Guyana could have successfully defended the action by Rudisa/CIDI

Mr. Anil Nandlall, former Attorney General, has raised on his Facebook page the issue of the Environmental Tax paid by the Surinamese company Rudisa and its Guyana subsidiary Caribbean International Distributors Inc. (Rudisa/CIDI). He suggested that the current Attorney General “either did not study the [CCJ] case or having done so is still unappreciative of its gravamen.” The decision in that case was handed down on May 8, 2014 but the PPP/C Government did not comply with an order of the Court that the Government repay with interest the sum of US$6,047,244.77, and further amounts collected up to the date of the judgment. The matter was resolved only after the APNU+AFC Government gave an undertaking to cease collecting the tax and to repay the full amount collected from Rudisa/CIDI.

Mr. Nandlall was not the AG when the PPP/C introduced the tax in 1995 but it would have been gracious of him to acknowledge that the PPP/C Government erred when it introduced a tax that clearly violated WTO Rules, and compounded its error by continuing to collect the tax from CARICOM companies after the Revised Treaty of Chaguaramas was incorporated in Guyana domestic law in 2006.

The matter has assumed important currency following the commencement of a similar action in the CCJ by the Trinidadian-owned Guyana Beverages Inc. which has paid more than two billion dollars in Environmental Tax. That money, like the Rudisa money, was spent by the past administration, and the current Finance Minister is faced with the serious risk of having to pay back this huge sum. In an ironic twist of fate, proposed legislation to address the problem introduced in 2013 by the PPP/C administration was rejected by the APNU and the AFC MP’s!

In his Facebook comments, Mr. Nandlall took issue with a statement by Mr. Williams that the Government of Guyana never led evidence to show that the Environmental Tax paid was passed on to the consumer, claiming that passing on was never “a disputed issue”. The problem for Mr. Nandlall is not only that passing on was and is the principal defence to an action for reimbursement, but as the judgement at paragraph 30 states, Mr. Nandlall submitted that no such reimbursement should be made to the Claimants (Rudisa/CIDI) because the latter must have already passed on the tax “by a re-adjustment of the price”.

The Court rejected that submission, finding that Guyana “presented no evidence to show that the Claimants have in fact passed on the environmental tax to their customers. The mere assertion that the Claimants are motivated by profit and that the tax must (CCJ emphasis) have been passed on is not enough.” Having failed to prepare adequately the case which he chose to argue himself, Mr. Nandlall sought to establish, belatedly, the presumption of passing on by way of “robust cross examination”. That could not and did not find favour with the Court.

While criticising Mr. Williams’ understanding of the case, Mr. Nandlall states on his FB page that Rudisa contended that it was “forced to lower the price of its product destined for the Guyana market below their market-value to offset the environmental tax.” He then goes on to state that “Rudisa absorbed the losses or the equivalent of the environment tax in Suriname before the product arrived in Guyana. They led evidence to establish that they sold similar products in other territories in the Caribbean at a price higher than they sold those same products for to their Guyanese distributor”.

That is not what the judgment states. It states at paragraph [31] that “Rudisa Beverages would invoice goods to CIDI at FOB Suriname prices with Rudisa Beverages bearing the insurance and freight charges.”

Another easily rebuttable evidence from Rudisa, accepted by the court presumably because it was unchallenged by Nandlall, was that Rudisa and its local subsidiary “absorbed the loss occasioned in order to retain their 50% market share”. Yet, if Mr. Nandlall had done minimal research he would have realised that the Guyana subsidiary never had any such market share. He would have learnt too that CIDI did not commence operation in Guyana until July 2007, the company having been incorporated three years earlier. He might even have argued that the tax was incidental to the company’s carefully planned strategy and that Rudisa/CIDI opted for a market penetration price to earn rather than to retain market share.

It is probable but speculative that Guyana could have successfully defended the action by Rudisa/CIDI. Clearly Mr. Nandlall’s preparation and advocacy of the case was seriously deficient, and cost the country heavily. How the consequence of that poor performance will impact on the present case is a $2 billion dollar question.

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