There seems mischief afoot and a conspiracy involving Ms. Azeena Baksh, Registrar of Companies, the Berbice Bridge Company Inc. (BBCI) and Dr. Ashni Singh, Minister of Finance to conceal information from the public about the Bridge Company. One year after the NIS had invested nearly one billion in preference shares in BBCI, the company wrote the NIS telling its General Manager that it would not be receiving any dividends for 2014 because “the company had not made any profits”.
One of the regulatory controls of companies is disclosure to the public, mainly through an annual return. The problem is that BBCI has not filed any returns with the Registry since 2011 and has resisted every attempt to have it comply. The reason has become clearer over the past month with the Minister of Finance giving the company cover NOT to file for some time yet, even though he has no such power under the law. Even if the Minister had such power, the company had not met the conditions set out in the Companies Act for any extension of the filing date.
Continue reading Conspiracy to conceal mandatory public information
Interview with Dr. Surendra Persaud, Director, Caribbean Surgery Inc.; Mr. Robert Badal, Chief Executive Officer, Pegasus Hotel; and Frederick Collins, Civil Society Activist
Subscribe and view more at:
Introduction to third party letter
I have been asked by Mr. Rafiq Khan the writer of this letter who is also an attorney-at-law whether I would accommodate the corrected version of his letter. I have agreed to do so in the interest of wider information to the public on a matter which I have previously addressed both privately to GECOM and in the press.
The upcoming general and regional elections are perhaps the most important elections since those of 1992 and every citizen has a right and a duty to vote for the list of his or her choice.
Yet I regret that I will not be exercising that right or duty come May 11, 2015. My reason has nothing to do with the ability or inability of any of the contestants to properly govern the country.
My reason is based purely on a matter of principle as I perceive it. I refuse to be an accomplice to or complicit in the perpetuation of what I regard as a constitutional illegality on this country. Some of your letter writers have already alluded to it, but it does not seem to have gained the traction that it deserves. The reason, I believe, is that all political players, to use the words of Martin Carter, “are consumed” by it.
On Thursday the cream of the private sector would be gathering at the Kingston Marriott to celebrate what a leading private sector representative described as an impact investment, i.e. an investment in a company that not only provides a financial return to the investor but also social and environmental returns as well. One example of such a company would be one that produces solar lighting for those without access to electricity, while another would be one producing low cost mini-computers (tablets) for the needs of deprived kids.
In both economic as well as financial terms, the Marriott Hotel provides neither a financial return to the investor, in this case a Government company named Atlantic Hotel Inc., nor any social benefit to the community. Let us see what the Government has had to put into the investment:
1. Land with a market rental value of $1 US per square foot has been leased to the company at half a US cent per square foot, i.e. 1/200 of its worth.
2. The land is estimated to be worth around US$75 million but the company can buy it at any time within 99 years for US$1 million. This model practically tells the investor to rent for next to nothing for the next ninety eight years and then exercise the right to purchase in the 99th. year when the present day value of $1 million will be worth approximately US$491, using an 8% discount rate.
3. There is a concept of a negative rent and the nominal rent being paid is effectively a payment to hold an option for 99 years.
4. Investment in GT&T which has produced billions of dollars in dividends was sold for $30 million to partly finance the government investment in the Marriott. At least $20 million of this sum has been lent to AHI at zero rate of interest and not repayable until after fifteen years. In today’s value that US$20 million paid after fifteen years is worth US$6.3 million, using an 8% discount rate.
5. The Government has given a generous tax holiday to the company including ten years for taxes on income and twenty years on duty and taxes on imports.
6. The Chinese contractor, which was awarded the contract even before it registered to do business in Guyana, has paid no corporate taxes on its profits, nor as is widely suspected were its all-Chinese labour force subject to tax on their income or to NIS.
7. All the development costs including multiple but useless studies, sewage diversion, interest during construction, and administration costs have been borne by NICIL, another Government company whose chairman is Dr. Ashni Singh, the Finance Minister, and is therefore not recoverable.
8. In addition to the more than US$20 million given to the company interest free for fifteen years, the Government is putting in another US$4 million by way of equity on which no return is guaranteed.
Now, here is the kick: none of the concessions injected by the Government is given any value in how control of the company is exercised. Another Chinese investor – ACE Investments Inc. – who invests US$8 million dollars in equity is given control of the company while the government becomes a minority shareholder!
