Response to a Crises

Introduction
Today’s column looks at some of the ironies and contradictions in the response to what started as a domestic crisis in the mortgage sector in the US and the prospects for the developing countries arising out of the Obama victory. The effect of the crisis has been wide, deep and pervasive and demanded action.

On November 15, 2008, the Group of Twenty (G20) held an initial meeting in Washington to try and arrive at a common position and to seek solutions to the daunting challenges facing the world as a result of the cataclysmic turmoil that has shaken the belief in the way the capitalist system works. The meeting had been called by US President George W Bush, once considered the most powerful man in the world but whose performance during the entire period has been embarrassingly unconvincing and whose public pronouncements almost invariably coincided with further deterioration of the stock market. Bush’s obvious discomfort and lack of understanding of the problem did not instil any confidence in the US or world markets and his advisers thankfully and sensibly had stopped his effete television appearances which had been a regular occurrence when the crisis unfolded in September.

By contrast, Gordon Brown, the embattled British Prime Minister heading for defeat at the next UK elections, has come out − at the international level at least − smelling like a rose for his decisive response to the situation. On October 8 his government unveiled its plan which saw the first steps in an unprecedented scale of government intervention. The British banks received an injection of funds and government guarantees that are tantamount to nationalization, but it was this action that may have averted at least temporarily, financial Armageddon worldwide. The Brown plan seemed to be the blueprint for other countries which quickly followed suit in recognition of the extreme gravity of the world economic crisis. At the Washington summit, it was evident that everyone realised that coordinated effort was needed and that these economic powerhouses, if they could still be called that, had to work together to reform the financial system which had become inextricably intertwined as a result of globalisation.

Revival of socialism
But despite the critical and unusual steps that have been taken in various countries to stabilise the situation and provide support to the global economy, much more is needed. The financial markets are in a crisis of confidence and unless some assurance is received that there are matching reforms in addition to the support measures, the wild swings in the stock markets of the world will continue. The G20 leaders in their statement issued after their meeting acknowledged that reform of the financial system is a priority and must be so far reaching as to insulate the world financial system from a recurrence of these calamitous proportions in future. This is no easy task since the coordinated response that these reforms require will necessitate subjugation of self-interest for the common international good. Many critics will decry this as the revival of socialism but that is what seems to be inevitable if the world as we know it is to survive and hopefully achieve some semblance of prosperity going forward.

The alternative of retaining capitalism in the mould of Thatcherite-Reaganite economics in which the market is supreme, is too frightening to consider. Even the right-wing voices in the Republican Party in the US have been muted, perhaps an admission that those who want to hold on to outdated philosophies and beliefs do not truly appreciate the magnitude of what has occurred. One recalls that only days before the implosion in the US market, defeated Republican candidate John McCain had said that the US economy was “fundamentally strong.” Cruelly for him, the speed of the unravelling was as dramatic as it was mind boggling.

The collapse of three of the top financial houses in the US that were the public face of capitalism, adjustments in the European Union that could cost hundreds of billions of euros, the easing of credit arrangements in China all demonstrate a realisation that it is no longer business as usual. Indeed there probably have been more pro-socialism articles published within the past three months than in the past three years. Seventy-five years after his landmark work, renowned economist John Maynard Keynes must be gratified that the policies he recommended to avoid a slump are now accepted wholesale for introduction at the international level.

Questioning the US bail-out plan
Not lost in all this is the irony of the headlining role US Treasury Secretary Henry Paulson and his 35-year-old assistant Neel Kashkari have been playing in crafting the US rescue plan.

Both men are alumni of Goldman Sachs, another one of those once highly regarded US financial institutions that benefited tremendously from the financial engineering that has dominated and perhaps bears responsibility for the crisis, and which itself is now under threat. Paulson is former chairman and Kashkari is his protégé and more irony here, has immigrant roots in one of the emerging world economic powers, India. The latter has significant responsibility for oversight of the much publicized US$700 billion bailout that was supposed to be the silver bullet solution but which has not had even close to the desired effect. With President-elect Obama having taken effective charge of the public debate on crisis resolution and the Bush administration coming to an end in about seven weeks’ time, it is hard to see how much these men can achieve.

