Head of National Industrial Commercial Investments Limited (NICIL) Winston Brassington has slammed as “premature,” a recent statement, purportedly made by Minister in the Ministry of Finance Jaipaul Sharma, that it has been recommended that he be criminally charged, given that a final report on the findings of a forensic audit into the agency is yet to be submitted.
Brassington yesterday challenged statement attributed to Sharma in a Kaieteur News article which was published three days ago. The article was headline “Forensic audit recommends criminal charges against Brassington – Minister Sharma.”
In a two-page press release, Brassington said Sharma’s assertion was based on an “unreleased preliminary audit report” compiled by former auditor general Anand Goolsarran who was appointed the forensic auditor of NICIL.
The release said that on September 30, NICIL received a draft preliminary audit report which covered over 13 years of business, and which is currently being responded to. “It is communicated to NICIL that other than to its Chairman, Dr Maurice Odle, the preliminary report was not shared with the government as yet,” the release said adding that Goolsarran was awaiting NICIL’s response which will enable him to finalize his draft.
According to the release, the entity’s understanding is that once the formal draft is submitted to the government (via the Minister of Finance), NICIL will be able to respond to the final version of the report, and its response will accompany the final report.
“Given the gravity of certain statements allegedly said by Minister Sharma,” the statement informed, the management of NICIL also wished to submit its initial response.
The newspaper quoted Sharma as saying that the report “exposes some alarming things, some acts of corruption which are just unbelievable and nauseating” and that the report is currently undergoing some final touches.
Sharma, according to Kaieteur News, said, “NICIL was being run in a haphazard way and made dangerous decisions that cost the company millions of dollars in losses. It placed the then government in a bad place. NICIL really was operating as the PPP’s greatest force in making corrupt acts realized. The more the forensic auditor keeps digging, the more dirt he finds on NICIL and how it operated.”
But Brassington’s release made it clear that the facts contained in the report will ultimately show that there “has been and is no evidence of illegality, fraud, or corruption by NICIL.” It added that the preliminary report does not allege any “personal enrichment” of any of the officers or directors of NICIL, including Brassington.
“NICIL maintains that all actions taken by NICIL over the years on matters identified in the preliminary report, were on the lawful authority of its boards (Privatisation Board or NICIL Board) and/or Cabinet,” the release said.
It stated that Goolsarran’s main contention has been and continues to be that NICIL is subject to Articles 216 and 217 of the Constitution and therefore by extension the Financial Management and Accountability Act (FMAA). Accordingly, the release said, NICIL has and continues to refute the applicability of or violation of Articles 216 and 217 and reiterates that the preliminary report does not allege corruption or fraud by Brassington.
The release said Goolsarran did make one recommendation in the preliminary report with regard to alleged wrong-doings, which is: “Institute disciplinary action against all those who were complicit in the violation of Article 216 and 217 of the Constitution, including the Board of Directors of NICIL, the former Minister of Finance and the previous Cabinet, as provided for under the following sections of the FMA Act: (a) Section 48—Misuse of public moneys; (b) Section 49—Liability for Loss of public moneys; and (c) Section 85—Liability of Official.”
The release also made reference to Article 216 of the Constitution which states, “All revenues or other moneys raised or received by Guyana (not being revenues or other moneys that are payable, by or under an Act of Parliament, into some other fund established for any specific purpose or that may, by or under such an Act, be retained by the authority that received them for the purpose of defraying the expenses of that authority) shall be paid into and form one Consolidated Fund.”
It stated that Goolsarran’s broad position in his preliminary report about actions prior to 2002 when he was the Auditor of NICIL, is repeated numerous times as well as his publicly expressed objection to NICIL’s operations from 2002.
Notwithstanding, the release said, Goolsarran recognizes that from 1991 to 2001, NICIL transferred $3.415 billion to the Consolidated Fund. Between 2002 and 2012, over $12 billion was paid as dividends from NICIL to the Consolidated Fund. “Mr Goolsarran also recognizes that the accounts of NICIL, prior to 2002, were ‘qualified’ audit opinions but for every year since, NICIL has received ‘unqualified’ or ‘clean bill of health’ audit opinions,” it added.
Notwithstanding these facts recognized in the preliminary report, Brassington’s release said, Goolsarran states that NICIL violated Articles 216 and 217 of the Constitution when it retained all funds and invested these funds. It added that this argument, which contradicts the facts as stated by Goolsarran, is the basis of the recommendation he has made in the preliminary report. It was stressed that NICIL has responded to various questions during the course of the forensic audit and refutes the position of Goolsarran on the several grounds.
The first ground listed is that NICIL has substantial legal advice that indicates that Articles 216 and 217 are not applicable to NICIL and further, that the application of these two articles would cause NICIL to be in violation of the Companies Act and NICIL’s own Articles of Incorporation and Bylaws.
Being more specific, the release said, “NICIL does not fall within the definition of ‘Guyana’ as set out in Article 232(1) of the Constitution and section 5 of the Interpretation and General Clauses Act, Cap. 2:01. As a consequence, Article 216 of the Constitution is not applicable to NICIL.”
The second ground is that NICIL’s “clean” audit opinions for 2002 to 2013, were evidence that the current Auditor General, who audits all of government, does not consider NICIL to be in violation of Articles 216 and 217.
The third ground is that NICIL received advice in 2001 from private accounting firm, Ram and McRae that clearly showed, that NICIL prior to 2002, violated the Companies Act and its financial statements were not prepared in accordance with applicable accounting standards. Ram and McRae, the release said assisted NICIL in preparing its accounts in proper accounting form, after which it received a clean audit opinion. At no time, did NICIL receive advice that it had to deposit all of its revenue into the Consolidated Fund, it stressed.
The fourth ground is that NICIL operates like any other state-owned entity, incorporated under the Companies Act, according to the release, which explained that if it operates in violation of Article 216 and 217 of the Constitution, then all state-owned entities would be similarly guilty. Further, this would defeat the very purpose of having government conduct commercial business via companies.
The last ground is that there is no legal precedent or court ruling that suggests that NICIL is obliged to deposit its revenues into the Consolidated Fund or that Articles 216 and 217 are applicable to NICIL.
“It is unfortunate that the protocol for addressing the forensic audit is not being followed, and sensational public statements are being made without balance, much to the detriment of a fair and balanced audit and audit process,” the release said. “Incendiary accusations without specificity as to wrongdoings lack any semblance of objectivity and is one form of prejudicing a fair and balanced audit process.”
It added that such actions are more akin to a “witch hunt” than to a fair, independent, impartial, professional, and objective audit process. Goolsarran began the forensic audit in June.
NICIL has attracted strong criticism as it has acted mostly as an investment agency for the government.
It has retained large sums of money for various uses which critics have said should have been deposited into the Consolidated Fund.
