An audit of the Guyana Office for Investment (GO-Invest) found files for major investments in disarray, inconsistencies in how tax holidays were granted and in one case an investment officer was instructed to sign a key agreement which was later withdrawn.
The audit by Nigel Hinds Financial Services which was submitted to the Ministry of Finance on September 30, 2016 and recently released said that in many instances, files which were examined had un-dated draft Investment Agreements which undermined the integrity of the documentation process for a vital area of GO-Invest responsibilities.
“This opened the verification and review process to opportunities for forgery and undermined the use of an audit trail,” the audit said.
In one instance, the audit found an unsigned Investment Agreement (IA) for Sun and Sand Mining and Mineral Resources (UK) Ltd, with initialled pages containing a clause that the hotel would be provided with a tax holiday for a period not exceeding ten years. In all other cases where tax holidays were granted, that audit said it was done via a Memorandum of Understanding (MoU).
The unsigned cover letter from then Chief Executive Officer (CEO) of GO-Invest Keith Burrowes stated that Housing/Commerce Minister Irfaan Ali had requested that the Sun and Sand Investment Agreement be sent directly to Finance Minister Dr Ashni Singh. The normal procedure is for the IA to be addressed to the Guyana Revenue Authority and copied to the President of Guyana, Minister of Finance and the Chairman of GO-Invest, the audit said.
The audit said that the determination of whether the potential investor would be the land owner or have lease ownership of the location where the investment is occurring cannot be determined from any policy document of GO-Invest. It cited several examples, the arrangement that the government was obligated to lease to Sun & Sand Mining & Mineral Resources (UK) Inc twelve acres of land at $200,000 per year for three years, with Sun & Sand having the option to purchase after three years at an undisclosed price.
The government was also obligated to sell a plot of land to Buddy’s Hotel Royale for $8 million per acre, where the hotel was being constructed. The $8 million would become due and payable on completion of the erection of the hotel and the beginning of operation.
The government was also obligated to sell a plot of land to Georgetown Investment and Management Services (GMIS) Inc/Princess for $7 million per acre on the date GMIS acquired ownership of Buddy’s International Hotel.
For Atlantic Hotel Inc/Marriott there is no clause in the MOU stating that the state land on which the hotel is located has any provision for lease or purchase by Atlantic Hotel Inc/Marriott.
“There is no evidence on file showing the rationale or consideration that supports the methodology used to explain, reconcile or justify the terms of the four Memorandum of Understanding Agreements,” the audit stated.
It referred to an instance where Leanna Damond, Investment Officer made a statement dated February 5, 2015 that she was instructed by CEO Burrowes to sign an MoU on behalf of the CEO for Buddy’s Hotel Royale. Damond claimed in her statement that the instruction was given to her by way of a telephone call on January 22, 2015. Damond further stated that she was specifically instructed not to let Roxanne Sumner, Senior Investment Officer, sign the MoU and to treat the MoU as strictly confidential. Damond further said that she was instructed by Burrowes to sign four copies of the MoU on behalf of the CEO and also to sign the IA for the same company.
However, Burrowes in a correspondence to Buddy’s owner Omprakash Shivraj, dated January 10, 2015, which was prior to the signing of the MoU by Damond on behalf of the CEO, rescinded the MoU signed by Damond. The audit report said that Burrowes in the correspondence stated that the officer who signed the MoU was not authorized to sign the MoU even though he had reportedly instructed the signature and noted that “The Government of Guyana has also legitimately and statutorily vested such far reaching powers of conclusion, signing and acceptance of Investment Agreements and Memorandum of Understanding under the executive function of the Chief Executive Officer for the Guyana Office for Investment.”
No documentation is available from GO-Invest providing the rationale or justification for the methodology used for granting tax holidays via MoU or IAs, the audit report said.
It cited the following examples:
- Georgetown Investment and Management Services Inc, a member of the Princess International Group of Companies -corporate tax holiday for hotel – 5 years.
- Buddy’s Hotel Royale – corporate tax holiday for hotel – 5 years.
- Sleepin International Hotel & Casino Inc – corporate tax holiday for hotel – 10 years.
- Sun & Sand Mining & Mineral Resources (UK) Ltd – corporate tax holiday – 10 years.
- Atlantic Hotel Inc/Marriott – corporate tax holiday for hotel and casino 10 years; this entity also received waivers for property tax and withholding tax for an unspecified period.
- Pegasus Hotel Guyana Ltd – no tax holiday
The audit report noted that GO-Invest is a conduit for corporations and other businesses to obtain tax concessions. However, it said that there is also evidence that despite the fact that concessions were granted to many investors, little or no business activity related to the IA occurred.
“In some instances, GO-Invest was used by businessmen as an opportunity to obtain products without paying import duty and other taxes, then reselling the goods or keeping them for personal use,” the audit report stated.
It said that it requested, but got no information, from the Guyana Revenue Authority on concessions granted to the investors with approved IAs shown below:
- a) Buddy’s Hotel Royale
- b) Quark Communications Inc
- c) E-Networks Inc
- d) Sleepin International Hotel and Casino Inc
- e) New GPC Inc
- f) Global Packaging Inc
- g) Sun and Sand Mining and Mineral Resources (UK) Inc
- h) Diamond Tropical Woods Inc
- i) Decopav Concrete Products Inc
- j) NHL Alproguy Inc
- k) Global Printing and Graphics Inc
- l) Health International Inc
- m) Monica Beepat trading as Giftland Office Max
- n) Movietowne (Multicinemas Guyana Inc)
- o) Global Hardware Inc
The audit report said that multiple enquiries were made over several weeks for the information from the GRA and promises were received that the information would be
forthcoming shortly.
According to the audit report, GO-Invest also said that select IAs that would normally fall within the remit of GO-Invest were directly processed by the then Office of the President. Thus, GO-Invest was not in a position to provide any information on such investment applications or agreements.
