History Repair "SOS Children's Village Russia" Lavrovo (History of deception LLC "Company LAD")

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Continuation, correspondence. The first letter to Construction adviser SOS Children’s Villages Inter
Dear Mr Strommer,

On 05.11.2012 I sent you a fax where the situation is described in details as we see it. Unfortunately I didn't have your contacts and I used the fax of SOS-Kinderdorf International office in Innsbruck. Probably you didn't receive this fax so I attached it to this email. Nevertheless the main details are described below.

Our company signed a Contact for repairing works with your company on 01.08.2012. On 05.09.2012 we found that the contract doesn't cover full amount of work that is required to accomplish houses repairing tasks with appropriate quality. The actual situation as it was revealed that defects of the plaster and the existing interior finishing didn’t satisfy the requirements of the Clause 1.3 of the Contract and of the Construction Norms and Rules (SNiP 3.04.01-87). In fact situation required amendment of the Clause 1.3 as the hours of labour and consumption of materials hugely increased. According to clause 3.4.9 of the contract we informed Mr Alexey S. Lubimov (SOS Children's Village Russia) about this situation on 05.09.2012, 07.09.2012 and 11.09.2012. On 11.09.2012 we also informed Mr Nikolay Yu Slabzhanin. 13.09.2012 we received an answer from Mr Lubimov where he requested us to continue working and informed that your company was developing an Additional Agreement to the Contract. We continued to work to make the things go though the cost of repairs in reality increased and we had to invest own money. At the current moment we performed the works the total cost of which comprise 50% of the sum under the contract. Thus total sum of indebtedness of your company in front of our company is RUB 2 758 621,00.

In our letters to Mr Slabzhanin (SOS Children's Village Russia) on 11.09.2012 and 18.10.2012 we provided 2 options for the continuation of works. First option – by performing main works, i.e. works necessary for living in the buildings, and cancelling the less important works thus decreasing the total number of works but without increasing the sum under the contract; in this case finalization of works will be done on 25.12.2012. Second option – by performing all works, but increasing the sum under the contract and performing works in two stages, with main stage finishing by 25.12.2012, and the finalization of works with the beginning of warm season (i.e. start in April, finish at the end of May). We didn’t receive any feedback on our proposals.

On 07.11.2012 SOS Children's Village Russia office informed us about cancellation of the contract (Notification 208-12 dated 01.11.2012). The reasons described in the notification are inappropriate quality and schedule breach.

I agree that quality is very important especially in your work. Our company takes the special care on this question. We informed SOS Children's Village Russia about the actual quality problems from the very beginning and when the advance sum was finished, I underline – we invested our own money to keep the quality of the performed work on high level. I receive only positive feedbacks from the families that live in houses repaired by our workers. I can confirm that quality of our work corresponds to the engineering standards. Moreover, for the proof of my words I would kindly invite you to come and personally inspect our work in Lavrovo SOS Children's Village.

I can’t but agree that the schedule breach took place. But as I described above we met unexpectedly additional amount and kinds of work that are not covered by the contract. We have informed Mr Lubimov and Mr Slabzhanin in due time, hiding nothing from your company. It turned out that it was impossible to make the cosmetic repairs in accordance with the Clause 1.3 of the Contract. Instead of the cosmetic repairs it was necessary to redo the internal finishing totally. We were authorized by Mr Lubimov in his email to do this where he requested to maintain the necessary quality. We did as he instructed and that is the reason for the breach of schedule.

We do not dispute your right to cancel the contract. Still I believe that our further collaboration can help us to deliver quality houses to children who are in great necessity of this. If this is not possible we kindly request to repay the indebtedness to our company.

Could you please provide your opinion and take your decision on this situation?

Looking forward to hearing from you,

Sincerely yours,

General Director
By power of attorney as of 14.08.2012 Igor P. Skorkov


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