The Golden Rule: Twenty Percent Retainage!!????

He who has the gold makes the rules.

Is the above a more “cynical” version of the Golden Rule or one that accurately explains how the business world works? As Geoff Pender reports for the Sun Herald it is the latter as local contractors evidently agreed to what amounts to loan shark contractor terms to get a piece of the BP pie. I work for none of these companies so I’ll comment here as an expert and say that holding retainage to maximize the float is very common.  Also common is 10% retainage and even then generally not on cost-plus labor contracts.

Insurance companies delay paying claims to max out the float. Certain mortgage companies did likewise after Katrina, holding insurance proceeds paid on damaged/destroyed homes, in one case in which I am personally familiar, in an amount far more than the related mortgage.

This story also made it on MPB this morning. While SEACOR subsidiary O’Brien’s Response Management’s treatment of its subs certainly appears to smell (as does homegrown Yates and a host of other generals for that matter), I’ll add there is another element in play that makes this story as reported in the media to this point incomplete as there are complexities present that I do not see accounted for in the reporting.  I will say that greed was the driver of a 20% retainage clause in the subcontract in question.  There is no telling what other devils are buried in the details.

sop

2 thoughts on “The Golden Rule: Twenty Percent Retainage!!????”

  1. Holding back money could also explain why at least one person who worked for a BP Contractor was told there was no record of their employment with the sub-contract when the person tried to file their BP claim. We have no records of working for the sub-contractor means the claim would be harder to prove. This person had a receipt of their paycheck saved and was able to file their claim. Blow that whistle loud so they can hear it in Jackson. This was done to someone who picked up oil of the beach for BP. The same person was told wearing safety gear was very optional and not recommended by the sub-contractor due to the heat. The same person had their claim for emergency funding denied because Feinberg was trying to pressure the person into accepting a quck check right before Christmas for pennies on the dollar. All was well for the application for emergency funding but that ended when the mass denial letters were sent to BP claimants to ready them for the Feinberg Christmas Check Scam. All this lead the person to be very emotionally upset and ready to take anything in lue of being screwed with so much. All this for one of the people who risked their health to clean up the toxic soup BP created in our Gulf. Feinberg has no business running the claims center, he should be in Court defending lawsuits against his mismanagement of the process. To the extent he violated the law he should be placed in jail.

    One other aspect to the scam Feinberg created was to make a deliberately ambigous claims process with few screening guides for applicants. This encouraged the local criminal types to file false claims would be paid and later turned over to the AG’s office in Jackson for prosecution. This was no accident, it was part of the attempt to shift the news cycle from BP’s actions to that of something all media loves—crime. This is the next step in the process Feinberg created to help BP spin the media. Hopefully Slabbed will report and its readers will decide.

  2. When I wrote this post yesterday the name of one of the contractors in question, Rhino Construction rang a bell but I could not place it. Thanks to a commenter to the Sun Herald story with an assist from the Secretary of State I made the connection: It is owned by a local politician.

    I think this topic deserves a second post.

    sop

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