Author: ChrisRam

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Beware of the triskaidekaphobiacs (fear of the number 13)

Introduction
It is that dreaded time of the year when columnists are expected to look into and engage in attempts to predict the future. You would think that in Guyana that would not be too hard – every pessimistic prediction since 1961 about our political parties failing to act in the national interest having been proved right. But you do not understand how accountants operate.

Their eyes are at the back of their heads so they can look back with no discomfort, and organise and manipulate historical accounting data to show that two and two can be whatever the CEO wants the result to be.

The feature of such year-end pieces has been a combination of levity, hopes for the new year and some not-too-serious predictions which in my case are invariably wrong. In fact so wrong that it will take up much less time and space to highlight the few obvious correct forecasts than the litany of failures. Here are two I did get right: I can claim some credit for predicting in the January 1 2012 column that the world would not end on December 21, 2012, a claim attributed to the Mayans but based on no written or scientific evidence. In fact, December 21, 2012 marked the end of one of the cycles in the ancient Mayan calendar at the winter solstice, not the end of the world.

Despite the successive failure of Armageddon to materialise (remember the year of the Rapture), this will not deter other nuts from predicting the end of the world, though ironically not in 2013 which otherwise arouses triskaidekaphobia (fear of the number 13).

The second success was that Barack Obama would be re-elected President of the United States of America with the help of his wife Michelle. In fact it was with the help of both his wife and Bill Clinton, an omission that can be explained as one of detail rather than substance.

Apologies to Usain Bolt for saying he could not repeat his Beijing triumph in London. I forgot we were dealing with a superman and a legend of Greek proportions. And yes, I note that the United Nations has responded to my plea on behalf of vegetarians by naming 2013 as the Year of Water Co-operation and also the International Year of the Quinoa, a vegetable. Thank you Mr Ban!

No place for levity
For me Guyana is a place from which levity has taken flight. Look at our cartoons and all we see is a decadent form of political atrophy that even allows APNU to claim credit for making the government more accountable, itself nothing short of a joke.

Perhaps their spokespersons forgot that Article 216 of the Constitution of Guyana is violated on a daily basis; that the Minister of Finance sticks his thumb at them over NICIL, the Marriot and the Contingencies Fund; that every initiative is upended by misguided resort to the courts; that an agreement between the Government, APNU’s leaders and those of Region 10 over a month-long protest in which three lives were lost are still not effectuated; that they have allowed several parliamentary sessions to be dedicated to a single Minister not for what he has or has not done, but according to a PNCR Central Committee member, for being “a symbol of what the PPP/C government represents”; that slush funds multiply in number and value to finance secret spy operations, discontinued offices and the employment of special advisors to do party political work. And that the PPP/C and the APNU are collectively responsible for the failure to hold local government elections guaranteed by the constitution and postponed each of the past sixteen years.

2012 as the year of the Ds
For me the year 2012 will go down as the year of the Ds – Donald, David and Disappointment, all with capital letters. Maybe I was being overly optimistic when I wished that in 2012:

“President Ramotar will reverse his prior commitment to more of the same and will:

“Demand that the Public Accounts Committee perform its parliamentary duties with greater competence.

“Push legislation to improve transparency by appointing a new Ombudsman, establish the Public Procurement Commission, revise the Access to Information Act and introduce anti-corruption legislation.

“Revisit Jagdeo’s pet projects like the Kingston Marriott, the fibre-optic cable, Amaila and the specialty hospital.

“Order the Cabinet-infested NICIL Board to bring its accounts up to date for independent audit. “Declare the implementation of VAT was a rip-off but have a change of heart and compromise on a reduction in the rate to 10%.

“Instruct the Guyana Revenue Authority to increase the volume of lifestyle audits of workers to try to understand why, like Leona Helmsley said, only the poor pay taxes.

“Get rid of the deadwood in the Office of the President, otherwise known as presidential advisors, by the application of an integrity detector test and the ability to stay awake during meetings.”

