The reach of the People’s Republic of China (PRC) in major infrastructure projects in Colombia has increased considerably in recent years. The first line of the Bogotá Metro, the Regiotram commuter train, and the Mar 2 Highway are just some of the million-dollar contracts awarded to the Asian country. Projects that have come with some expectations, as they promised to turn around the development of a country lagging behind in infrastructure, but also concerns because Chinese works are far from smooth.
“Several Chinese companies currently operating or participating in large Colombian projects have been accused of environmental damage, corruption, labor violations, or undue delays worldwide,” Leland Lazarus, associate director of national security at the Jack D. Gordon Institute for Public Policy at Florida International University (FIU), told Diálogo.
These accusations add to the questionable quality of PRC engineering. According to a study revealed by The Wall Street Journal, China’s global infrastructure projects are collapsing. The most emblematic example is in Colombia’s neighboring country: Ecuador. The Coca Codo Sinclair hydroelectric power plant, built by Chinese company Sinohydro with a $2.7 billion investment, and promising to be the largest infrastructure project in the history of this country, today has countless technical failures that prevent it from generating energy at full capacity and threaten to destroy the dam, due to the erosion caused in the Coca River.
These repeated complaints not only worry experts, but also set off alarms about the risks posed by the growing presence of Chinese companies in Colombian infrastructure; a country which, until a few years ago, had been particularly impervious to Chinese influence.
The Chinese landing in Colombian infrastructure
China-led infrastructure came late in Colombia. At the beginning of the century, a wave of Chinese projects began to appear in Latin America, driven by loans from the Asian country that compelled countries to hire Chinese companies to develop the works. These projects were also part of the Belt and Road Initiative (BRI), Xi Jinping’s strategy to boost business in the area. Colombia, however, opted for a more moderate position, staying away from the Chinese boom being generated in the region.
“It was not Colombia’s decision to be part of the Belt and Road, nor to favor or make direct agreements with China. In that respect we are very different from our neighbors, with whom they make government-to-government contracts, as China is accustomed to do in most of its projects. That’s how China works, but that’s not how Colombia works,” former Colombian Minister of Transportation Ángela María Orozco told Diálogo.
But things began to change, when Colombia saw the need to open bids to compete with neighboring countries. In 2014, Colombia was the least competitive of all the countries in the Pacific Alliance, lagging 15 years behind in infrastructure, according to the World Bank’s ranking on logistics competition. To make up for that, the Colombian government at the time, promoted the project known as the Fourth Generation of Road Concessions in Colombia. “The 4G was a package of public-private partnerships with an investment at that time of $6 billion, an ambitious project for any country in the world, with good guarantees and uncommon in Latin America — China was not going to be left out,” Orozco said.
In September 2015, Colombia’s National Infrastructure Agency (ANI) awarded the construction of the Mar 2 Highway, one of the projects within the 4G, to the Chinese consortium led by state-owned China Harbour Engineering Company (CHEC). What was the first private-public partnership agreement in Latin America with Chinese banks, would pave the way for the PRC’s entry into Colombia.
“This would be the snowball that would begin to move everything,” David Castrillón, professor and researcher at the Externado University of Bogotá, told Diálogo. China went from being absent in the infrastructure sector to leading the most important projects in the country’s recent history. “Of the 42 Chinese projects in Colombia today, more than half have been awarded in the last three years, and the bulk of them are in infrastructure,” Castrillón said.
Although foreign direct investment brings with it development, the presence of Chinese companies is worrying, Lazarus said. “We are talking about state-owned companies that depend directly on the Communist Party and that respond to its strategic interests.”
CHEC: Bogotá Metro
Of the infrastructure projects awarded to China, the most important is the Bogotá Metro. In November 2019, the Chinese consortium APCA Transimetro celebrated its win of the tender to build the first line of the Bogotá Metro, a victory over the Mexican-Spanish consortium Metro, which put an end to a saga of more than half a century for Colombians, who have always had their hope of having a subway in the capital unfulfilled. But that enthusiasm faded over time as the project began to hit some hurdles.
The first issue had to do with non-compliance. “This is typical of Chinese companies,” said Lazarus. “They have other expectations.” Empresa Metro de Bogotá (EMB) fined the Chinese consortium (CHEC and Xi’An Metro) in charge of the planning and operation of the metro, for failing to meet deadlines to complete studies and preliminary designs, which should have been delivered in December 2022.
Delays and non-compliance are no stranger to that same company in other projects worldwide. The Ugandan government for example, decided in January 2023 to terminate the $2.2 billion contract with CHEC following years of unfulfilled promises, Ugandan newspaper Daily Monitor reported. CHEC was to build the railway tracks to link Ugandan capital Kampala to Kenyan border town Malaba. However, seven years into the contract, neither financing nor structuring of the works had materialized, resulting in Uganda dropping the Chinese firm, the daily reported.
In addition to delays with the Bogotá Metro documentation, other concerns are coming to light. In its September 23 issue, Colombian magazine Semana reported on alleged irregularities in the awarding of the project. According to the magazine, there is evidence that compromises a Chinese citizen, a former employee of the Ministry of Transportation, and other officials with alleged money transfers in the construction of the mega project. The Attorney General’s Office referred to the complaint through a statement confirming that it is indeed conducting investigations for alleged corruption in the awarding of the Bogotá Metro.
