So far, we have carried two articles on the Administration’s efforts to access $3 billion from the Guyana Geology and Mines Commission (GGMC) to accelerate its housing programme in an apparent attempt to secure a political advantage in the run-up to the national elections. These efforts were triggered by the Administration’s ill-advised decision not to have a budget for 2015 until after these elections. Depending on the outcome of the elections, the 2015 budget may not be in place until August or September 2015. With no sitting of National Assembly at least in the first half of the year, funds could only be accessed for the first four months to meet the cost of essential services, and are limited to one-twelfth of the 2014 approved budget for each of these months. In particular, no new capital expenditure project can be initiated during this period – hence the move by the Administration.
In our first article, we examined the purpose of the loan of $3 billion from the GGMC to the Central Housing and Planning Authority (CH&PA) vis-à-vis the relevant sections of the GGMC Act. We concluded that the loan agreement violated the said Act, notwithstanding its approval by the Cabinet. According to the CH&PA project document, the loan “is pivotal to the realization of the Government of Guyana’s 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.” However, the GGMC is only permitted to grant loans in the pursuance of its objectives which are exclusively in relation to mining activities. We also suggested that the Cabinet’s approval contravened the provisions of the Constitution as they relate to the payment of revenues or other public moneys into the Consolidated Fund as well as the authority of Parliament to approve public expenditure. These concerns prompted a Member of Parliament and a member of the CH&PA’s board to seek judicial intervention as to the legality of the loan. The Chief Justice has since ordered the GGMC to justify its action.
In our second article, we examined the 32 other instances where the GGMC provided funds totalling $5.388 billion during the period 2012 to January 2015 to other State agencies to meet expenditure. This was a period during which the combined Opposition held the majority in the Assembly. For three consecutive years, the proposed national budget had to be adjusted downwards because the Assembly was not satisfied with the necessary explanations and justifications that the Administration had provided. This was compounded by the fact that the Assembly was denied a say in the decision-making process regarding major infrastructure works, such as the Marriott Hotel, Amaila Falls Hydropower Project, the Specialty Hospital and the extension of the Cheddi Jagan International Airport. The GGMC was therefore complicit in the Administration’s efforts to circumvent the authority of Parliament by facilitating extra-budgetary funding.
Cancellation of the loan
Following the order by the Chief Justice, the Cabinet reversed its decision to approve the loan and replaced it with a direct transfer from GGMC to the CH&PA. This time, the Administration disclosed that the transfer was to support the development of housing infrastructure projects in mining communities and other areas where miners settle, no doubt in an effort to seek a more justifiable way of accessing the funds from the GGMC. The GGMC board, no doubt smarting from the furore it had created in relation to the aborted loan to the CH&PA, sought legal advice on the Cabinet’s decision. That advice was that:
(a) The Cabinet cannot direct the GGMC to transfer funds to another agency since Section 31(1) of the GGMC Act allows for the concerned Minister to give directions only of a general nature to the Commission in the exercise of its functions;
On the assumption that the Cabinet decision constitutes a direction by the Minister, such direction must relate policy only. A direction to pay over moneys to another agency is, however, an operational one. The Minister therefore has no power to direct the GGMC to carry out a specific act; and
The functions of the GGMC are set out in Section 4 of the Act and do not remotely relate to the development of housing infrastructure or anything connected to it even in mining communities.
The above legal advice is consistent with our assessment as contained in our two articles. Neither the GGMC nor the Administration has reacted to this latest development.
Disclosures by the former President
At a recent press conference, former President Bharrat Jagdeo disclosed that the funds were meant for the Guyana Sugar Corporation (GUYSUCO) to assist it in overcoming its financial woes. He stated that the amount being sought are state funds and that the “GGMC treasury” does not belong to the mining sector. On this score, he is correct, and one would hope that he would make similar pronouncements as regards the “NICIL treasury” and the “Guyana Forestry Commission treasury”. That apart, it is unclear in what capacity the former President made the disclosure and what his locus standi on the matter is, though we know that the President has appointed him to chair the newly established National Economic Council whose membership is yet to be announced.
The former President, however, overlooked the fact that funds cannot be legally transferred directly from the GGMC to the CH&PA. If the GGMC is in possession of funds surplus to its requirement (which is obviously the case), it is entirely appropriate for it to make transfers to the Consolidated Fund, as it did during the period 2006 to 2011. It is then for the Assembly to decide through the budget process whether to approve of funds for the CH&PA, having regard to necessary explanations and justifications put forward by the Administration. With the dissolution of Parliament and elections due on 11 May 2015, it is unlikely that the 2015 Appropriation Act will be in place until the second half of the year. It is therefore a question of waiting out to ensure that the constitutional and legislative requirements are not violated. Regrettably, this does not appear to be an option for the Administration.
Perhaps of equal importance is the fact that the former President’s disclosure about the use of the $3 billion contradicts the statement by the Cabinet that the transfer relates to the development of housing infrastructure projects in mining communities. If what the former President said is true, then the Cabinet is engaging in an act of deception as it relates to the use of public resources. So far, three different explanations have been provided as to the reason for seeking to access funds from the GGMC.
What are the specific constitutional/legislative violations?
Article 216 of the Constitution provides for all revenues or other moneys raised or received by Guyana to be paid into the Consolidated Fund, including those of authorities created by specific Acts of Parliament, otherwise known as statutory bodies. However, these entities are permitted to retain such revenues only for the purpose of defraying expenses relating to their operations. GGMC is a statutory body, created in 1979 by Chapter 65:09 of the Laws of Guyana. It is therefore obliged to pay all surplus funds over to the Consolidated Fund. Any decision or instruction to the contrary would violate Article 216.
Section 6(3) of the GGMC Act provides for “Where there is a deficiency in the funds of the Commission, such deficiency shall be met out of moneys provided by Parliament”. Section 20 also refers to the maintenance of a reserve fund and for the Minister to approve of periodic transfers to this fund from surpluses made from time to time. If, however, the balance of the reserve is insufficient to meet a loss incurred in any one year, the amount of the deficiency is charged to the Consolidated Fund. When the GGMC returns to financial health, the deficiency has to be repaid. On a matter of principle, therefore, if losses of the GGMC have to be made good from the resources of the Consolidated Fund, it follows that any accumulated surplus will have to find its way to that Fund. Nowhere else!
In terms of public expenditure, Article 217(3) specifically states that “No moneys shall be withdrawn from any public fund other than the Consolidated Fund unless the issue of those moneys has been authorised by or under an Act of Parliament”. The financial resources of the GGMC constitute a public fund, and neither the GGMC Act nor any other Act permits the transfer of funds to any other entity. Again, any decision or instruction to the contrary would violate Article 217(3).
Finally, the above constitutional requirements are reinforced in a more detailed way in the relevant sections of the Fiscal Management and Accountability Act.
