caused DSD large losses, though they claimed they weren’t motivated purely by greed but by a “fascination with bridge building“.

Back when the contract was signed, an announcement on the website of Statens vegvesen, Norway’s public road administration, had shown a picture of a radiant He Saizhong, captioned as a “representative from SRBG”.

The Hålogaland bridge, under construction in Narvik, a couple hundred kilometres into the Arctic circle, is to be the second longest suspension bridge in Norway. It’s the first project of its kind for a Chinese company in the area, and SRBG’s first contract in Europe, which it won by offering just 2.5% less than the second cheapest bidder, MT Højgaard from Denmark.

While their activities abroad are not that important (their most significant operations have been in Eritrea, Tanzania and the Federated States of Micronesia; a Russian foray might be in the works), SRBG have built some of the largest bridges in China, including for example the Xihoumen 西堠门 joining Zhoushan to the mainland and the Jingyue 荆岳 over the Yangtze in Hubei.

They also have a less stellar side though. In my 2013 article I detailed how, while their own bridges seem to fail quite seldom and under arguably exceptional circumstances, Chuanjiao (四川川交路桥有限责任公司), a company related to SRBG and with which it shared some of its top management at the moment, was responsible for a bridge that suffered a tragic collapse during construction in May last year.

Corruption isn’t unknown to them either. In 2008, a manager with SRBG admitted to bribing an official to help the company win the tender to build the Xinlongmen 新龙门 bridge near Chongqing. More recently, Huang Jinping 黄金平, who used to be a vice-general manager at SRBG and chairman at Chuanjiao, was reported to be under investigation for ‘serious discipline violations’, usually a euphemism for corruption.

At the moment there’s no indication of the German process affecting the project in Norway in any way, of course as long as they can go on without Mr He’s expertise.

Eritrea: Sichuan bridge-builder goes into gold mining

Sichuan Road and Bridge Group (SRBG, 四川路桥集团), recently written about in this blog in connection with its first European contract, the Hålogaland bridge in Norway, has been diversifying into a rather different area. Finance and Investment (金融投资报) reported in late October that SRBG will enter a partnership with the Eritrean government to explore for gold and other metals in a 1000 km2 area in the Bisha-Zara region. The exploration phase, expected to last between three and five years, could require an investment of around $33m.

The first major mining project in Eritrea, the Bisha mine, a joint venture between the Eritrean government and Nevsun from Canada, produced gold from 2011 until a few months ago, when it switched to copper. Nevsun has been criticised for relying in its Eritrean partner’s use of conscripts as “forced labour“, a charge the company denied at a subcommittee meeting in the Canadian Parliament. Eritrea had received a $60m Chinese loan to start the Bisha project in 2007.

SFECO, a Shanghai government-owned company also active in Eritrea, bought a 60% interest in the Zara gold mine from Chalice in September last year.

[new article] Hålogaland: a Chinese bridge in Norway

I have a new article up on the contract awarded in October to Sichuan Road & Bridge Group (SRBG) for the steelwork of the Hålogaland bridge in northern Norway. This is the first time SRBG wins a tender in Europe: while they have a long history of activities overseas, so far they were restricted to Asia and Africa, in particular with a long presence in Eritrea. At home, they’re behind quite a few rather impressive bridges, including the Xihoumen, the second longest suspension bridge in the world. Somewhat less impressive is Chuanjiao, a company related to SRBG, one of whose bridges partially collapsed during construction last May, adding another fatal incident to China’s record of falling bridges.

Go read the full text.