Last Wednesday’s lead article in the Guyana Times newspaper carried the headline “NICIL under APNU/AFC Govt still retains billions in dividends – source”. The article stated that despite pre-election criticisms and the forensic audit recommendations, National Industrial and Commercial Investments Ltd (NICIL) continues to retain dividends from several State-owned entities. We note that NICIL has since responded indicating that since 2015 all dividends received were paid over to the Consolidated Fund. However, there is no evidence that audited accounts of the entity are available beyond 2013, which would have provided conclusive and verifiable evidence as to whether or not the entity is still retaining dividends received from public corporations and other entities. NICIL therefore needs to clarify the status of its audits for the years 2014, 2015 and 2016, considering that Section 346(1) of the Companies Act requires audited accounts to be presented to the Minister within six months of the close of the financial year and for those accounts to be laid in the National Assembly within three months thereafter. The forensic audit report indicated that the Auditor General was in the process of auditing the 2014 accounts, and a review of his reports for the years 2015 and 2016 indicated no further progress.
The article referred to main finding of the audit report which was that during the period 2002 to 2014 NICIL retained $26.8 billion in dividends and divestment proceeds in breach of Article 216 of the Constitution. It quoted a legal opinion that NICIL had sought subsequent to the issue of the draft audit report, as follows: “Section 216 applies specifically to revenues raised by the State. NICIL is not the State, but rather has a separate legal personality. The fact that the State is the sole shareholder of NICIL does not render its corporate form defunct; and accordingly, the automatic transfer provision contained in 216 does not apply.”
In today’s article, we revisit the issue, drawing heavily on two of our previous articles under the caption “A classic case of constitutional breach in public finance”, published on 25 January 2016 and 8 February 2016 respectively. These two articles were put together using mainly the contents of the forensic report on NICIL that is available on the Ministry of Finance’s website: https://finance.gov.gy/wp-content/uploads/2017/05/nicil_audit_report.pdf.