Indeed even before its implementation, the US bailout is now being questioned as the typical American approach to a crisis: throw tons of money at it and it will go away. This emphasises the stark reality that traditional prescriptions will no longer be effective and that while the preservation of market principles may be a laudable objective, French President Nicolas “L’Americain” Sarkozy’s assertion that laissez-faire is dead, does not represent irrational pessimism at all. What is clearly evident is that the days of reckless abandon in financial and economic dealings must come to an end and that the requirement for asset values to be based on realistic underlying worth can no longer be panned as antediluvian esoterica.

Obama for change
Obama started his incredible campaign for the presidency of the US perhaps to the left of the liberal wing of the Democratic Party, but he is pragmatic and was quite willing to shift positions in response to changed circumstances. So far he has been concentrating on putting his team together rather than pre-empting and second-guessing the incumbent. He campaigned on a slogan of ‘Change’ but the striking feature of his economic team has been described by the Economist as “centrism,” comprising real economists, many of whom served the Bill Clinton presidency of 1992-2000, another irony of sorts. The team is studded with economics PhDs, such as Larry Summers, Tim Geithner and Peter Orszag, all of whom would be top of any class. Thankfully, Obama is an intellectual heavyweight in his own right and he will certainly be able to arbitrate any competing views these stars may offer.

What will have to wait for clarification is the role Obama and his team will play in helping the developing countries weather the international financial storm that will still be raging on Inauguration Day on January 20, 2009. For decades the countries of the developing world have been led, dragged, coaxed and cajoled by the economic mantra of the IMF and the World Bank. The irony is that following the adjustments and rescue packages proposed by the G20 countries, the economies of those countries will have more direct government intervention than all the developing countries combined.

We will have to wait too, to see whether the Obama team will seek to bring about any change to the free-market capitalism promoted by the IMF and World Bank, who for decades have been forcing countries, in exchange for aid of any kind and value, to liberalise trade barriers, deregulate financial and labour markets, privatize national industries, abolish subsidies, and reduce social and economic spending.

That would be more than a vindication for all the support and good wishes Obama receives from the people of the developing world.

Adjustment time in Trinidad and Tobago

Introduction
It has been a challenging week for Trinidad and Tobago where crime seems to dominate the headlines in the dailies. In fact, crime had to share space with news on the economy and more dramatically with natural events in which persistent and unusual rainfall caused severe flooding in several regions of the country, including its capital, leading to the death of two persons. The central bank announced that food price inflation in October increased on a year-on-year basis to 33.4 per cent, slightly below the 34.6 per cent recorded in September. Core inflation, which factors out the cost of food, increased for the first time in three months to 7.4 per cent from 6.2 per cent as consumers paid more for water, electricity, gasoline and transportation. That was not all. The IMF reported on its visit to the country and then Prime Minister Patrick Manning addressed the nation on how the government proposed responding to the revenue shortfall. Let us look at the address first.

Oil and gas run out of steam
The thrust of his address when shorn of politics and rhetoric was that in the face of an international financial crisis that shows no sign of abating, the Government of Trinidad and Tobago has moved to cut discretionary expenditure to match the fall in revenues from key sectors. These of course, form the backbone of the economy of the twin-island economy. Revenue losses are being felt in the prices of the country’s major exports − oil and petroleum products, ammonia, methanol, urea and steel. Because of the significance of those sectors to the economy, the budget makes certain assumptions about the international price − and therefore the revenue the country will receive – of those products.

In the budget presented at the end of September, the Minister of Finance used a price for oil and gas of $70 per barrel and $4/mmbtu (Million British Thermal Units) respectively based on international estimates at the time. If anyone had a clue of the falls that were likely to take place following the budget, they certainly did not mention it. Yet, by the end of October, crude oil fell significantly to US$67.81 per barrel at the end of October, losing more than 50 per cent of its value since peaking in July 2008 at US$148 per barrel. Natural gas at the US benchmark trading hub was priced at US$6.58/mm but at the end of October 2008, it was down 11 per cent since the beginning of the month and trending downwards. Between September and October this year, the price of ammonia fell from US$887.60 to $772.90 per tonne (13%); urea from US$798.75 to $573.40 per tonne (28%) and methanol, also softening, from US$411.00 per tonne to $399.00 (3%). Because the markets for these products are different, prices do not move in tandem.

Compounding a bad situation that may yet get worse, are a number of temporary plant closures and reduced output at the Point Lisas Industrial Estate, the 860 hectares, world-class facility that is the heart of the country’s petrochemical sector.

