Peruvian President Pedro Castillo along with a former Transport Minister and six lawmakers are being investigated for allegedly being part of a criminal network that received bribes for public works contracts. According to investigators, the network led by Castillo received benefits from works improperly allocated to some business leaders. It is the first time in Peru’s history that a sitting President is being investigated. Six former Peruvian presidents have been sentenced, indicted or investigated for corruption or money laundering. One of them, Alan García, committed suicide before he could have been investigated for bribes by a Brazilian construction company. See https://www.washingtonpost.com/world/peruvian-president-faces-investigation-in-corruption-case/2022/06/17/2e609f9e-ee65-11e.
Over in Pakistan, newly elected Prime Minister Shahbaz Sharif appeared in court in connection with a four-year old corruption case involving alleged links to a multi-million dollar housing scam in Lahore. Prosecutors claim that Sharif abused his power when he was chief minister of Punjab province. He is accused of awarding contacts for a housing scheme for low-income citizens to those connected to his Pakistan Muslim League Party that is family-run and family-dominated. The party has a long history of corruption allegations. Sharif has denied the allegations. See https://abcnews. go.com/International/wireStory/pakistani-prime-minister-appears-court-corruption-case-85504185.
Two Sundays ago, the U.S. television network Showtime aired a programme titled “Guyana For Sale”, based on an interview with Guyana’s Vice President. So far, there was quite a reaction from the Guyanese public, some defending the Vice President while others are calling for an investigation into the allegations or his resignation. We do not wish to comment at this stage on the allegations, as we believe it will be premature to do so. We will therefore await the outcome of such investigation which we support in order to establish the truth or otherwise of the allegations. However, there are a few unsettling aspects of the interview that we wish to highlight.
Guyana for sale
We refer to the Vice President’s response to a question posed by the interviewer, Ms. Yeung, who in commenting that Guyana has attracted a lot of foreign investment recently, enquired of the Vice President as to what Guyana has to offer. The Vice President responded, with a chuckle, that it has to do with ‘[t]he opportunity to make money that is why people are coming here, so that’s what I am going to say’.
It would have been more comforting if the Vice President had said that investors are attracted to Guyana because it is now a major oil-producing country; and while the Government welcomes foreign investments, the interest of the country and all of its citizens must take precedence above all other interests. He could have elaborated on how the ordinary Guyanese, the unemployed youth, the elderly, the sick and the disadvantaged are likely to benefit from Guyana’s new-found wealth. The Vice President could also have cited the provisions of the Local Content Act 2021 that offer opportunities to local businesses and individuals in relation the procurement of goods and services as well as employment; and the mechanisms in place to secure compliance with those provisions. The Vice President’s emphasis on the money-making aspect of foreign investment might have influenced VICE News to title the programme ‘Guyana For Sale’.
Guyana’s natural resources belong to its citizens, both present and future, and should be exploited so that they enjoy the maximum benefit from those resources. We have seen how the reverse happened when the previous Administration entered into an agreement with ExxonMobil’s subsidiaries for the exploration and production of crude oil. At that time, the estimated amount of crude oil resources discovered was about one billion barrels. Further discoveries have since upped the figure to about eleven billion barrels. Several oil-producing countries have incorporated into their oil and gas production agreements a requirement that, as new oil discoveries are made, the government obtains a greater share of the oil wealth. Regrettably, our agreement with Exxon, which is overwhelmingly weighted in favour of the U.S. oil giant, contains no such provisions. So far, calls for the renegotiation of the Agreement have fallen on deaf ears.
As regards the two percent royalty payable by Exxon to the Government, leaders from both sides of the political divide are adamant that the payment is not a “recoverable cost”. Exxon’s financial statements show that royalty payments are an expense against revenue, which under normal circumstances is the correct accounting treatment in keeping with generally accepted accounting practice. However, according to the Guyana Revenue Authority (GRA), while the royalty is an expense incurred in the production of income, it is not allowable in the calculation of “cost oil”. GRA went on to state that ‘the 2% Royalty payment currently adds to the Government’s take. Hence the Guyana Government presently receives a total of 14.5% in Royalty and Profit Oil (2% plus 12.5%), and not a total of 14.25%’. One hopes that the audit underway of Exxon’s costs will bring some clarity as to whether the 75 percent of recoverable costs chargeable every month to arrive at “profit oil”, includes royalty payments.
We also need to be guarded against the adverse impact on the economy arising from the sharp inflow of foreign currency that can lead to currency appreciation. When this happens, Guyana’s exports from other sectors will become less competitive on the work market, resulting in a decline in these sectors. This is essentially what the Dutch disease entails. Linked to the Dutch disease is the “resource curse” or the “paradox of plenty”. The term was coined by British economist after he considered on how countries with an abundance of natural resources, especially non-renewable ones such as minerals and fossil fuels, ‘often develop more slowly, more corruptly, more violently and with more authoritarian governments than others’. See http://content.time.com/time/magazine/ article/0,9171,1997460,00.html.
Perceptions of corruption
Ms. Yeung commented that Guyana has dropped two points on the 2021 Corruption Perceptions Index (CPI) which puts the country among the most corrupt in the Region. She then enquired of the Vice President whether he accepts that within the government and within the country there is a problem with corruption. His response was as follows: ‘First of all, I have a problem with the indices. But we do have a real corruption in countries as ours too. This is like a blacklisting index. The darker you are, the lower you are on the Index’.
