Chartered accountant and attorney-at-law Christopher Ram says that it might make more economic sense for the Guyana Revenue Authority (GRA) to buy its own property than rent the Clico building in Georgetown now owned by the National Insurance Company (NIS) for $10 million per month. In addition, he says the government should have no role in making the place ready for occupancy after it had been sold by the liquidator to the NIS.
Since the building was constructed several years ago, it has never been occupied. The complex is now earmarked for GRA’s headquarters, housing many of the services that the GRA currently carries out at various other locations.
Cabinet Secretary Dr Roger Luncheon announced on Wednesday that Cabinet had granted its no objection to a $227.1M contract to complete and modify the Clico building in Camp Street, so that it could be occupied by the GRA.
Responding to questions about the building, Luncheon acknowledged that its acquisition by NIS allowed for the value of $600 million to be offset from the liquidator’s outstanding indebtedness to the Scheme of over $5 billion.
He stated that the NIS would be receiving rent from the GRA in the neighbourhood of $10 to $10.5 million monthly.
With regard to the modifications to the building, Ram said that since the liquidator had sold the building to the NIS, government should have no role in fixing the place up for the GRA, unless government was making an advance, but no such advance had been catered for in the national budget. Ram stated that this is another example of the static accounts and slush funds that government has “all over the place.”
“That property is owned by the NIS. It is reckless and irresponsible of Dr Luncheon [to make such an announcement]. At least let’s act legally,” the chartered accountant commented, going on to ask, “What is the liquidator’s role in this? The whole transaction is ridiculous.”
He said that by using government funds to prepare the building for occupancy, Dr Luncheon was trying to salvage the NIS and shield his “dismal” management of the scheme.
Ram said too that Minister of Finance Dr Ashni Singh never sought to bring financial discipline to the management of the NIS; “He never sought to ensure that the Scheme met the requirements of the law.”
Ram is also of the view that if the GRA is prepared to fork out $10 million per month to rent the building, then it might make more economic sense for the entity to purchase its own property. “The GRA should buy its own place, [since it would cost] more than one third of the price of the property to customise it for GRA’s use,” said Ram.
Owing to the nature of the GRA’s work, not all services will be moved to the building, such as those carried out at ports of entry, wharves and warehouses.
Efforts to reach Commissioner General of the GRA, Khurshid Sattaur for a comment proved futile but in January Sattaur told Stabroek News that the GRA had requested the use of the building and the Board of the NIS had approved that request.
According to Sattaur at that time, the cost of leasing the CLICO building should not exceed what it would have cost to rent all the buildings that the GRA presently occupies. Sattaur said too that the GRA had hired a consultancy firm at a cost of $4.5 million under a competitive bidding process to prepare the building for occupancy.
The departments to be housed in the Camp Street building are the Customs and Trade Administration, now on Main Street; Licence Revenue Division, on Princes and Smyth streets; the Value Added Tax (VAT) and Income Tax Divisions, on Charlotte Street; and the Human Resources and Finance Division and the GRA Secretariat, both located on Lamaha Street.
The GRA was to have occupied the Ministry of Human Services building at the corner of High and Princes Streets. However, this was put on hold because of the delays in finishing that building.
The NIS is said to have acquired the building at a cost of $600 million from CLICO and was the failed company’s biggest single asset.
CLICO was placed under Judicial Management in 2010, and a local accountancy firm produced a report which indicated that the building had a going concern value of $1.5 billion, a liquidation value on a best case scenario of $1.112 billion and on a worst case, $750 million. According to reports, the NIS had more than $5.8 billion invested in CLICO as at December 31, 2009.
Efforts to reach Minister Singh were unsuccessful yesterday.
