The Guyana Geology and Mines Com-mission (GGMC) has signed a loan agreement for $3B with the Central Housing and Planning Authority (CH&PA) which observers say transgresses the GGMC Act and would also violate the constitution.
A joint statement last night from the GGMC and the CH&PA said that following the submission of an investment proposal by the CH&PA in January 2015, the agreement was signed. The statement said that the proposal is for the investment of $3b to be loaned to the CH&PA for a period of one year and to be used for the development of the housing sector.
The statement seemed to have been hurriedly issued as a result of the two agencies becoming aware that the media was in possession of documents on the loan agreement.
The joint statement said that the Board of Directors of the Commission met and deliberated on the proposal submitted and it was noted that the interest rate being offered by CH&PA was 5% which was 3.2% more than what was currently being earned via the commercial banks and other investment options open to the Commission.
“At the level of the Board of Directors, it was agreed that the investment proposal was financially prudent and sound. In this regard, the Board agreed to the granting of the loan subject to the terms and conditions enshrined in the Loan Agreement and any additional guarantees required by the Commission”, the statement said. It did not say when the loan agreement was signed.
It added that “The CHPA project is pivotal to the realization of the Government of Guyana strategic target of allocating 30,000 lots under the Adequate and Affordable Housing Programme in order to maintain momentum in the provision of service land in several areas on the East and West Demerara.”
According to documents seen by Stabroek News, the Permanent Secretary in the Ministry of Natural Resources and the Environment, Joslyn McKenzie on January 19th, 2015 forwarded a draft of the loan agreement to the Chairman of the GGMC, Clinton Williams for him to review.
Earlier, the Permanent Secretary of the Ministry of Housing and Water, Emil McGarrell had forwarded the loan agreement draft to McKenzie and Minister of Housing and Water, Irfaan Ali for their review.
All public funds are to be accounted for through the Consolidated Fund and the relevant withdrawals made as per the appropriations act. This proposed agreement between the two agencies would run afoul of this and appears to be an attempt to expedite developments in the housing sector as Parliament is suspended and a budget for 2015 is unlikely to be presented soon.
Exclusively
The draft loan agreement states that the loan shall be used “exclusively for the specified purpose relating to Cabinet Decision CP (2015) 1:2:R titled `Proposal for the Investment of Three Billion Dollars from Guyana Geology and Mines into the Housing Sector”.
The agreement sets out that the loan shall bear interest at the rate of 5% per annum calculated on the reducing balance in quarterly arrears beginning on the last day of the first quarter. The principal amount of the loan together with all the accrued interest under the agreement is to be paid in full by the close of business on December 31, 2015. Sources say that the agreement would breach Section 10 of the Guyana Geology and Mines Commission Act which deals with the authority of the commission to make loans. That section specifies that the loan must pertain to the functions of the GGMC such as mineral exploration.
Observers say neither the CH&PA nor the GGMC has any business entering any such loan agreement and the move underscores concerns in opposition circles and the general public that with no Parliament in place there is a great risk to public funds in the period leading up to general elections.
The European Union recently withheld $5.8b in funds for Guyana for a number of reasons including the absence of budget oversight.
The government has been accused before of permitting agencies like NICIL to withhold sums that should be deposited in the Consolidated Fund and spending these monies unauthorisedly. The funds held by the Guyana Lotteries Commission have also been spent for many years without going through the Consolidated Fund.
Concerns had previously been raised about the GGMC expending funds on interior roads without these funds having been sourced via the Consolidated Fund.
In his column in the February 23rd, 2013 edition of Stabroek News, former Auditor General Anand Goolsarran had said that the government had transformed NICIL into a parallel treasury, retaining and using funds meant for the Consolidated Fund at the discretion of its directors in violation of the Constitution. Goolsarran said that in order to regularise matters at NICIL, it must be realigned to what it was prior to 2002 or alternatively its operations must be wound up.
He recommended too that it must be ascertained how much should has been paid over to the Consolidated Fund from 2002 to present, against what has actually been paid.
He also recommended an investigation and appropriate disciplinary action against the concerned officials, if it can be established in a court of law that there had been a violation of articles 216 and 217 of the Constitution.
The two articles provide for the establishment of the Consolidated Fund (Article 216) and set out instances for withdrawals from it and other public funds (Article 217).
