China Eximbank provides RMB 67.26 million government concessional loan for Telecom Sports Arena Construction Project (Linked to Project ID#40532)

On July 23, 2008, the Chinese Government and the Government of the Cook Islands signed a preferential loan framework agreement for the Telecom Sports Arena Construction Project and the Ministry of Education Administrative Building Project. Then, in August 2008, China Eximbank and the Government of the Cook Islands signed an RMB 74.1 million ($9.6 million) government concessional loan (GCL) agreement for the Telecom Sports Arena Construction Project and the Ministry of Education Administrative Building Project. The GCL carries the following borrowing terms: a 1.8% interest rate, a 5-year grace period, and a 20-year maturity rate. The loan’s final maturity date is August 2028. The loan’s outstanding amount was RMB 9,224,000 as of September 2019 and RMB 8,298,000 as of December 2019. RMB 67.26 million ($8.65 million) of the GCL proceeds were allocated to the Telecom Sports Arena Construction Project (as captured via Project ID#37877) and RMB 6.84 million ($950,000) of the GCL proceeds were allocated to the Ministry of Education Administrative Building Project (as captured via Project ID#40532). The purpose of the Telecom Sports Arena Construction Project was to construct a sports arena in Tereora in advance of the 2009 South Pacific Mini Games. China Civil Engineering Construction Corporation (CCECC) was the contractor responsible for implementation. Construction began on or around October 1, 2008. 60 Chinese workers were employed during the construction phase. The project was officially completed and handed over to the local authorities on July 31, 2009. The construction of the sports arena, which was later renamed to the Bluesky Sports Arena, was completed in time for the Cook Islands to host the 2009 South Pacific Mini Games. However, this project was also a subject of local debate and controversy. In February 2008, the Cook Islands Chamber of Commerce demanded that the Government of the Cook Islands abandon its plans to contract a China Eximbank loan for the Telecom Sports Arena Construction Project, and threatened legal action against the central government. It announced that it was prepared to apply to the Rarotonga High Court for a declaratory judgment on whether the central government had acted illegally in proceeding with the China Eximbank loan and plans for the sports complex arena. A draft statement of claim was prepared for the court naming five government officials as defendants. The Cook Islands Chamber of Commerce then sent the draft statement of claim to the Prime Minister’s office, the audit office, the public expenditure review committee, and Crown Law. The Cook Islands Chamber of Commerce argued that the central government had breached the MFEM (Ministry of Finance) Act, which requires that all government officials must prudently manage the fiscal risks facing the crown. A number of matters breaching the MFEM Act were identified, including that the central government would increase the country's debt with a foreign currency loan for an open-ended design and build project with a foreign contractor. The Cook Islands Chamber of Commerce asked the central government to consult with sports codes in order to commit to a cost effective upgrade of village sports facilities; identify options for modifying existing facilities to host the world youth netball champs and mini games; and consider the possibility of some new special purpose facilities. 2009 Pacific Mini Games Chief Executive David Lobb was also highly critical of the plans for the sports arena, saying the design did not meet the minimum games requirements and would not provide a lasting legacy for the sportspeople of the Cook Islands. CISNOC (Cook Islands Sports and National Olympic Committee) President Tiki Matapo echoed Lobb's concerns and agreed that the country's sporting bodies had not been properly consulted on the design of the complex. In a written statement, the the Cook Islands Chamber of Commerce said its concerns were underpinned by the two examples of poor design and workmanship in the Chinese Government-financed courthouse and police station: ‘The chamber has previously expressed concern on a number of aspects of the MSF (complex) project including the foreign exchange risk, the lack of a transparent and accountable process (one that would enable the true finance rate to be determined) and that local contractors are being denied the opportunity to construct any such facility with the subsequent benefits this would have for the Cook Islands economy.’ Then, in late April 2008, the Chinese Government expressed concern about the negative public comments and indicated that the China Eximbank loan offer might be withdrawn.

Additional details

1. This project is also known as the Indoor Sports Stadium & Upgrade of Existing Sports Facilities Project, the Multi-Functional Indoor Sports Stadium Project, and The Bluesky Sports Arena Project. The Chinese project title is 库克体育馆项目 or 多功能室内体育馆. 2. The China Eximbank loan that supported this project is not included in the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020. 3. The Chinese Government provided grant funding in 2016 and 2017 to renovate Telecom (Bluesky) Sports Arena, the courthouse, and the police station (as captured via Project ID#64016 and #64018).

Number of official sources

6

Number of total sources

29