Do-Nothing Parliament
Optimism at the beginning of 2012 was I believe rational and justified. The combined opposition controlled the National Assembly for the first time in the country’s history; they took both the offices of the Speaker and Deputy Speaker; they directly or indirectly controlled the committees of the National Assembly.

Then they proceeded to become one of the most do-nothing parliaments in Guyana’s history. The Tenth Parliament has embarrassingly exposed the weakness in the country’s list system where loyalty to the party leader has proved to be far more important than competence.

With just one exception no member of the National Assembly stood out favourably; no piece of legislation could be considered truly path-breaking and substantive; no new prospect identified; no campaign promise made to the electorate only months before kept; no attempt to change the constitution; the poor getting poorer and the rich and the powerful smug, satisfied and inert. While more than two dozen MPs from the opposition made no contribution to the Assembly or the people of Guyana, the failure of Mr Trevor Williams, AFC MP, to attend a meeting of the PAC which confirmed the appointment of several unqualified persons in the Audit Office who did not merit confirmation for years must surely earn him the wooden spoon as the MP for the year.

The positives
On a positive note the domestic economy continued to do well, led by gold, massive government expenditure financed by taxation and transfers, the agenda of the Chinese and tax evasion.

Companies in all sectors continue to report record-breaking profits, while paying out huge dividends to shareholders. No wonder then that the private sector hardly bothers to remind President Ramotar that his first action as President in announcing the establishment of a Tax Review Committee has not moved a single step.

Standing out too was the series of cuts to the 2012 National Budget initiated by the Alliance For Change and supported belatedly by the APNU which saw attempts to rein in government excesses in both policies and spending.

With Government controlling the purse strings of state instrumentalities like the Gold Board and government companies like NICIL, many of the cuts were undermined by the Minister of Finance, restored by the National Assembly, or confused by a ruling of the court at the preliminary stage of an action brought by the Attorney General.

Indeed that ruling is not only hard to fathom but does great harm to the concept of governance by asserting that if the National Assembly finds a project or programme – for whatever sum – unacceptable, it has to reject the entire budget. That is surely beyond logic, common sense, or even good law.

It is bad for the country’s jurisprudence that this case was not taken to finality and the absurdity of the all-or-nothing premise resolved. Watch for a reprise with the 2013 Budget.

Civil society
But the performance of civil society was equally poor. A new entity successively named Occupy GT and the Peoples’ Parliament flattered then fluttered, and at the end of the year finds itself trying to find its feet, let alone its wings.

The best that can be said of the trade union movement is that remnants of it still exist but with decreasing relevance to all that is taking place around its various elements. Both the TUC and FITUG must accept part of the blame for the state of the National Insurance Scheme, plagued by poor governance, weak management and enforcement and catastrophic indecision.

The consumer movement is all but dead with nothing to take its place, at a time when it is most needed. The Private Sector Commission seems satisfied with the status quo raising its head only when it thinks that its members’ profit-earning machinery is under threat. Meanwhile the country’s accounting regulator, the Institute of Chartered Accountants of Guyana, after several months, is still to pronounce on a number of complaints involving high-ranking members of the profession.

With all of these it should not be too difficult to appreciate why there is so much disappointment and loss of confidence in the institutions in Guyana.

Transparency Institute of Guyana Inc – of which I am not the driving force – seems to have established itself as a credible and potent force in the struggle fight against the quagmire of corruption.

Help and Shelter must wonder what else it can do to reduce domestic violence, a mission shared with Red Thread which, with little support from other key segments of the society, has so far made little progress in its efforts to reduce cost of living and improve earnings. The Catholic Church which for a number of decades had led the democratic charge with liberation theology established the Justice and Peace Commission aimed at enhancing the society. There has been no reaction from the rest of the religious community.

On crime, Commissioner of Police Henry Green died in office after his statutory retirement age was extended, leaving a society in which the Customs Anti-Narcotics Unit seems to be far more successful than the Police Force in tracking drugs.

With the substantial resources at its disposal, one might expect the Police Force and the Director of Public Prosecutions to ‘engage’ the persons arrested rather than have them passed through the Magistrate‘s courts where they hurriedly plead guilty to protect their bosses.

