Part 2
Introduction
Today as we celebrate Christmas, a day marked as much for its commercial opportunities as for its religious significance, Business Page concludes a look-back at some of the articles carried in these columns during 2011. Out of a pool of fifty, the selection was made based on what I consider to have been the ones which had continuing importance, as Guyana navigates the unchartered but exciting prospect of shared governance between the executive and the legislative branches of the state. Consequently, and with a slight departure from the first instalment begun last week, the number of articles has been reduced to allow for some greater depth of those addressed. Today, we look at Robert Persaud’s challenge and pusallinimity with respect to GuySuCo, the continuing failure by the opposition-chaired Public Accounts Committee to put teeth into the audit of the government’s accounts, the continuing abuse of the Contingencies Fund by Minister of Finance Dr Ashni Singh, the Amaila road and hydro-electricity project, NICIL, Clico and the Berbice Bridge Company Inc. With that introduction and Business Page’s wish to all Guyanese and readers for a peaceful but joyous Christmas, here is the selection.
Calling Robert Persaud’s
bluff – Forensic Audit of GuySuCo
“In a letter in the Stabroek News of May 18, 2011 I … note[d too], that Agriculture Minister Mr Robert Persaud had challenged Kaieteur News and me “to conduct a forensic audit of GuySuCo and the Packaging Plant.” Responding to that challenge I wrote, “I hereby accept this challenge to undertake a professional audit, the cost of which will be borne by Kaieteur News.
“I hope this is not just bluff on Mr Persaud’s part and that he has both the authority and the courage to carry through with his challenge. I now await word from him.”
As the public is aware Mr. Persaud quietly resiled from that position, using the Audit Office as the excuse.
The ‘blasting’ Public Accounts Committee – May 22, 2011
“Unlike legislation which the National Assembly makes, requiring the specific qualification, experience and competence, appointees to boards, commissions and committees must possess, there is no specific requirement for eligibility to membership of the Public Accounts Committee. The PAC has no secretariat and must rely on the Auditor General Deodat Sharma and the Finance Secretary Nirmal Reekha as resource persons.“One wag once said that an expenditure of $200 usual attracts more attention than a $200 million transaction, simply because that is how the ordinary mind works. That seems to hold very true for our PAC, and only a couple of days ago Ms Bibi Shaddick was blasting one region over vehicle log books while Ms Chandarpal was raising questions about some mystery “Economic Fund” and raising questions about advances of “amounts such as $400, $600 and $1,000,” while Chairperson Volda Lawrence was questioning an advance of $60,000. That is like auditing the petty cash and ignoring the bank accounts.”
Amaila: ‘Deals within a deal – Sunday, May 15, 2011
“President Jagdeo not too long ago had announced that the final cost for the hydro will be US$306 million, the transmission line US$145 million through a public tender and US$150 million is there for contingency and interest cost.” That leaves US$75 million of the US$675 million to be accounted for.” (Ed Note: We are now told that the cost is US$850. The government has so far not explained this escalation.)
Annual Reports of the NIS 2008 and 2009
– Sunday, May 8, 2011
“As the NIS enters its forty-second year … there is one egregious matter which I think deserves the widest exposure and that is risk to the Scheme of losing $5.8 billion invested by the NIS in the failed CLICO Life and General Insurance Co (SA) Limited. At December 31, 2009 the NIS had invested in CLICO’s so-called annuities the sum of $5.748 billion, in addition to $90 million of income earned but not yet received from CLICO. The reality is that because of this reckless and possibly unlawful investment by the board in a Jagdeo-favoured company, 20% or $1 of every $5 of the accumulated fund of workers’ contributions in NIS is now at grave risk, earning nothing in income.”
The biggest budget ever – and more! – Sunday, June 19, 2011
“The contingencies fund continues to be used and abused in the most unlawful manner with practically no regard being paid to basic principles of financial management. It is not without some irony that it is the serial violators of the precepts of proper financial management and controls who continue to be provided with increasing sums of money to be spent without regard for the interest of the country’s taxpayers. While the Report of the Auditor General often makes adverse comments on the use of the Fund, it never deals with some of the most troubling questions that the public would wish to see answered. Hopefully the Public Accounts Committee will at some time insist that these be addressed.”