Taken together, revenue is projected to fall short by six billion dollars or US$1B for the financial year. Describing the situation as “very serious” and warranting immediate action, Prime Minister Manning in a national address earlier this week reported that his government had done a reassessment of its planned expenditure and cabinet had considered recommendations from the Minister of Finance. Out of those, according to the Prime Minister, the government was reordering its developmental priorities and deferring some projects considered essential to the realisation of developed country status. Trinidad and Tobago has targeted the year 2020 for the achievement of that status and has in place a multi-sectoral group of twenty-eight subcommittees working with a National Development Strategy Plan.

All ministries, departments and statutory authorities have been targeted for reduction of budgetary allocations including discretionary expenditure like promotion, publicity and printing; materials and supplies. Not without significance is the decision to put on hold any further consideration to buy a jet for the country’s increasingly mobile Prime Minister. But the real brunt of cutbacks are in relation to the country’s development programmes with “downward adjustments” for new projects other than those of an urgent or critical nature; for those projects for which there were no firm contractual obligations; for ongoing projects for which the pace of implementation could be reduced without legal penalties; and for ongoing projects for which some components could be deferred.

CARICOM
Trinidad and Tobago has the largest economy in CARICOM. Since 2001, the economy has grown at Asian rates of 8.3 per cent per annum, tripling in size from 55 billion dollars in 2001 to 160 billion dollars in 2008. Comparatively in CARICOM, the T&T economy is a giant among ordinary mortals. The Prime Minister recognised in his statement, however, the interdependence of the CARICOM economies which represent T&T’s second largest market for its goods and services. Amid all the cuts and belt-tightening Manning emphasized the need for the continuing availability of the CARICOM Petroleum Fund for the assistance of its partners.

Reaction to the address has been varied and while the announcements have largely been welcomed by the various private sector organizations the political opposition has been less generous calling on Manning to begin by cutting governmental excesses. But it seems that most Trinidadians are prepared to wait on the details of the cuts following a review by ministers of their respective budgets and cuts in specific programmes and projects decided by the cabinet to ensure that expenditure is kept in line with revenue.

The IMF
At the end of a mission to discuss economic and financial developments, policies, and prospects, as part of its routine annual consultation with Trinidad and Tobago, the IMF issued what may be considered a cautiously optimistic assessment of the economy with its usual caveats and warnings. The team acknowledged the impressive growth of the economy and achievements in key macro indicators including the low unemployment rate, the halving of the public debt and moving from a net debtor country to a net external creditor, and having one of the strongest credit ratings in the region.

The report notes, however, that while its large international reserves and low debt ratios make Trinidad a better place than many countries to weather the international financial crisis, it is not immune from contagion. The report notes that the country’s banking sector has entered the period of global turmoil from a position of strength, being well capitalized, liquid, and profitable, and funded mainly through domestic deposits and equity, as opposed to external borrowing. Spillovers and disruptions are not likely to be significant even with the risk of liquidity shocks transmitted through foreign parent banks. Ironically RBTT one of the country’s largest banks has only just been taken over by Royal Bank of Canada although there is no suggestion or indication that RBC is anything but strong.

Threats
The problem will come if the global slowdown becomes more acute. If that is accompanied by a more dramatic decline in energy and asset prices things could change with risks arising from exposures of large and complex financial conglomerates operating across the region. No one wants to bet on the unlikelihood of that happening but the odds must still be in the country’s favour.

If the external environment continues to deteriorate and recession bites deeply in the advanced economies there will certainly be spillovers to the tourism-dependent economies of the region, and sharply lower prices for energy products. The IMF sees the effect in sharp declines in growth of the economy to 3½ per cent in 2008 and 2 per cent in 2009. While this will dampen demand and ease price pressures, it will also see the external current account surplus declining by 13 percentage points to about 15 per cent of GDP and transform the central government balance into a deficit of about 2 per cent of GDP under current budget plans.

The mission noted the urgency to the enactment of improved financial sector legislation and the strengthening of supervisory practices and welcomed the recent passage of a new Financial Institutions Act (FIA). Trinidad and Jamaica have perhaps the most sophisticated but complex financial sectors in the region and the mission called for changes in conglomerates’ holding structures, with a clear separation of financial and non-financial activities; risk-management practices; and enforcement of prudential standards and for coordination with regional and international supervisors.