The world
Like the December 21 non-event, the global economy did not experience any apocalyptic turbulence and in fact performed almost as well as had been expected with the IMF forecasting that global output in 2012 would grow just 3.3 per cent, down from a July estimate of 3.5 per cent.

That would make 2012 the slowest year of growth since 2009 when the world was struggling to pull out of the global financial crisis. According to the IMF, “familiar” forces were dragging down advanced economy growth: fiscal consolidation and a still-weak financial system, the same problems that have plagued the world since the global financial crisis exploded in 2008.

Part of the problem is that as family sizes decrease and life expectancy increases, the number of workers to those too old to work is decreasing putting a strain on the economies as health care and retirement costs rise in proportion to taxes and available pension schemes.

Less than seventy-two hours before the end of 2012, the US cannot decide whether to allow reason to trump insanity or economics to triumph over politics and stave off what is perhaps with exaggerated drama, referred to as the fiscal cliff.

If no agreement can be reached between the House of Representatives, the Senate and the White House, taxes will increase and automatic cuts will be applied to spending. Not surprisingly, economists disagree on the precise impact these will have on the US economy but the stock market has already taken a big hit as a result of the loss of confidence in Washington to manage the affairs of the country. This will hit the rest of the world for which the US is still the largest domestic market measured by spending power.

2013
In terms of predictions it is safe to say that we will not have campaign financing legislation or legislation regulating political parties. The Public Procurement Commission will not be set up while the Integrity Commission and the Ethnic Relations Commission will remain dormant.

There will be no constitutional reform or amendments while the parliamentary agenda of the AFC and the APNU will remain closely guarded secrets. The Government will push back any efforts at tax reform and there will be further delays in holding local government elections. Georgetown will qualify for the prize as the worst city in the Caribbean while car sales will spike as MPs cash in on their duty-free entitlements.

The odds are less than even that there will be local government elections, the bringing into law of the Judicial Review Act or the discovery of oil.

But they are marginally slightly better for the naming of an Ombudsman. And finally let us not rule out the possibility of fresh elections, either forced by the rejection of the 2013 Budget or called by President Ramotar unwilling to tolerate and adjust to a National Assembly he does not control.

Still, or because of these, best wishes to all.

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Twenty years later – part 2

Correction, addition and appreciation
In last week’s column I stated as the year in which the Government of Guyana took over the assets, liabilities and operations of the Royal Bank of Canada as 1994. In fact the year was 1984. And I omitted to note that the percentage of the shares in the Guyana Bank for Trade and Industry Limited (GBTI) held and sold in 1994 by the Government of Guyana to the Beharry Group was 30% at a price of G$15 per share.

Finally I would like to express my appreciation to the Republic Bank (Guyana) Limited, GBTI, the Bank of Nova Scotia and Demerara Bank Limited which responded to my short survey for information for this column. I find it particularly disappointing that Citizens Bank Limited, the principal banker of Ram & McRae did not respond to the survey. I thank as well Mr Rajendra Rampersaud of the Bank of Guyana for making available information from the BoG’s library.

Finally, to the readers of this column warm wishes for a merry Christmas and 2013.

Introduction
Last week I noted how the regulatory and statutory landscape for banking has changed over the past twenty years. The changes have been more than evolutionary, affecting both the operations of the banks as well as the environment in which they operate. Shortly before 1992, the Hoyte administration had removed practically all exchange controls and had made trading on foreign currency with the introduction of the non-bank cambios with several paper controls but little meaningful supervision and enforcement, not unlike the money laundering that takes place openly in the country.

For more than a decade this column has drawn attention to the operations of these non-bank cambios arguing their usefulness and the objectives which they were expected to serve had ceased to exist. More than twenty years later, these non-bank cambios are seen as a fixture of the foreign currency landscape.

It was no surprise to me that Republic Bank noted as a concern of the earlier decades the question of security. In August 2006 the Rose Hall branches of RBL and Demerara Bank were victims of one of the most daring robberies in the history of banking in Guyana, traumatising the staff of the banks for a considerable time thereafter. I recall going up to Rose Hall immediately after the robbery to collect staff members of Ram & McRae who had to lock themselves in a washroom of RBL during the episode. They were still visibly shaken.