The Clico fallout: Contrasting the action in Trinidad and Tobago with the silence in Guyana
“So far we have heard nothing but a deafening silence from the new insurance regulator the Bank of Guyana whose Governor has, probably dangerously, been appointed the company’s liquidator. I say dangerously because it is not unusual for legal actions to be brought against a liquidator and the person most likely to do so would be the regulator. That is not going to happen even as the liquidation has in essence been contracted out! Indeed my understanding is that CLICO’s former CEO Ms Gita Singh-Knight is still playing a paid role in the liquidation. We are truly an incredible country.
“We should long ago have started an enquiry into CLICO for possible criminal conduct and the Bank of Guyana should, like their counterparts in Trinidad and Tobago, have begun civil action against them and their Trinidadian masters. This would have been an excellent opportunity to expand on our jurisprudence while penalizing those who break our laws and cause our people and country huge losses.”
NICIL – Sunday, July 24, 2011
“NICIL, whose directors are mainly ministers of the government, continues to receive public monies and to spend it however it pleases. It infamously played the role of handmaiden to President Jagdeo and his cabinet in the unlawful tax concessions to Queen’s Atlantic Investment Inc and has failed to provide properly audited financial statements for its expenditure of hundreds of millions of dollars of GGMC funds to build hinterland roads. It is at the heart of the proposed Marriot Hotel deal and indeed has been busy shopping around for any partner, which would give the project legitimacy. No one knows where the funds will come from.”
Elections year mid-year report – September 18, 2011
“I also draw attention and comparisons with the half-year report of the Bank of Guyana which while using the same data used by the Minister of Finance, is less inclined than the Minister to put a political spin on the numbers. Readers may find it of some interest that in this election year and with so much at stake, it is the first year since the Fiscal Management and Accountability Act was brought into force in 2004 that the mid-year report has been presented within the two-month deadline, hence the title of this column. Guyanese who have become quite cynical may not have been too surprised, given that the same treatment was accorded the Guyana Prize for Literature which was held this year after last being held around the time of the 2006 elections.”
The Jagdeo Initiative – what is that? Sunday, October 23, 2011
“As President Jagdeo prepares to demit office in another few weeks there is a single issue with which his name will always be associated in Caricom. And that is the common regional agricultural repositioning strategy that has been given the name Jagdeo Initiative. That it will remain only an initiative without any success is evident by Jagdeo’s failure to carry through his initiative even in his own country. Quite what is the Jagdeo Initiative and how did it arise? “The silent and dormant agro-processing/packaging plants at Parika and Sophia testify to Guyana’s failure to address its mounting food bill and exploit its huge potential in agricultural products. There must be a sense of both relief and sadness among Guyanese that other Caribbean countries long ago realised that under Jagdeo the region’s agricultural initiative was going nowhere.”
Berbice Bridge Company Inc – Not really a profit – Sunday, October 16, 2011
“Had it not been for some admirable creative financing and accounting the Berbice Bridge Company would not only have recorded continuing and significant losses but it would have been unable to meet the generous interest and dividend obligations to its investors.
“Despite substantial subsidies, the bridge is uneconomic for the body of investors as a whole, and most especially the government in the form of exempted taxes running into further hundreds of millions of dollars and in waivers of Preference Shares Dividends. The high cost necessitates an unbearable burden on the users of the bridge in the form of tolls.
“Even at, or because of the high tolls, the company will continue to have significant shortfalls to cover annual expenditure and current and future debt obligations. In the medium to long term the company would only be able to repay loans by further borrowings and would be insolvent, ie unable to pay its debts at the time of its contractual handover.“
Ever since October 16, when in the Business Page column I reviewed the Bridge Company’s annual return and the 2010 financial statements, I have been studying how the second issue – the high tolls – can be addressed. I am more than ever convinced that the legal structure, nature of ownership and the financing model are the cause of the high tolls.
Conclusion
The Jagdeo-Ashni Singh combination was largely responsible for the mess inherent in the issues raised by these transactions. I am hopeful that despite the re-appointment of Dr Singh by the new President, that good sense, better judgment and best practice will prevail, both on the initiative of the President and the determination of the opposition-controlled National Assembly.
The National Assembly has a duty to right the wrongs of the Jagdeo era. I think it is also committed to doing so.