Because Brassington as the sole director of AHI has decided that details of the investment are a private, commercial matter, no one is sure that ACE is prevented from exercising its controlling interest by selling its shares at any time and capitalise on all the concessions the Government has put into the company! This is either a foolish deal or a crooked one.
No doubt the top brass of the Private Sector Commission will be at the opening to give praise to the Government and so I hope that its Chairman Ramesh Persaud who is an accountant and is in the business of finance would be willing to answer the following questions:
• Should a value not be placed on all the non-equity inputs in the company, including tax concessions, land rent concessions and costs borne by NICIL for the benefit of AHI not recorded in AHI’s books?
• Does it make financial sense that the price to be paid for a share by an investor coming in when the project is operational is the same as that paid by an original investor who has also made valuable cash and non-cash inputs?
• Is the PSC aware that that is the nature of the arrangement with ACE?
• Is the PSC aware that the Shareholders’ and Share Subscription Agreement were entered into in 2013 when the project and its financing were almost completed?
• Does the PSC agree with the decision to dispose of shares in GT&T earning hundreds of millions to be invested in ANY investment that produces no return for fifteen years?
• Would IPED of which the Chairman of the PSC is the CEO lend money or make advances to any person on the terms on which NICIL is lending AHI?
I have not heard anyone make the case that the Marriott was conceived as a social investment for the benefit of any deprived individual or class of individuals, whether economically disadvantaged, physically impaired or socially underprivileged. In fact, a five star brand does quite the opposite – it is expensive, exclusive and selective. So any suggestion of a socially impactful investment is clearly nonsense.
There has been some disingenuous attempt to make the financial case for the project using some heavily doctored projections contracted by Winston Brassington. The economic case is even weaker. Does any rational person say “international brand X operates in Guyana and I must therefore visit that country”? Or does a rational person not say “I am thinking of visiting Guyana so let me see what my hotel options are”? No investor decides against coming to Guyana because HSBC or UBS (international banks) does not have a presence here so why do we think that an international hotel is any different?
A local, actual example also undermines the economic argument. The GMSA plans to host the PPP/C presidential candidate at a forum and decided that it would be held at the Pegasus. The President and some members of the GMSA were overruled and the venue was suddenly changed to the Marriott. Is there an economic benefit to the switch from a business which pays tax to the Government to one that does not? The GMSA example is the beginning: we can expect business to be diverted to the Marriott to make the financial case for the Marriott. The economic case is at best minimal.
I do not think any Guyanese does not welcome the Marriott brand but did it have to come at such an expensive cost to the taxpayer and as an investment by the government rather than by the private sector? Scarce resources are about choices. Does the PSC really think that the Marriott is a more impactful project than an investment in University of Guyana, or a better equipped and paid police force?
Finally, there are several legal issues which the project has raised, issues of constitutional violations, illegalities and misfeasance in public office. The project and those who have been part of the improprieties will be in the news for some time to come.
There is of course a part two to all of this in the form of the proposed Casino. We will leave that for a later date.
I welcome the report of the Gecom Media Monitoring Unit for the month of March 2015. It is well written and has not shied away from making firm conclusions on developments as it saw fit. The issue that concerns me however is what next? The March 10 “rivers of blood” editorial is not the first occasion on which the Guyana Chronicle, a state-owned newspaper, has spewed such hate. Anyone who can write with such venom is unlikely to bother with any adverse finding unless backed by some real sanction which the MMU is unable to impose, since it has no such power.
These reports might make useful reading and some of their findings will be noted in the Observers’ reports. But that would be after the elections are over and will have no practical effect on the outcome, while the hate-mongering by the Chronicle most likely will. And because the Chronicle and their employers know that, there is no reason why they would stop unless they are forced to confront the consequences of their criminal conduct.
The problem in my view lies with Gecom, which has constitutional responsibility for ensuring that elections are free and fair. The MMU is appointed by Gecom and its report should be submitted to Gecom for consideration and action. Gecom should then have immediately referred this report to the police and the Director of Public Prosecutions with a view to prosecution. It does not need any member of the public to tell Gecom that some of the matters addressed in the report point to criminal offences under at least two Acts.
Gecom must act now to address the rapid descent into outright lawlessness in this election season. Another MMU report is not likely to be published until after the May 11 election. But another report is not what we most need. Instead, we need free and fair elections in which no party or group hijacks the state media and corrupts the electoral process. And we need those who break the laws to be punished.