Wherever located, banks are now protected by armed guards and high quality electronic cameras monitoring all their perimeters and every movement by customers and staff. In fact so paranoid have the banks become that they no longer allow the use of mobile telephones in the banks, something that is still permitted in the USA.

Death of the consumer movement and advocacy
Part of the landscape then was a fairly active consumer movement and a willingness by the government to challenge the banks on what were considered exorbitant charges, unreasonable spreads between their buying and selling prices for foreign currencies, and the spread between their cost of funds and the rates of interest they charge on lending those funds. In those days, Ministers of Finance Asgar Ally and later Bharrat Jagdeo would rail about the interest spreads on funds. Now there is no consumer movement to challenge the plethora of charges imposed unilaterally by the banks while the government seems willing to extend every conceivable tax shelter to the commercial banks, even where they do not ask for such concessions.

In other words in respect of taxes the government has become the banks‘ major lobbyists and no longer analyses let alone questions the operations of the banks. In fact sometimes the relationship between the banks – or at least one of them – is so close as to allow what this column considered an improper foreign exchange transaction in a particular case.

I recall some years ago then President Jagdeo expressing surprise and alarm when I drew his attention to the effective rates of taxes paid by some of the banks. Yet, nothing has been done.

The banks’ best friends
Banking is indeed a regulated business but it is also a closed business with the government refusing to allow new entrants and allowing existing players to operate more like price-fixing cartels than genuine competitors. By the very regulations, the sector is largely protected from the vicissitudes and developments around the world, prompting Mr Jagdeo to refer, with some hyperbole, to a ring-fencing of the economy. Any detailed study of the history of the two entrants to the sector since 1992 will almost certainly show that the investors had recovered their capital within a few years, protected by a tax system that allows dividends to be paid tax-free and any capital gains arising from the disposal of shares in those companies to be exempt from taxes. On the other hand, the government sees no problem with charging at the rate of 20% the capital gains on the sale by a retired worker of her only house.

Bricks and mortar
Let us now compare the operations of the commercial banks twenty years ago and what now prevails. Rather than just accept, or rather than rely on, the words of the bank managers who provided some very useful insights into their operations in 1991 and 1992, I also went back to the financial statements and annual reports of two of our major players as well as of the Bank of Guyana for those years. In 1992 commercial banking was mainly about bricks and mortar – the customer wishing to transact any business would present herself to the bank, whether to make a deposit, withdraw money or negotiate for a loan. And more to the point, the banks had their branches mainly in the cities and towns and customers would have to travel some distance to do their business.

In fact the annual report of GBTI shows that it was not until 1992 that that Bank opened its Regent Street branch in the heart of the city. It seems fair to say that the bricks and mortar concept still largely drives commercial banking in Guyana both among the pre-1992 banks as well as those that came after. GBTI now has some nine branches and a new multi-billion head office adorning the Kingston skyline – almost all since 1992.

Republic Bank too has seen an explosion in the number of branches and the construction of a new head office since 1992. Like GBTI, Republic Bank also has nine branches. Demerara Bank has its head office and main branch in Camp Street Georgetown and five branches, including one in Essequibo and two in Berbice. Like Demerara Bank, Citizens Bank has its head office and main branch in Camp Street Georgetown and three branches.

Lethem in Region 9 is currently served only by GBTI but one should expect that others will follow to exploit the opportunities offered by the Brazil-Lethem trade link. Bartica, now more than just the gateway to the interior is served by both the Bank of Nova Scotia and Citizens Bank. Corriverton and Diamond on the Georgetown-Timehri corridor are both served by three of the commercial banks and by the New Building Society, the country’s only real building society. None of the banks disclose the profitability of their branches or have indicated the rate of return they expect in order to establish a branch, but the traffic flowing through many of these branches indicates that the driving factor might be less the volume of business than to keep up with the competition.