The 2021 CPI was based on surveys carried out of 180 countries using data gathered from 13 sources by 12 different institutions, including the Economic Intelligence Unit, World Bank, World Economic Forum and Varieties of Democracy. For a country to be included in the Index, there must be a minimum of three data sources that respond to specific questions relating to the following:
(a) Bribery;
(b) Diversion of public funds;
(c) Use of public office for private gain without facing consequences;
(d) Ability of governments to contain corruption and enforce effective integrity mechanisms in the public sector;
(e) Red tape and excessive bureaucratic burden which may increase opportunities for corruption;
(f) Meritocratic versus nepotistic appointments in government;
(g) Effectiveness of criminal prosecution for corrupt officials;
(h) Adequacy of laws on financial disclosure and conflict of interest prevention for public officials;
(i) Legal protection for whistleblowers, journalists and investigators when they are reporting cases of bribery and corruption;
(j) State capture by narrow vested interests; and
(k) Access of civil society to information on public affairs.
The countries that continue to score well on a scale of 0 to 100 are: New Zealand (88), Denmark (88), Finland (88), Sweden (85), Norway (85), Singapore (85), Switzerland (84), Netherlands (82), Luxembourg (81), Germany (80), United Kingdom (78), Hong Kong (76), Canada (74) and Australia (73). On the other hand, countries that scored poorly are: South Sudan (11), Somalia (13), Syria (13), Venezuela (14), Yemen (16), North Korea (16), Equatorial Guinea (17) and Libya (17). For the English-speaking Caribbean, Barbados and The Bahamas continue to top the list with scores of 65 and 64, respectively, with Guyana and Trinidad & Tobago jostling for the bottom place, scoring 39 and 41, respectively, as shown at Table I.
In 2012, Guyana’s CPI score was 28. Eight years later, it moved to 41. This 13-point increase occurred mainly during the period 2016-2020 when Guyana’s score increased from 29 to 41. The largest increase was in 2016 with a five-point increase, moving from 29 to 34. This enhanced performance was mainly due mainly to the following:
(a) Amendments to Anti-Money Laundering and Countering the Financing of Terrorism (AML-CFT) Act;
(b) Conduct of numerous forensic audits of State institutions, and the involvement of Special Organised Crime Unit (SOCU) in instituting charges against certain officials;
(c) Establishment of the now disbanded State Assets Recovery Agency (SARA);
(d) Activation of the Public Procurement Commission (PPC);.
(e) Appointment of new members of the Integrity Commission and the revision of the Code of Conduct contained in the Integrity Commission Act;
(f) Establishment of Guyana’s Extractive Industries Transparency Initiative; and
(g) Passing of whistleblower protection legislation.
Regrettably, events since the 21 December 2018 vote of no confidence in the Government have marred Guyana’s efforts to show further improvement on the Index, although both the 2020 and 2021 CPI did not appear to have taken some of these events into account. Guyana has now been relegated to the bottom of the table of English-speaking Caribbean countries, a position that it held since 2005 when it was first assessed, except for 2020 when it overtook the twin island republic by one percentage point.
The CPI does not take into account events that took place especially in the latter half of the year under review. Transparency International explained that ‘data sources often take time to catch up to real-life experiences and situations. Corrupt activity not within the timeframe of this year’s Index could take a year or more to affect the scores of a country’. For example, the 2021 index would have been based on country reports issued up to around August 2020 to allow for 4-5 months of detailed analyses of the data so as to arrive at the Index.
The Vice President’s comment that ‘[t]he darker you are, the lower you are on the Index’ is not borne out by the 2021 CPI and earlier indices. Of the nine countries comprising the English-speaking Caribbean assessed in 2021, six continue to score well on the Index. These are Barbados (65), Bahamas (64), St. Vincent & the Grenadines (59), Dominica (55), St. Lucia (56), and Grenada (53). On the other hand, Syria (11), Venezuela (14), North Korea (16) and Libya (17) scored poorly. The United States (67) was a mere one percentage point ahead of Barbados; while Qatar (63), South Korea (62), Portugal (62) and Spain (61) scored less.
The Vice President has finally acknowledged that there is real corruption in Guyana. Previously, raising the issue was met with vehement denial as well as character assassination and personal vilification of individuals and organizations attempting to do so. It would have been heartening to learn what steps are being taken to minimise the extent to which corruption is perceived to exist in the Guyanese society, such as having in place independent and fully functioning watchdog institutions that are staffed by technically and professionally competent persons whose appointments are free of political considerations. These include the Audit Office, Integrity Commission, Public Procurement Commission, and the National Procurement and Tender Administration Board, among others.
Involvement of Ministers in operational matters
Last year, I was approached by a foreign investor who wanted to invest in Guyana and who indicated that he had the required cash to do so. Someone must have mistakenly told him that I was government Minister, or as a former Auditor General I must have had some influence in government. Without entertaining any further discussion, I promptly told the investor how mistaken he was, and referred him to the competent agency in government, the Guyana Office for Investment.
Ministers of the Government are policy-makers. They ought not to make policies and at the same time execute them since such action, apart from being considered a conflict of interest, is a usurpation of the functions of the competent agencies in government. Besides, it is anathema to good governance, transparency and accountability. When Ministers step down from their policy-making positions and become operational, the floodgates for all sorts of allegations are wide open. I cannot recall Ministers getting involved in operational matters under the late President Hoyte, except perhaps in one case.
