A CHINESE company that signed a £10 billion agreement with Nicola Sturgeon wants to impose a string of PFI-style deals on Scotland.
It has been claimed that the firm seeking to invest billions in Scottish infrastructure such as housebuilding, clean energy networks and transport schemes favours private-finance deals similar to those which forced the closure of 17 Edinburgh schools due to shoddy construction work.
The news comes after as it emerged that the Chinese firm China Railway No.3 Engineering Group (CR3) approached Falkirk Council to agree to a partnership to deliver a large-scale urban regeneration scheme.
Details of the deal reveals that CR3 wanted responsibility for preparing a business model, financing arrangements and the power to appoint its own team of engineering consultants before “executing the project” itself.
The proposal also states that compensation would be payable should either party terminate the agreement - known a Memorandum of Understanding (MoU) - with disputes that could not be settled amicably to be sent for arbitration in Singapore.
After the local authority refused to agree to the terms, CR3 went on to sign an agreement direct with the Scottish Government.
A businessman working alongside CR3 confirmed the firm is keen to negotiate PFI-style deals while a second Chinese firm to sign the Scottish Government MoU, Sinofortone, claims to specialise private-finance projects or PPP contracts.
Read more: Rennie says "time for answers" over China deal after question barrage
Allan Currie, managing director with Bellerophon Scotland, approached Falkirk Council with the Chinese MoU last winter.
His company champions an innovative model for using large investments to build affordable housing without the need for public subsidies and has been working with CR3.
Mr Currie said CR3 is keen to fund Scottish infrastructure in line with Chinese President Xi Jinping’s signature policy of establishing a ‘new Silk Road’ to the West, in which the country uses foreign investment to increase its influence and status globally.
Bellerophon has had no involvement in the Scottish Government MoU.
Mr Currie said: “By all accounts they [CR3] are a big organisation, with several billion to invest across the UK. If you look at the projects they are involved in, it varies from sector to sector, but there is a private investment and they are looking for a return.”
Falkirk Council said it had not signed the MoU as it was a “contractual document that sought specific agreements and therefore could not be accepted as a MoU.”
A spokeswoman for the Scottish Government said that the MoU it signed was not legally-binding and any projects it took forward “must comply with domestic and European law.”
She added: “The MoU relates to exploring investment opportunities in Scotland. No investment has been confirmed – any proposed investment in any specific project would be considered on a case by case basis, would go through normal due process and due diligence, and be confirmed publicly in the normal way.”
But Willie Rennie, the leader of the Scottish Liberal Democrats, said he feared the Scottish Government is about to embark on a huge new programme of privately funded schemes, despite the ongoing Edinburgh schools scandal.
He also raised concerns that the demands outlined in the Falkirk MoU included worrying parallels with a botched motorway project in Poland.
The road contract was handed to a Chinese company that, like CR3, is a wholly-owned subsidiary of the China Railway Group, which has been blacklisted by Norway’s oil fund due to evidence of corruption and implicated by Amnesty International in illegal forced evictions in Africa.
Mr Rennie added: “The SNP seem to be prepared to enter into massive scale PFI-style projects with the Chinese companies involved in the MoU. “If the failed road project in Poland is an example of how CR3 does business then people will have real concerns about encouraging them to come to Scotland.
“This is a business that the Scottish Government admits they know nothing about. Why are the SNP happy to roll out the red carpet before due diligence has been completed? They need to shred this deal and start again.”
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