Changes, changes
If we were to form conclusions purely from the banks’ annual reports, we might think that the range of services has remained fairly unchanged since 1992. The balance sheets of the banks twenty years ago disclosed deposits in the form of savings, current and fixed deposits; lending in the form of loans and advances, mortgages and overdrafts; and investments mainly in government securities. The income statements reflected these items in the form of interest paid and received; investment income and other income mainly from foreign exchange transactions.

The survey and empirical evidence indicate however that the banks have moved away from a focus primarily on asset-based core lending and deposit products and now provide a suite of products and services designed to meet “specific market’s needs.” One bank indicated that its products and services have been enhanced to cater directly to segments such as commercial and small business versus retail.

The customer wanting to withdraw money does not have to rush to the bank before it closes, often before lunch, but now has a choice of Automatic Teller Machines available twenty-four hours per day seven days per week. Twenty years later it is normal for banks to offer internet banking, debit cards, local dollar credit cards and international credit cards. Customers of Scotiabank have seen their passbooks replaced by ABM cards and the PIN.

Technology and law
Many of the changes, while driven by customer expectations and a desire for instant everything, were made possible by changes in technology and telephony. Twenty years ago the Chairman of GBTI included as a highlight under the caption Computerisation “extensive research … towards upgrading our Management Information Systems” and the expectation that “the network to be fully operational by the end of 1993.” In 2012, technology rules.

Dramatic changes have also been witnessed in terms of statutory obligations in which even routine company functions like the paying of a dividend has to be sanctioned by the Bank of Guyana which also requires more and more frequent reports; new rules of accounting so that in 1991 notes to the financial statements of NBIC ran to a mere four pages compared with forty-four pages twenty years later. In fact even the auditor’s report has seen its own growth, increasing from five lines twenty years ago to twenty-one pages currently.

To be continued

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Twenty years later

Introduction
Twenty years and four days ago, Business Page became a feature of the Sunday Stabroek. The year 1992 is generally regarded as a breakthrough year for democracy and the return of free and fair elections in Guyana. But economically, former President Desmond Hoyte and his Finance Minister Carl Greenidge had already placed the economy on the path of market-based economic recovery within the framework of an Economic Recovery Programme (ERP) under the direction of and with the support of the International Monetary Fund and the international community.

Let us recall that in his presentation of the 1992 Budget on March 30, 1992, Mr Greenidge had reported growth of 6.1% in real GDP, “dramatically halting three years negative growth.” Indeed so optimistic was Mr Greenidge about the performance of the economy that he conveyed the famous message to those pundits and their parties who had made “tenebrous predictions” that the ERP would not work, with the admonition “the one who says it cannot be done should never interrupt the one who is doing it.”

ERP
Mr Greenidge was of course referring mainly to elements in the trade union movement, the WPA, the PPP/C and even some independent critics. The PPP/C had put its own spin on the ERP, describing it as Empty Rice Pot. So the loss by Hoyte of the October 1992 elections to the PPP/C under Cheddi Jagan brought with it uncertainty about the direction Dr Jagan would take the country and specifically whether he would re-introduce socialism.

After all, Marxism-Leninism had been the guiding philosophy of the Peoples’ Progressive Party which he formed and led until his death.

The ERP has had its serious consequences including a widening of the income gap of unprecedented proportions. But it also had its benefits, and while many would question key segments of the programme, it brought with it many improvements, including massive write-offs of a crippling debt burden which had developed for several years, and also only the second phase of significant tax reform since income tax was introduced in Guyana in 1929.

When Business Page first appeared in December 1992, the Guyana economy had continued the improvements witnessed in 1991.

In 1992 the economy grew by 7.7%, the fastest rate of growth ever recorded in Guyana; aggregate expenditure had moderated; inflation had declined from 75% to 15%; the overall deficit on the balance of payments fell from US$66 million in 1991 to US$41 million in 1992; the stock of public debt had already begun to fall; and the exchange rate had stabilized following the unification of the official and the market exchange rates.