Conclusion
The Manning government is by nature very populist in its ways and the developments will no doubt come at an inopportune time for the PNM government that was busy trying to cement some form of union with the OECS countries. Manning did not indicate whether that initiative is still on the front burner, but there must now be serious doubts about the gestation of that wish.

Half year economic performance

The Guyana economy has performed reasonably well during the first half of the year according to Dr. Ashni Singh, Minister of Finance, and there is cautious optimism about the domestic economy for the rest of the year. This is according to the mid-year report presented to the National Assembly by the Minister on October 27, 2008. However, anyone with a serious interest in the economy and concerned about the several important omissions contained in the mid-year report should read the report in conjunction with the half-year report done by the Bank of Guyana and published on the bank’s website.

Driven by improved performances in agriculture, mining, engineering and construction, and services, the economy recorded a 3.8 per cent GDP growth during the first half of 2008, but still a sharp decline from the 5.8 per cent growth in the corresponding period of 2007. The Bank of Guyana – using that well-known oxymoron – reports that the manufacturing sector recorded negative growth, due partly to the high cost of inputs − fuel and imported raw materials, challenges to which the sector is no stranger.

2008.11.16_Chart1
Source: Bank of Guyana Half-year report 2008

Revenue and expenditure
On central government revenue and expenditure, the mid-year report presents some interesting information. Value-added and excise taxes were budgeted to increase by 12.8% from the $36.7 billion collected in 2007 to $41.4 billion in 2008. For the half-year actual collections amounted to $17.8 billion (43% of full year) compared with the $17.1 billion collected last year. On a period by period comparison these collections represented a marginal increase in value-added tax to $11 billion from $10.2 billion, although excise tax collections declined to $6.7 billion from $7 billion.

Internal revenue collections amounted to $19 billion in the first half of 2008 compared with $17.4 billion collected last year. The bulk of such revenue comes from a handful of companies, including the commercial banks, telecommunications companies and Banks DIH, DDL and DEMTOCO. Despite the many unincorporated businesses, the self-employed category pays less than one billion dollars in taxes, or just about 15% of the taxes paid by the employed persons.

While both reports indicate significant growth in key sectors, tax revenues have not risen correspondingly and one is left to wonder whether this is a case of generous tax concessions or continued tax evasion within key sectors.

But it is in relation to expenditure that the picture is particularly interesting. And while the Minister in his report did not discuss the table which contains several errors, it must now be a matter of speculation why only 38% of the full year budget has been expended in what the table itself describes as key sectors. Particular attention is drawn to the Health,

Infrastructure and Agriculture sectors where only 41%, 27% and 33% respectively, have been spent in the first half of the year. Are we going to see a mad and irresponsible rush to spend during the second half of the year, simply because the money has been allocated?

2008.11.16_Table1

Debt
The mid-year report deals very inadequately with external debt and omits completely any information on domestic debt which has been rising alarmingly over the past several years. The Bank of Guyana Report shows the stock of government’s domestic bonded debt increasing by 7.6 per cent, while its external public and publicly guaranteed debt rose by a whopping 16.8 per cent from end-June 2007.

The outstanding stock of government domestic bonded debt, which consisted of treasury bills, debentures, bonds and the CARICOM loan, amounted to G$74,223 million, an increase of 7.6 per cent from end-June 2007 and 7 per cent from end-December 2007 balance. The increase from one year earlier reflected the expansion in the stock of outstanding government treasury bills at end-June 2007.

Over the year July 1 2007 to June 30, 2008, the stock of outstanding public and publicly guaranteed external debt rose by 18.2 per cent to US$774 million. This increase reflected disbursements of US$45 million by the Inter-American Development Bank and the delivery of US$44 million credit by the Venezuela Petrocaribe agreement.

Employment
This very critical economic and social indicator once again fails to attract the attention of the Minister and again recourse has to be had to the Bank of Guyana Report which by its own admission is not based entirely on hard data. One has to wonder why the government continues to refer to labour surveys but yet the Ministry of Finance seems unable or unwilling to deal with the issue. While indicating that preliminary data indicated that public sector employment remained relatively stable, the Bank of Guyana reports some decline due primarily to factors such as resignation and retirement of employees.

