When he berated businessman Yesu Persaud at the launching of the Guyana Times on the question of tax concessions for QAII, President Jagdeo argued that the assigning of these concessions was rule-based and according to law. As it turned out, that wasn’t the case. QAII’s textile business and its antibiotics production do not qualify as pioneering industries as defined by the Income Tax (In Aid of Industry) Act as pointed out by the eagle-eyed Sunday Stabroek columnist Christopher Ram. It seems that many senior government officials should certainly be at the tax seminar that President Jagdeo asked on the same evening should be organised by the Head of the Privatisation Unit, Mr Brassington.
In light of the fact that tax laws have been progressively amended to remove ministerial discretion in the awarding of concessions it boggles the mind that senior government officials could discuss with QA11 and agree to grant concessions that are patently not within the law. This failing encompassed the Guyana Office for Investment, the Privatisation Unit, the Ministry of Finance, Cabinet and the Office of the President. Where were their legal advisors? What sort of vetting process was undertaken? Who checked the relevant legislation? This does not inspire confidence at all and in other jurisdictions people would have already been held to account over this major blunder.
We had previously suggested that the entire QAII deal be the subject of a review by the Public Accounts Committee of Parliament and the Standing Committee on Economic Services. We still hold to that view with the added conviction that concessions which are not expressly permitted in the law cannot be properly awarded at this point. Therefore the tax breaks which the Ministry of Finance was so careful to say have not yet been awarded should not be granted to QAII until there is a careful, de novo examination of these two proposed industries and their impact on their respective sectors and whether the tax breaks are absolutely necessary and, of course, not until the amended law is passed by Parliament.
The country cannot permit as a precedent, retroactive legal covering of deals even if they are reached in good faith otherwise this leeway could be abused for other purposes and in many other ways. The only way to right this mess that the government has created is to subject these two businesses – in the context of the larger investment – to a thorough and impartial re-examination that is more rigorous and transparent than the one that was used.
In its four-page explanation last Sunday of the deal and another a day later, the Ministry of Finance strained credulity to suggest that the forthcoming amendment to the law isn’t really only for QA11. It pointed to other deficiencies such as the omission of the regions in certain sub paragraphs, the omission of some of the economic sectors in some sub paragraphs and the incorrect description and omission of some of the regions.
Who is the ministry trying to bamboozle? The citizenry are challenged on many fronts including numeracy and literacy but they know exactly what the covering of tracks look like and that is exactly what the Ministry of Finance is engaged in. Pure and simple. Certainly if there had been serious consideration of continuous law review or even a cursory re-reading of the legislation by the various government agencies and the legal draftsmen at the Attorney General’s Chambers the corrective amendments would have been made a long time ago instead of five years after the law was passed. Surely by now there would have been a more comprehensive articulation of the law. The ministry’s explanation is just not credible.
Towards the conclusion of its second statement, the Ministry reserved a barb for Stabroek News. It said “Regrettably, Stabroek News has chosen not to discuss the merits of the investment, but instead to preoccupy itself with other issues. One would certainly hope that this apparent bias is not as a result of the launching of a new competitor newspaper, which, incidentally received no concessions”.
Stabroek News in its entire existence has been pro-business and an advocate for a free market and a private sector-led economy. It welcomes all investment in the country but not to the detriment of the newspaper’s examination of the transparency and fairness of those deals. As it relates to competition, Stabroek News has been around for 22 years and has survived the rigours of business under this government and the previous one. Most notably Stabroek News suffered a brutal 17-month cut-off of state advertising by this PPP/C government from November 2006 on grounds that the government was never able to substantiate. Stabroek News’ only concern therefore would be that no preferential treatment is given by the state to any newspaper.
The QAII deal has suffered from serious flaws which call into question whether this government is committed to good governance and transparency. These include the manner in which discussions were first initiated between the government and QAII, the possible impact of the President’s friendship with one of the QAII principals on the deal, the terms of the deal and the fact that two of the concessions would be illegal if granted at this point.
This state of affairs bothers the people and it should also bother the government and the PPP which when in opposition raised legitimate anxiety about the way the then PNC was divesting state assets. Does the PPP have anything to say about this deal and the carelessness which attended it?