Asgar Ally
Not that these developments impressed the first PPP/C Minister of Finance who in his 1993 Budget speech wrote, “the apparent economic recovery is fragile as major structural obstacles to sustained growth still persist.” Add to this Jagan’s mantra of lean and clean, weeding out corruption, expanding democracy and giving every Guyanese a fair chance to benefit from the country’s resources, and we see why there was some uncertainty among the banking community.

For better or worse, it will remain one of Guyana’s unanswerable questions why Dr Jagan allowed pragmatism to trump his ideology, but it was a major relief among the business and investing community that his government, first under his choice of Finance Minister Mr Asgar Ally, retained the ERP for several more years. That continuation was to result in one of the longest running IMF programmes anywhere in the world.

Banking in 1992
It was against that background that Business Page appeared with its first column captioned ‘Our banks must adopt a more positive role.’ That column made several comments and recommendations with regard to the commercial banking sector and I thought it useful to see how far and in what ways the banking sector in particular has changed in twenty years.

Of course at that time the government was the dominant player in the banking and financial sector. It controlled the National Bank of Industry and Commerce, the former Royal Bank of Canada whose assets, liabilities and operations were acquired by the Government of Guyana in 1994.

The government had also acquired the assets, liabilities and operations of Barclays Bank PLC and vested these into the Guyana Bank of Trade and Industry Limited. On January 1, 1990 the operations, assets and liabilities of Republic Bank (Guyana) Limited, which had arisen from the US Chase Manhattan Bank were merged with GBTI. Bank of Baroda had quietly been carrying on its own operations, as did the Bank of Nova Scotia.

Importantly the government also owned and operated the Guyana National Co-operative Bank (GNCB), the Guyana Co-operative Mortgage Finance Bank and the Guyana Co-operative Agricultural Development Bank.

In 1992 therefore the banking system was largely state-controlled. Indigenous banks had become the vogue and we recall that the GNCB, GAIBANK and the Mortgage Finance Bank had been established with the aim of fast-tracking economic development by making it easier for individuals and businesses to access capital for business and social purposes.

Such state control over such a key sector had problems beyond losses of staggering amounts, as politics became a major consideration in the operations of the institutions, although it was less so in the case of NBIC and GBTI.

Bank ownership
Since 1992, there have been substantial changes in the ownership and operations of commercial banks in Guyana. GNCB had acquired the portfolio of GAIBANK which was subsequently closed, but in 2003 certain assets and liabilities of GNCB were sold to what was by then Republic Bank (Guyana) Limited.

In October 1997, the government’s shareholding in NBIC – approximately 47% – was sold to Republic Bank of Trinidad and Tobago and the name NBIC was changed to Republic Bank (Guyana) Limited. The Republic Bank of Trinidad and Tobago now owns 51% of the local subsidiary while other substantial shareholders (defined as 5% shareholding) include Demerara Mutual Life Assurance Society Limited, GTM and Trust Company Guyana Limited.

GBTI was sold to the locally owned Beharry Group of Companies which now controls 61% of GBTI’s shares. The remaining shares appear to be spread among several non-substantial shareholders.

But there were new players as well. In January 1992 Demerara Bank Limited was incorporated as a private limited liability company and received its licence to carry on banking business in October 1994. It was subsequently registered as a reporting issuer under the Securities Industry Act in 2003. According to this Bank’s 2011 annual report, no shareholder owns more than 5% of its shares.

Another entrant to the market was the Citizens Bank which started out in November 1993 as a Jamaican initiative, but all its shares were subsequently acquired by Guyanese. It is now a subsidiary of Banks DIH Limited, a publicly traded company. Apart from Banks DIH, other substantial shareholders include Continental Agencies Limited (16.7%), the Hand-in-Hand Group (8.7%), and the Hand-in-Hand Pension Scheme (7.8%).

Regulatory changes
Another defining feature of then and now is the regulatory landscape. In 1992, banks were regulated under the Banking Act and, whether they were private or public companies, operated purely under the Companies Act, Cap 89:01 which had seen no amendment of substance since it appeared on the statute books in 1913. The Banking Act was repealed in 1995 with the passing of the Financial Institutions Act that brought about some sweeping changes to the industry.

