An exercise in speculation

Having been paid for the last 20+ years to read the fine print in big contracts, this writer believes she has a fairly good grasp of how they are written and of the different loopholes less-than-honest negotiators can exploit for their own interests.

Although people from every country of the world could find similarities with contracts that made the headlines in their own motherland, this write-up is by no means intended to vilify anybody or any specific country without proof. Indeed, we don't have any proof and would only like to attract the attention of the general public to risks of unpatriotic behaviour embedded in such big contracts.

Let's take, for example, the theoretical example of a relatively small country ordering several aircraft; contracting with a foreign security company to rid itself of the drug trafficking menace; buying state-of-the-art surveillance equipment to better monitor telephone usage; contracting the building of tens of thousands of houses; or building a monorail.

The theoretical careful reader of these news, having at heart to educate him/herself as much as possible on the affairs of his/her country, would have researched the foreign contractors and established that they were nonexistent; created a mere few days before the deal was discussed; without any identifiable track record of prior achievements; or so seriously indebted that their continued existence would be a matter of concern.

This theoretical careful reader would wonder whether the relatively small country officials did even ten minutes research into the foreign contractors to ascertain the feasibility of the contracts. Surely, a company that doesn't exist, or was formed three days before the deal, or that is crippled by debt would find it difficult to perform, wouldn't it? Surely, that much would be obvious to the least educated person, let alone high government officials, wouldn't it?

Like yours truly, this theoretical careful reader has been reading every single word of thousands of contracts and agreements over a 20-year span and knows a bit about the terms of conditions usually included in such instruments.

Considering the most plausible answers to this theoretical careful reader's above-mentioned questions, the next question would be: why sign anything if you know or suspect the contract can't possibly be performed?

There comes the loophole we alluded to earlier on. It's very boilerplate wording, very neat, and shouldn't be seen as anything sinister if the signatories' intentions were pure. Our experience is that whenever a deal is struck, and in order to secure the order for the contractor who will have spent money to put up a proposal, then will have to spend more to hire extra workforce and, generally speaking, make provisions to begin performance at the appointed date, all contracts include a provision which in effect says that if, at this point, you renege on your word or for any reason rescind your commitment to this agreement, you will owe the supplier penalties to cover their expenses and general inconvenience. These penalties are often a percentage of the contract price. The higher the price, the higher the penalty.

And in this theoretical string of seemingly senseless and impossible deals, what if the officials were signing in full knowledge of their co-contractors' dubious history or prospects? What if they even were in cahoots with them to share the spoils once the deals reach the headlines, there is public outcry, and the Parliament refuses to confirm the deals or rescinds them? What if pocketing a percentage of these penalties were the main motivation behind these so-called miracle deals (after a few weeks in the limelight and self-aggrandizement)?

Although this is all purely theoretical, the concerned, careful citizen may want to think about it and ask their government to provide verifiable background information on all the contractors entrusted with helping to build their country's development. Although nobody in their right mind would hope this theory to prove true, the concerned citizens of any country of the world would certainly do a service to the motherland by demanding that the standards of disclosure be improved.