The Bank of Guyana reported that while “data on private sector employment are sparse, there are indications that the growth sectors recorded higher levels of employment.” It went on to state that the mining, distribution as well as the engineering and construction sectors seem (emphasis mine) to be associated with increased employment.

It is interesting how the Bank of Guyana and the Ministry of Finance are so sure of the performance of the various sectors of the economy but cannot establish similarly reliable numbers on employment.

Inflation
Inflation has been one of the most disputed and massaged variables in the Guyana economy. Both reports indicate a 5.8% rate of inflation but again the Bank of Guyana is more informative even if no less controversial. The Minister of Finance attributes the increase mainly to food items, identifying cereals and cereal products as the principal contributors which are unlikely to be the main concerns of the average consumer. In fact in a typical food basket done monthly by Ram & McRae, Chartered Accountants, the price increase in food items over the six month period was 10.2%, compared with the Bank of Guyana figure for the food group of approximately 9%.

Conclusion
While the date on the Minister’s report is shown as September 12, in fact it was presented to the National Assembly on October 27, repeating a pattern of wrong dating by this Minister. Despite the additional time he took in presenting his report, the Minister chose not to address the serious global economic issues that surfaced in the third quarter, nor did he treat in any serious way his duty under the law to include in the report a list of major fiscal risks for the remainder of the fiscal year, together with likely policy responses that the government proposes to take to meet the expected circumstances.

David – a Goliath of a man

David de Caires was very clear on what Business Page was about – the dissemination of financial and economic information and discussion of ideas and issues aimed at enhancing the business culture and environment. He was quick but polite in recognising my sometimes not too subtle attempts to inject extraneous matters into Business Page. His use of the editorial pen was surgical and sharp, always accompanied by the reassurance that if I “put it in a letter” I would have a better chance at publication. On this occasion, as we mark his passing, I take the opportunity to break his rule, hoping that he would understand how extraordinary are the circumstances and implications of his departure.

Even though over approximately twenty-five years or so I had the privilege of knowing him as client, editor-in-chief and friend, my initial impression of him of awe and admiration remained undiminished to the very end. Much has been written and said of David – the enduring nature of his contribution to the country that he loved, including the reconstruction of the Camp Street Avenue as a Y2K project, the rehabilitation of the Theatre Guild, the launch of the Stabroek News in 1986, his contribution to the ideas for an independent Guyana with the publication New World, his success as a solicitor and his role as guide, mentor and friend to so many in the field of journalism.

But there was another side, a personal side, to David that was equally extraordinary. He was human to the bone. My first experience was shortly after I had returned from Grenada with a young family and was told by state officials in a state-dominated economy that as I had worked for the Grenada government, I was blacklisted and could not be employed in any state entity in Guyana. I had met David through his law partner, Miles Fitzpatrick, who had also served the Bishop regime in Grenada. David would certainly never had heard of me, but his words on being told by Mr. Fitzpatrick of my situation were that they would “give me a brace” with an offer to me to provide professional accounting services to their law practice.

It is no disrespect to anyone to state that that was the beginning of one of the most satisfying and stimulating professional relationships Ram & McRae has had with clients throughout its more than two decades of existence.

His incisive questions on audit matters and instant grasp of issues raised by us were a testament to the breadth and depth of his intellect. The relationship was characterised by mutual respect for each other’s profession, during which never was Ram & McRae asked to do anything remotely unlawful or unethical. There was no question in Mr de Caires’s mind that simple decency, patriotism and calls for good government and governance carried with them an obligation to act within all laws, that if you make profits you should pay your taxes, that the flip side of the coin of privilege is responsibility. He felt that accounting and accountability were not a responsibility reserved for companies, but also wherever public funds or interest were involved, including the Camp Street and the Theatre Guild projects which he insisted must be audited.

My partner Robert McRae recalls the occasion when David and he both got stopped by traffic cops. In David’s case, the fitness for his vehicle had expired and while admitting that his driver was careless, David took full responsibility for the lapse and recognised that the police were totally in order. According to McRae, even as they were being held, David saw as a positive that the police were doing their job without caring who he was!

His respect for professionalism, for ethical conduct, for accountability and good governance was no doubt his motivation for the launch of Business Page.

He wanted the page to be an unvarnished record of business and related issues that was informed, fair and balanced. Crusader as he was, the only goal, weapon and vessel was the truth.

