Former President Bharrat Jagdeo yesterday acknowledged that Cabinet had played a role in the NIS investment in the Berbice Bridge but disputed the findings of a forensic audit of the Scheme which said that Cabinet had a significant input over the Board and made key investment decisions.
“As far as I can recollect, the cabinet did not deal with investments of the NIS resources…they did not, that was done rightfully so at the level of the Board”, Jagdeo told a press conference yesterday at his party’s headquarters at Freedom House, Robb Street.
“We dealt with the NIS several times, we discussed but from more an actuarial perspectives to look at the future of NIS, its sustainability and we discussed it several times after the Clico issue to ensure the resources of NIS were not lost”, he added.
The audit, conducted by Ramesh Seebarran and made public on the Ministry of Finance’s website, noted, among other things, that “Cabinet had significant input over the board and made certain decisions which the directors accepted without any discussions, analysis and due diligence to determine the merits of the decisions.” This finding was based on an examination of the minutes of board meetings which referred to decisions by Cabinet being accepted by the board.
One such decision was the $2.59B investment in the troubled Berbice Bridge Company Inc. (BBCI) as well as other investments which have left the Scheme in a dire condition.
According to the report, this investment into “a company (BBCI) which is making losses and which has many issues surrounding its going concern” was executed by the last board of the Scheme “without proper due diligence.” Instead, the board “accepted decisions made by Cabinet.”
The report notes that in the minutes of the 445th Board of Directors (BOD) meeting, it is stated that “the chairman (Dr Luncheon) informed directors that approval was given by Cabinet for National Industrial and Commercial Investments Limited (NICIL) to sell 950,000 preference shares held in BBCI to NIS at par value.”
It goes on to state that Cabinet’s decision was “countenanced by directors,” who in effect made no attempt to determine whether the investment was in the best interest of the scheme.
This decision came exactly one meeting after “directors expressed a disinterest in the BBCI investment offer” and “the chairman expressed concern about the inordinate risk concentrated in the portfolio.”
Luncheon has told this newspaper that he will respond to the audit claims and that he is “prepared to do what is professionally responsible” but he has not been invited by government to respond to the claims.
And even as he dismissed the audit saying that there was no input into NIS’s investment decisions by Cabinet, the former President said that his government made an exception as it pertained to the Berbice Bridge Investment.
“So we dealt with NIS many times but never about where NIS should invest their money. The only time that came up was when they made some investment in the Bridge,” Jagdeo stated.
He pointed to his tenure in office, when Clico collapsed and millions of Guyanese investments were in jeopardy saying that it was his government’s intervention that saw that the country never reeled from the losses as that in other territories. The government absorbed some of the losses to ensure payouts to certain Clico policyholders but the NIS is still short of $5.1b. The government had also been blamed for not ensuring more effective scrutiny of Clico.
Jagdeo said that along with monies garnered to pay off persons who had pension funds invested in Clico, assets owned by Clico were sold and he said that the proceeds from those sales are still available to bail out the NIS, if government needs.
“We started disposing of some of the assets. Where GRA is now, that building was one of the assets. We raised about $500M, we used it to settle a lot of the pension funds for a lot of the people. Then we sold the CRL property that they had, they had a liability to CLICO here, that property was sold for US$20M and that money is still available…then another company that was a subsidiary of the Clico group had made a loan of $13M to Bosai. We went to court and we asked that this money be put in escrow,” he said.
“If (Finance Minister Winston) Jordan is not arrogant and not political, he can look at that money over US$33M we have there.
That is over $6B of resources, we can easily clear NIS and the others outstanding from that money we left. We offered to share these details too. I hope that Jordan will pursue this in a way that protects the country,” Jagdeo also said.
The NIS acquired the Camp Street building presently housing the GRA as part of the liquidation of Clico. In a much criticized deal it began garnering revenue by renting the building to the GRA. The GRA is planning to move from the building as it has many defects.
