Under fire over its $3 billion loan to the Central Housing and Planning Authority (CH&PA), the Guyana Geology and Mines Commission (GGMC) yesterday argued that the disbursement is permissible under the law, while pointing out that it has provided billions in financial assistance in various areas in recent years.
In a statement, the GGMC also said it saw the loan as an investment and it cited the rate of interest of 5% on the loan as being 3.2% higher than commercial banks, while ignoring the fact that the additional interest expense would have to be footed by taxpayers anyway.
Opposition leader David Granger has said the loan is a misuse of state funds and has promised that the main opposition coalition’s lawyers would seek to take action against those responsible.
Analysts have pointed out that there is nothing in the GGMC Act that reasonably permits the loan and that two state agencies should not be permitted to enter such a transaction outside of the Consolidated Fund. Such inter-agency transactions, they say, would lead to chaos in the public accounts and make a mockery of parliamentary oversight.
However, according to the GGMC, the loan agreement with the CH&PA is provided for under sections 10 to 19 of the GGMC Act, which it says provide “the legal framework for the Commission to undertake the granting of loans.”
Section 10 states, “Subject to such conditions as it may deem fit to impose in particular cases the Commission may, out of its funds and resources, make loans in accordance with the provisions of this Act in that behalf, in the performance of its functions.”
The GGMC notes that as it relates to the Commission’s functions alluded to in the latter part of Section 10, Section 4 (1) (f) of the Act provides the Commission with the latitude to undertake activities that would further the business of the Commission and the promotion of its functions by stating “to carry on all activities, the carrying on of which appears to the Commission to be requisite, advantageous or convenient for, or in connection with, the exercise of its functions.”
It, however, has not been made explicit how the housing development is connected to the GGMC’s exercise of its functions.
The commission maintained that the CH&PA loan should not be seen as an isolated case and it listed 33 instances where it provided financial assistance totalling over $8 billion between 2012 and 2015.
The GGMC’s loan to the CH&PA is the single largest outlay disbursed by the commission during that period. More than half of the allocations went to the development of the hinterland communities for rehabilitation work to roads, bridges and airstrips. Hundreds of millions of dollars reportedly went into projects such as the rehabilitation of the road from Tamakay to Ottomung Head and Tamakay Junction to Puruni Roadway ($169 million), the repair of the road from Brian Sucre Junction to Blackwater ($329 million), rehabilitation of the Aremu Road–Phase 1 ($129 million) and payment to the Ministry of Public Works to cover additional works for the Karasabai-Monkey Mountain Road rehabilitation ($168 million).
There was also the transfer of $2 billion from the GGMC to the National Protected Areas Trust in 2014 and the transfer of $1 billion to the national treasury.
Additionally, the GGMC listed contributions made to the Consolidated Fund in the sum of $6.8 billion from 2006 to 2012.
A joint statement from the GGMC and the CH&PA said following the submission of an investment proposal by the CH&PA in January 2015, the agreement was signed. The statement said the proposal is for the investment of $3 billion to be loaned to the CH&PA for a period of one year and to be used for the development of the housing sector.
“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.
“The CH&PA project is pivotal to the realisation 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,” it added.
Based on documents seen by this newspaper, Permanent Secretary in the Ministry of Natural Resources and the Environment Joslyn McKenzie forwarded a draft of the loan agreement to GGMC Chairman Clinton Williams on January 19 for him to review.
Earlier, 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.
