KICB refuses to be liable for guarantee of China Railway No. 5

The Kyrgyz Investment and Credit Bank (KICB) refused to be liable for the bank guarantee of China Railway No. 5, which the Asian Development Bank requires to announce the winner of a tender for the reconstruction of the Bishkek-Kara-Balta road. 24.kg news agency has the official letter from KICB.

In response to a letter from the Ministry of Transport and Roads dated March 3, 2017, KICB reports that the Kyrgyz Investment and Credit Bank is not a correspondent bank of the Bank of China. In fact, the commercial bank refused to contact the company and answer under its guarantee in any case. « If the Ministry of Transport and Roads issues a payment claim under the guarantee, Kyrgyz Investment and Credit Bank CJSC will transfer this requirement to the Bank of China via the international inter-bank information transfer system (SWIFT) without payment obligations on its part," the bank’s letter says.

However, neither the Ministry of Transport and Roads nor the Asian Development Bank is in a hurry to recognize the violations of China Railway No. 5. Instead, China Railway No. 5 writes a letter to Kyrgyz Minister of Transport and Roads Zhamshitbek Kalilov with a request to extend the period for granting a bank guarantee. The document indicates that the contractor provided a guarantee of implementation of the contract on February 27, 2017. The local bank KICB verified it and confirmed that it is legally valid and executable. However, on March 7, 2017, the contractor received a letter in which the customer refused to accept the guarantee.

«There was too little time left to issue a new guarantee. The contractor requested an extension of the warranty period. We, China Railway No. 5 Engineering Group Co. Ltd., immediately issued a new bank guarantee. Issue of the bank guarantee has already passed through the electronic SWIFT system, and the correspondent bank «RSK Bank» was supposed to receive it on March 8, 2017. However,  the bank didn’t work on that day. In this regard, we ask the customer to allow us to provide a guarantee on March 9, 2017,» an official letter of the alleged winner of the tender said.