The situation is bitter, even more so as both companies leading the project have a questionable track record. CHEC, with an 85 percent stake in the consortium, has been involved in corruption scandals worldwide. The most recent of these occurred in neighboring Bolivia, EFE reported, where reports of corruption led to the dismissal of the Chinese firm’s general manager.
CHEC’s parent company, China Communications Construction Company (CCCC), has also been involved in scandals. The World Bank (WB) debarred CCCC, which has more than 60 subsidiaries, for a six-year period for fraudulent practices involving road projects in the Philippines. Of note, when its subsidiary was awarded the Bogotá Metro project, CCCC was still under the WB sanction period. To this sanction must be added other complaints for alleged irregularities in a railway project in Malaysia and the construction of a children’s hospital in Australia, journalism platform Diálogo Chino reported. According to Diálogo Chino, in Latin America, Brazilian local authorities in San Luis, are investigating whether the company took advantage of the illegal sale of property titles for the construction of a port. In Panama, authorities are investigating irregularities in the contract for the construction of a bridge.
But that’s not all. Xi’an Metro Company, the other company in the consortium, has also starred in corruption scandals. In December 2018, the Intermediate People’s Court of Xianyang City ruled that the manager of this company was guilty of accepting bribes, several local media reported.
‘Highest bidder’ at the risk of political influence, little accountability, and espionage?
The Bogotá Metro tender opens the debate on the need to include additional criteria to those already established that require compliance with technical specifications at the lowest cost, when competing with Chinese state-owned companies. According to experts, Chinese state-owned companies have access to very economical resources and financial conditions. “Access to financing conditions gives them advantages to win projects,” Orozco said. However, Chinese advantages translate into disadvantages for the host country, because these are companies with questionable reputations.
“It’s shocking that a company that combines global complaints of corruption, environmental impact, and labor and human rights violations, as is the case of China Harbour Engineering — a combination of all these conflicts within the same company — is in charge of carrying out the most important work in the recent history of Colombia,” Sergio Vita, an Intelligence and Democratic Systems analyst at the Rey Juan Carlos University of Spain, said.
A thought that isn’t foreign to local and international organizations in charge of the bidding process, Orozco said, adding that “there is a great discussion with the multilateral agents for the bidding of the second line of the Bogotá Metro, which allows for the inclusion of additional criteria that balance the scale, so that is not only the lowest bid, but that allots requirement and measurement to other characteristics that were not given in the first line.”
This goes even further, because, according to experts, the interests and conditions imposed by Chinese state-owned companies go against the business rational of Western companies, which creates enormous risks for the security and sovereignty of the host country. One such risk is the interest behind the projects. “For Chinese companies, the Bogotá Metro is a strategic decision, guided mainly by political criteria in search of influence, not so much by economic results or profitability; that’s not so important,” Vita said.
The lack of transparency is also a concern. “The contracts they enter into with local authorities tend to be confidential. This deliberately keeps the Colombian public ignorant about the type of agreements reached and what the Colombian authorities had to give up to reach those agreements,” Lazarus said. “The Colombian people should not have to wonder if their government has made ‘Faustian’ deals with China.” CHEC, the company in charge of the Bogotá Metro, is also the company that built the space station in Argentina, which has caused great controversy precisely because of the contract’s lack of transparency, and for its potential military purpose.
In addition, the lack of accountability to which Chinese companies are subjected is a major concern. Analysts explain that while there are some guidelines for their companies, these are not mandatory. “Western companies are subject to higher standards of transparency, there are a multitude of governmental and civil society mechanisms in charge of supervising the behavior of these companies, something that does not happen in China’s case,” Vita said.
To this disturbing scenario is added an even more alarming one: data capture. “Both actors [the Chinese State and state-owned companies] act based on the same objective in which the strategic interest takes precedence over the economic,” Francisco Santos, former vice-president of Colombia, told Diálogo. According to Santos, the Bogotá Metro is a clear example of the fears about espionage already detected in different sectors when it comes to Chinese companies. “China is not only going to build, but also to operate the subway for the next 25 years. Has anyone stopped to think that China is going to keep the data of each of the people who get on that subway and the information it is going to be able to access only through that capture mechanism?” Santos asked.
Bogotá Metro second line
All eyes are on the awarding of the second line of the Bogotá Metro and in whose hands it will fall. The race has just begun, but doubts have already started to emerge. According to Semana’s November 5 publication, Empresa Metro de Bogotá was warned about a possible conflict of interest in three of the four consortiums interested in the megaproject, and was asked to disqualify the three bidders, which area allegedly linked to CCCC. In other words, no matter who wins, the beneficiary would be one and the same: China. “In sum, what all these companies have in common is that they are state-owned, therefore, even if they are presented as diverse firms competing under a free market scheme, the selection of any of these will always end up favoring the Chinese state,” Vita said.
This would not be the first time that several Chinese companies competed for the same project. An example of this was the tender for the most recent contract awarded to a Chinese company. This is the completion of the Ituango hydroelectric works in Antioquia, in which three consortiums were presented, two of them being China state-owned companies, leading to all kinds of questions. This situation will be analyzed in the second part of this report, along with other projects, such as China’s failed attempt to take over the country’s most important river: the Magdalena.
Read the next installment of The Risks of China-Made High-Impact Infrastructure in Colombia PART II.