VZCZCXYZ0000
OO RUEHWEB

DE RUEHC #8878 1831618
ZNR UUUUU ZZH
O P 021556Z JUL 09
FM SECSTATE WASHDC
TO RUEHMD/AMEMBASSY MADRID IMMEDIATE 1977
RUEHFR/AMEMBASSY PARIS IMMEDIATE 5192
RUEHRO/AMEMBASSY ROME IMMEDIATE 1335
INFO RUEHZP/AMEMBASSY PANAMA PRIORITY 5110
RUCPDOC/USDOC WASHINGTON DC PRIORITY 5307

UNCLAS STATE 068878 
 
SENSITIVE 
SIPDIS 
PLEASE PASS TO ECON AND COMMERCIAL COUNSELORS 
 
E.O. 12958: N/A 
TAGS: EWWT BEXP ECON EFIN ETRD PM SP FR IT
SUBJECT: DEMARCHE REQUEST: ENSURING FAIRNESS BY BIDDERS IN 
THE PANAMAL CANAL EXPANSION PROJECT 
 
¶1.    (SBU)  Summary and action request.  Please see para 2 
for action request.  Response requested by July 7.  The 
Panama Canal Authority (ACP) is expected to announce next 
week the winner of the nearly $4 billion third set of locks 
contract.  This project is the centerpiece of the Canal,s 
overall expansion plan. The three consortia bidding on this 
project are led by Bechtel (U.S.), ACS (Spain) and Sacyr 
(Spain).  We are concerned that the Sacyr group may have used 
the Spanish, French, and Italian credit agencies to guarantee 
a $50 million performance bond that Sacyr would otherwise not 
qualify for ) thereby disadvantaging the other competitors 
and masking Sacyr,s ability to complete this vital project. 
 
¶2.    (SBU) ACTION REQUEST FOR MADRID, ROME, AND PARIS: 
Embassy Action officers  are requested to immediately 
approach the appropriate government authority that supervises 
the named export credit agencies and ask whether those 
agencies of Spain (Secretaria de Estado de Comercio - CESCE), 
France (Compagnie Francaise D,Assurance pour le Commerce 
Extereur - COFACE), and Italy (Servize Assicurativi del 
Estero - SACE) guaranteed, insured, or in any way backed a 
$50 million performance bond for the consortia led by 
troubled Spanish firm Sacyr to construct the nearly $4 
billion third set of locks on the Panama Canal. Please report 
back by July 7, by either cable slugged to the Department and 
to Embassy Panama or by email to Marsha Singer in WHA/CEN and 
Joel Reifman, Economic Counselor, Panama, and Jim Bangert, 
Economic Officer Panama. 
 
¶3.    (SBU) Background:  A consortium led by Spanish firm 
Sacyr Vallehermoso S.A., in direct competition with consortia 
led by Bechtel (U.S.) and ACS (Spain) has bid to build the 
roughly nearly $4 billion third set of locks, centerpiece of 
the Canal expansion project.  Other leaders of the Sacyr 
group include Impregilo S.p.A. (Italy) and Jan de Nul n.v. 
(Belgium). As part of the process, the Panama Canal Authority 
has asked for a $50 million performance bond from all of the 
three consortia to verify their respective financial 
soundness.  We understand that Sacyr is nearly bankrupt and 
is being propped up by the Spanish government.  We further 
understand that their condition was so dire that they could 
not qualify for a $50 million performance bond on the open 
market, and the 3 European credit agencies specified above 
had to provide guarantees for Saycr,s performance bond. 
However, at this point ) we have not confirmed the actions 
of these three agencies. 
 
¶4.     While obtaining a guarantee from these agencies likely 
does not violate, on its face, the terms of the ACP,s 
bidding proposal,  the fact that the guarantees ) if they 
exist* could mask the true condition of Sacyr is of concern. 
The USG is supporting U.S. firm Bechtel in its efforts to 
obtain this enormous contract and bring jobs to the United 
States.  Concurrently, we wish to ensure that an otherwise 
fair and transparent bidding process is not wrongfully 
manipulated by the Sacyr consortium.  If Sacyr is concealing 
its true financial condition, with the support of European 
governments, we wish to bring that fact to the attention of 
the ACP before they announce the winner of this 
once-in-a-century project. 
 
¶5.    The Department thanks you for your prompt assistance. 
CLINTON