Almost 70% of those who obtained government loans to attend the University of Guyana (UG) are delinquent in repaying their loans which amounts to billions of dollars and among these are prominent members of society including magistrates and lawyers.
“It appears that many of these individuals are still around and should be pursued to have them settled their indebtedness,” a report by accounting firm, HLB, R. Seebarran & Co has recommended. The firm conducted a forensic audit into the UG Student Loan Agency for the period December 2011 to May 2015. In its report, submitted to Minister of Finance Winston Jordan in September, it highlighted the billions owned and urged a number of changes. The report was made publicly available yesterday.
It revealed that since the beginning of the programme, 25,335 students had obtained loans up to December 31, 2014. The total value of the loans was $9.1 billion. During the period 1994 to May 2015, the Government of Guyana approved $9.4 billion through the National Budget for the loan agency with $1.8 billion received by the agency during the period April 2011 to December 2014.
The report revealed that of the total number of students who have received loans, 17,561 or 69.4% of the loan portfolio are deemed delinquent because they have not been honouring their indebtedness.
“This is a clear indication that the Ministry of Finance and by extension the Agency have not pursued the defaulters. The Agency Head confirmed that his department is not equipped to pursue defaulters,” the report said.
The principal outstanding at December 31, 2014 was $8.2 billion while installments due including interest at December 31, 2014 was $5.4 billion. Total repayments including interest over the life of the Agency was $1.4 billion.
The report revealed that just 1,776 persons or 7% have repaid their loans totalling $679,918,794 including principal and interest while 4,713 persons or 18.6% are recent graduates or are still students. Five persons had their loans written off and 1,278 persons or 5% have been paying but not all are up-to-date.
The report said at the time of the audit, there were 488 loans with balances in excess of $1 million totaling $880,100,737 of which $754,539,289 represents principal. This amount represents 10.6% of the principal loan balances outstanding at December 31, 2014. “Some of these loans have been coming forward since the inception of the Agency and most of them have been determined to be delinquent,” the report said. It noted that the loan agency is not geared to recover loans especially those in default other than sending occasional written reminders and verbal communications when students visit the agency.
Among those who owed UG over $1 million for loans taken were former Leader of the Opposition Robert Corbin. 295 persons owed UG between $1 and $2 million, 151 persons owed between $2 and $3 million while 41 persons owed UG over $3 million and one person owed over $4 million. Current and former magistrates as well as prominent lawyers such as former president of the Guyana Bar Association Ronald Burch-Smith were identified as delinquent in repaying their loans.
Other prominent persons identified in the report who owed UG over $1 million were Zamilla Ally, Sadie Amin, Jacy Archibald, Fazil Azeez, Fabayo Azore, Azeena Baksh, Marcel Bobb, Joann Bond, Paul Braam, Yohhahnseh Cave, Geeta Chandan, Omadatt Chandan, Stephen Daniels, Joel Persid Edmond, Subas Ganesh, Gordon Gilhuys, Lawrence Harris, Maxine Hinds, Ganesh Hira, Abiola Inniss, Rexford Jackson, Leslie James, Stephen Lewis, Jaya Manickchand, Adela Nagamootoo, Clive Nurse, Leslie Sobers, Roger Yearwood, and Melissa Yearwood.
Inundated
A number of those persons completed studies at UG several years ago.
Meanwhile, the report noted that they were advised and subsequently verified that a sample of files with were damaged during the 2005 floods when the bottom drawers of filing cabinets were inundated. The estimated number of files which were affected by the flood and still in use is approximately 2,700.
The documents, although dried are not all legible and some have been damaged which make them difficult to be used. Attempts to re-construct the damaged files depended on the Agency’s ability to get the students to re-submit the damaged documents, which was not successful. In addition, the files do not include up-to-date information on the loan balances, interest charged and receipts from the students, the report said.
It recommended the appointment of an oversight Board of Trustees including a Secretary to the Board of about six persons to oversee the Student Loan Agency. Board members should include a representative from the Minister’s office, the University Bursar, the President or a designate from Students Society at University, an Attorney-at-Law and a qualified Accountant, it said.
It said that the Trustees should approve governance practices and, in addition, meet monthly to ensure that the Agency is managed effectively and efficiently. Further, they should ensure that student loans are disbursed consistently with improved policies and procedures and recovered on a timely basis.
The report outlined a number of things it said the Trustees must ensure. Among these are that the Agency must be adequately staffed and equipped to carry out their responsibilities and all loan files are maintained up-to-date including those that have been damaged in the floods.
It also urged that the Student Loans should be managed as “Student Revolving Loans” with immediate effect. “This will allow outstanding loans to be collected and used for future loans without the Government having to provide additional amounts. Based on the current bank balances and loans outstanding, there is no need for the Government to budget for any further funds for the Agency,” it said.
The report recommended that a formal letter be sent to students showing their loan balances and request that they visit the Agency with a view to honour their obligations to repay the loans, failing which, legal proceedings should be instituted. “Where students cannot be located or have failed to respond to written and oral communication, the guarantors should be pursued,” the report urged.
It said that the Ministry of Finance should include on its website a page referred to as the ‘Student Loan Agency’ and include the names of the defaulters. “This approach could cause them to follow up with the Agency to settle their debts. Or the Agency can set up such a website which can also facilitate students to follow their loans,” it said.
Among other things, the report said consideration should be given to endorse the passport of students so that they cannot leave the country without making provision to repay their loans if they fail to return. “Or students should not be allowed to travel abroad unless the guarantors undertake to repay the loan in full and immediately, if the students do not return,” it said.
The format and security for the issuance of loans must be reviewed to strengthen the existing systems and to put in place mechanisms for the prompt repayment of loans, it added. Students should be made to start repayment on or before the one year grace period once they would have been employed, it urged.
