The liabilities of Guyana Stores Ltd (GSL) at the time of its sale by the state and whether its assets had been stripped were among issues that arose as NICIL’s head Winston Brassington was cross-examined on Friday in a case where NICIL is seeking to recover an outstanding sum of US$2M which formed part of the purchase price.
Senior Counsel Rex McKay, representing the present owners of GSL, suggested to Executive Director of the National Industrial and Commercial Investments Limited (NICIL), Brassington, that the assets of GSL had been fraudulently stripped before it was privatized.
“You were taking loans and said whoever takes over will pay these loans,” McKay queried Brassington when the matter continued before Justice Roxane George at the High Court.
Royal Investment Incorporated, which owns and manages GSL, has been sued by NICIL for failing to pay the balance of US$2 million or $407,399,993 for the 70 million shares in Guyana Stores which the company acquired for US$6 million. The purchaser also signed an agreement to pay interest on the amounts owed one year after the deal was signed but never has. The current Guyana Stores owners are contending that NICIL sold the property to them with many liabilities accrued shortly before finalizing the sale and as such they should not be made to pay the sums owed.
NICIL has contended that when a company is bought so are the liabilities and that a legally binding sale was struck.
At Friday’s hearing, Brassington was cross-examined by McKay as it relates to the 1999-2000 transactions which were made prior to GSL being sold. “You were taking steps in December 1999 and January 2000 to reduce the current assets of what you had sold, Guyana Stores Limited, you agree?” McKay asked Brassington. In response, Brassington said that nothing was sold at that time.
McKay repeated the question but the answer was the same.
Further interrogated about whether or not Guyana Stores Limited suffered losses due to decisions he had taken at that point, Brassington nodded before answering in the affirmative.
Questioned by the attorney on whether dividends were paid to its shareholders Brassington stated that they were. Asked if they were paid out of a $300 million loan his company had taken from Republic Bank, he said that it was paid out of both the loan and GSL’s profits. The company in 1999 recorded $51 million after tax profit.
Brassington explained that assets used to underpin the loan were Guyana Stores itself and a garage property it has. Further, these assets included monies owed to GSL and that owed by hire purchase buyers.
“No building of Guyana Stores was involved in the collateral assets included. Assets were receivables, higher purchase receivables, inventories and prepayments. Those are some of the then current assets. Those assets would remain…, they belong to Guyana Stores” he said.
The hearing will be called again on September 7.
