VZCZCXYZ0003
OO RUEHWEB

DE RUEHC #9224 1832255
ZNR UUUUU ZZH
O P 022233Z JUL 09
FM SECSTATE WASHDC
TO RUEHBS/AMEMBASSY BRUSSELS IMMEDIATE 4232
RUEHMD/AMEMBASSY MADRID IMMEDIATE 1978
RUEHRO/AMEMBASSY ROME IMMEDIATE 1344
INFO RUEHZP/AMEMBASSY PANAMA PRIORITY 5121
RUCPDOC/USDOC WASHINGTON DC PRIORITY 5308

UNCLAS STATE 069224 
 
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.    1.    (SBU)  Summary and action request.  Please see 
para 2 for action request. 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 400 million USD performance 
bond and 50 million USD payment bond that Sacyr would 
otherwise not qualify for, thereby disadvantaging the other 
competitors by masking Sacyr,s true financial position, 
which may impede Sacyr,s ability to complete this vital 
project. 
 
¶2.    (SBU) ACTION REQUEST FOR MADRID, ROME, AND BRUSSELS: 
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), Belgium (Office National du Ducroire-OND) 
and Italy (Servize Assicurativi del Estero - SACE) 
guaranteed, insured, or in any way backed a 400 million USD 
performance bond and 50 million USD payment bond for the 
consortium 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 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 $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 three 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 theguarantees, if they 
exist, could mask Sacyr,s true condition 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 it announces the winner of this 
once-in-a-century project. While experts have rated the 
engineering difficulty of this project as moderate, the more 
daunting challenge lies in logistics - management of cash, 
materials, and labor - all of which depend upon the ready 
availability of credit.  Successful completion of the canal 
expansion is vital to U.S. interests.  Currently, roughly two 
thirds of all vessels transiting the canal are travelling 
to/from a U.S. port, and 5 per cent of world commerce passes 
through the canal. 
 
¶5.    The Department thanks you for your prompt assistance. 
CLINTON