For one, the capital stock of a company carrying on banking business has been increased substantially. The capital stock specified by the Banking Act for a Guyana company to be granted a licence was initially not less than G$500,000 unimpaired by losses. In 1986 this requirement was increased to the greater of 10% the demand and time liabilities or one million dollars.

At the 1965 exchange rate the requirement was equivalent to approximately US$200,000 compared with US$24,096 in 1986 and US$4000 in 1992! Under the Financial Institutions Act the minimum capital of a deposit-taking financial institution is $250 million. The FIA also has capital requirements for branches of international banks such as Scotiabank and provides for a build-up of a statutory reserve fund equivalent to its paid up capital.

The FIA is a modern piece of legislation that has been supervised by the Bank of Guyana, the FIA regulator, in a very professional and co-operative manner. While the reporting requirements are quite considerable the commercial banks have not complained and actually praise the BOG for its adoption of risk-based audits, a key requirement under the FIA.

By December 1992, the Companies Act 1991 had been passed in the National Assembly repealing the earlier Act, but it was several years after the call by the 1992 Business Page and others that the Act was finally brought into force. What was more significant however was the passing of the Securities Industry Act which regulates, among other things, public companies. That Act too has largely been well received by the two publicly traded commercial banks and its regulator, the Securities Council, has had far fewer issues with them than with some other public companies.

One of the other principal regulatory changes is the Anti-Money Laundering and Prevention of Terrorism Act. This Act sets up a Financial Intelligence Unit to pursue money laundering by requiring a range of bodies to report transactions. The operation of the Act has however proved quite onerous and there are complaints about the manner in which it is administered by an appointee of the Minister of Finance.

Next week: I have invited the commercial banks to provide me with some brief information on their own operations over the intervening twenty years. I will share the results with readers.

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Nandlall did no research in relation to Transparency International before making his comments

Attorney General Anil Nandlall has joined the attack on Transparency International (TI) on the publication of its 2012 Corruption Perceptions Index. Because Mr Nandlall is a member of a profession which calls itself learned, and which is known for its members researching before speaking, and speaking with a certain sense of responsibility and decorum, I thought it might be useful to examine how Mr Nandalall’s statement stacks up against those standards.

Mr Nandlall accused TI of:

1. Failing to disclose “the empirical data or sources that they examined to arrive at those conclusions.”
2. Not stating the methodology as to how the organisation ended up at its findings [sic].
3. Not disclosing whom they spoke to and which institutions and organisations, or which documents they consulted.
4. “Gross dereliction” by arriving at baseless disclosures.
5. Failure to say where corruption exists, be it in the government, public or private sector.
6. Failure to examine the institutional mechanisms which are in place constitutionally, legislatively or departmentally.
7. Being insulting and disrespectful to Guyana and Guyanese.

Points 1, 2, 3 and 4 are all on the same issue: that Transparency International did not disclose vital information and sources.

If Mr Nandlall had taken the elementary research step of going on TI’s website he would have learnt that the basis for inclusion of a country/territory in the CPI is a minimum of three of the CPI’s data sources. The website also identifies CPI’s 2012 data sources as: i) African Development Bank (ADB); ii) Bertelsmann Foundation (German non-profit foundation); iii) International Institute for Management Development (IMD); iv) World Competitiveness Yearbook; v) International Country Risk Guide (ICRG); vi) World Bank; vii) World Economic Forum (WEF); viii) World Justice Project; ix) Economist Intelligence Unit; x) Global Insight; xi) Political Economic Risk Consultancy (Asian); xii) Transparency International Bribe Payers Survey; and Freedom House (no, not that one).

If he had acted more responsibly, he would have learnt that in the case of Guyana, there were four sources: ICRG, WB, WEF and Global Insight, and that a country’s score on the index is a simple average of its data sources.

Point 5 is even worse in terms of Mr Nandlall’s research efforts. I find it embarrassing that the Attorney General of this country does not by now know that the definition of corruption in the TI lexicon is “misuse of public office for private gain.” Perhaps he is more familiar with relevant examples such as Pradoville 1 and 2; the misuse of duty-free concessions; and paying out of the Treasury so-called advisors to the President and the Local Government Minister to work at Nandlall’s party in Freedom House.

