Chartered accountant Christopher Ram believes there is need for rules for the governance of state- owned enterprises in the wake of the ongoing saga surrounding the Head of the National Industrial and Commercial Investments Limited (NICIL), Winston Brassington and the quest to find out how his brother got wind of an investment opportunity in Hand in Hand Trust Company Inc.
“We need to have rules of governance of state-owned or controlled enterprises. The head of one state body should never be placed in a position where he or a family member has to use their personal resources to save a regulated financial business as the Brassingtons claim to have done,” said Ram in a recent Sunday Stabroek column.
Brassington’s brother – a US- based entrepreneur in the IT sector – invested in HIHT. Winston Brassington has rejected accusations of insider information sharing and said that he did nothing illegal or unethical.
Brassington is adamant that it was his brother’s investment that saved HIHT from certain doom and noted that his brother bought 30 per cent of the shares which meant that HIHT still remained in control. Brassington said his brother has received no dividends on the investment so far.
Ram dismissed Brassington’s statement published in a previous article that he would have had no knowledge of the business of HIHT given the fact that National Industrial and Com-mercial Investments Limited (NICIL) would have been off the board.
“As the representative of the government’s 10 percent shareholding in the company, Mr Winston Brassington would have received a notice of the meeting and a copy of the proposed resolution to increase the company’s share capital,” said Ram.
On the question of the real or perceived conflict of interest in his brother’s acquisition of shares in HIHT, Ram said the fact that Brassington sought out what he might have considered independent opinion suggests “that even in his own mind there was a perception of a conflict.”
The columnist noted that Guyana’s general laws on the use of insider information are not well developed and any progress appears to have ceased with the Securities Industry Act 1998.
“The 1991 Companies Act was an improvement over the Companies Act it replaced, but as far as insider trading goes, it deals with the concept only in respect of narrowly defined transactions and persons,” he said. Ram noted that the Financial Institutions Act and the Securities Industry Act are both limited in their scope and only to companies within the ambit of those two Acts.
“The FIA’s provisions deal with conflicts of interest involving directors and officers and the disclosure of customer information, while the SIA defines ‘insider’ to include a person (an outsider) who is informed of a material confidential fact by an insider,” he explained.
“But even applying private laws as Dr (Roger) Luncheon [who said NICIL is a private company] and Mr Brassington – who maintains he did nothing illegal – seek to do, Mr Brassington may in fact be considered an insider,” said Ram. “The general perception is that he made use of confidential information (an offer) which was not available to members of the public,” Ram said.
Further, he said that the persons who are reported to have supported or defended Mr Brassington – including two Attorneys General, a Finance Minister and a medical doctor – “fail to recognize that his conduct has to be judged against the specific circumstances involving a public officer and a state company in which matters like conflicts of interest and duties are as likely to arise as those of conflicts of interest and duties in a private sector setting, which the Companies Act addresses.
“It would be unfair to expect Dr Luncheon and possibly Dr Singh to know that the framers of our Companies Act had explicitly rejected the Companies Act as the medium under which government companies should operate,” said Ram.
Repeated attempts by the Stabroek News to make contact with either CEO of the Hand in Hand Group of Companies Keith Evelyn or General Manager and Director of HIHT Hewley Nelson for HIHT’s explanation of how Winston Brassington’s brother became involved in the purchase of shares proved futile.