Mr Nandlall should and could have served his and the country’s interest by challenging the local Institute to start speaking out on private sector corruption, including tax evasion and money laundering. He must be personally aware that members of his and other professions as well as aggressive law firms not only engage in these practices for their own direct benefit, but also in aiding and abetting others to do so.

Once Mr Nandlall understands my comments on points 1 to 5 above, he will realise that point 6 is not relevant to his argument. I cannot believe that the holder of such a distinguished public office does not recognise that in his attempt to discredit others, he ought not to be relying on laws that are on the statute books but not in operation. Any person would know that rather than prevent and punish, it actually perpetuates corruption if the Procurement Commission is not established ten years after it became a mandatory constitutional requirement; if there is an Integrity Commission without commissioners; an Access to Information Act not brought into force sixteen months after passage; and a Judicial Review Act not brought into force two years after passage.

On disrespect and insult, readers might wish to consider whether Mr Nandlall’s failures do not amount to an insult to his own intelligence, that of the legal profession and to the expectation of Guyanese to have an Attorney General who is informed, responsible, temperate and accurate.

Finally Editor, I researched the recent publications of leading newspapers in Zimbabwe and Pakistan which had much worse ratings than Guyana in the 2012 Index. In fact, in the case of Pakistan, the 2012 CPI was sensationally misreported by stating that Pakistan was the 33rd most corrupt country in the world. That report wrongly assumed that all the countries of the world were covered in the survey. Some twenty countries were not.

Yet I could not see any article or statement in which the governments of Pakistan and Zimbabwe engaged in any attack on Transparency International or their national chapters, let alone in the crass, vulgar, shameless and disgraceful manner in which Mr Nandlall, Ms Gail Teixeira, the PPP/C and the PYO did in the case of Guyana.

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Teixeira was very wrong

In his presentation at the awards dinner of the Georgetown Chamber of Commerce and Industry last Thursday Mr Clinton Urling, the Chamber’s President included in his wish list for Guyana a stronger civil society. In the course of his presentation Mr Urling not only referred to the work of the Transparency Institute of Guyana Inc but also echoed a recent call by that young organisation – made on the day Transparency International released its 2012 world Corruption Perceptions Index – for measures to enhance accountability, combat corruption and strengthen governance.

Mr Urling would most likely have been aware that only a few hours before he spoke the youth arm of the ruling party had attacked Transparency Institute, singling out its highly respected Vice-president Dr Anand Goolsarran for its vituperation, and severely chastising Transparency International for daring to include Guyana in its 2012 survey. Significantly, even if Mr Urling was aware of the attack, he offered no comment or defence of a civil society organisation in the presence of two Ministers of Government, Messrs Irfaan Ally and Robert Persaud.

One day later, PPP/C governance czarina Ms Gail Teixeira took the PYO vulgarity one notch down when she dismissed the 2012 CPI by stating that “only four persons were surveyed [by TI] as it related to Guyana.“ She even suggested that they must all be male! Surely anyone who knows anything about surveys would know that no sane person would regard a sample of four as reliable or representative of any population and that such a statement simply could not be right. Indeed, Ms Teixeira was wrong, very wrong.

The Transparency International website discloses that for its 2012 CPI with respect to Guyana, TI used four surveys, which in total, and even allowing for overlap, would have covered hundreds of individuals and organisations. The four surveys were Global Insight, World Bank’s Control of Corruption Index (WB), World Economic Forum and the International Country Risk Guide.

If this better information does not have any impact on Ms Teixeira and her “youths”, it is inevitable that any discourse in Guyana would continue to be backward-looking, uncivil and profoundly infected by manipulation and distortions. The leadership of the PPP/C must be in dreamland if it does not realise that for many Guyanese, the ‘C’ in PPP/C has long since ceased to represent any evaporated Civic and now, on empirical evidence as well as well-founded perception, unmistakably stands for Corruption.