His unfortunate but honourable battle with the government over its withdrawal of ads from the Stabroek News has been widely acknowledged, but he was also disappointed at the behaviour of some of the captains of industry and leaders of the private sector who also used ads to express their displeasure over the content of critical news articles and Business Page. He recognized, however, the difference between the strict duty of a government and that of the private sector, and while he would often say that Business Page cost him friends and the newspaper, advertising revenue, he never entertained any thought of discontinuing the page or replacing me as contributor.

We had our own skirmishes over editorial deadlines − which the Sunday Editor would attest that I mostly missed − and the sometimes unnecessarily strong language I used to express myself.

He would constantly remind me that the English language is so wide and flexible that the same idea could be expressed in much more palatable words, and of course be free from libel!
But David was also a friend with whom the closest secret can be shared and advice sought. In that regard there are only two other persons in whom I had such confidence – former President Desmond Hoyte and Elder Eusi Kwayana. David was ever willing to lend that ear, to share an anecdote or to offer advice that was measured, sound and uncannily right. It did not require of him any special effort to demonstrate extraordinary humility and while I have known him on a first-name basis for years, never was I not aware of the uniqueness of the man or has my awe and respect of him been dimmed.

I suppose, however, that even with that close and long association I admired, but never truly appreciated his greatness. If I had to put a label on him it was that he was a capitalist, even if a liberal one. Yet many of his friends were socialists, if not Marxists.

He saw the strong criticisms of businesses in Business Page and the views of market economics as contributing to their refinement and enhancement. He was an intellectual giant, a workaholic with the patience for even the most modest among us.

He was at once a David, the nimble tactician, and a Goliath, a force of power. He came from a privileged class but not only did he not seek to benefit from that class, but actually cultivated relationships outside of it. While others would talk about multiracial values and conduct, David actually lived them and offered us what is, I believe, an outstanding example of those values.

It may be idealistic but certainly not idle to ponder what Guyana would have been if his vision and values had been shared by politicians over the last fifty years or so. To those in his later profession, he has left a legacy of commitment to excellence, quality and values that should be the goal of all journalists. For him the progression from New World to Stabroek News was a mere step, inevitable and logical. For those who now bear the responsibility of carrying on his work, or hoping to walk in his footsteps, that will require giant leaps.

Guyana is a better place for having benefited from his presence, his contribution, his insights and his ideas. All Guyanese at home and abroad are better informed because of the brave new world of Stabroek News. Those who use the Camp Street Avenue are safer and more comfortable for his tireless efforts to rebuild the avenue. The arts community is richer because of his faith that the Theatre Guild could be and was restored.

With the passing of Mr David de Caires, founder and Editor-in-Chief of the Stabroek News, Business Page has lost its creator, guide and friend. David’s commanding personality, considerable intellect, unusual humility and an unshakeable commitment to truth in all its forms, made him a truly remarkable man, a legend in his lifetime and the quintessential gentleman.

To his wife Doreen, children Isabelle and Brendan and their families, Business Page extends its condolences.

Curbing corruption: The Corruption Perception Index – conclusion

Introduction
Today we conclude this three-part article arising out of the publication of the 2008 Corruption Perception Index of Transparency International which ranked Guyana at a lowly 126 out of a total of 180 countries surveyed, with a score of 2.6 out of 10. No one can say whether the ranking is correct in the strict sense. That would require knowledge of the other countries surveyed or assume an unerring degree of consistency in the process across all of them. What we can say, however, is that the methodology and sources meet the reliability and credibility test, and any government serious about the image of the country ought to take the perception very seriously.

No one needs to be convinced that corruption and its sidekick, bad governance, have developed in Guyana into a culture of impunity fuelled by an unacceptable level of public tolerance. Inconsistent with its boasts of achievements in rooting out corruption, the government fiercely resists any demand for public scrutiny and readily attacks anyone who questions its decisions and actions. Corruption finds shelter in opacity and over- centralisation of power, non-transparency in major financial dealings and contracts, absence of accountability, and excessive red tape in government departments − conditions that exist here.

Many-headed hydra
There is no longer any question whether there is corruption, but only the extent and cost. One columnist described the situation as a “kleptocracy,” a term applied to “a government that extends the personal wealth and political power of government officials and the ruling class at the expense of the population.” Corruption takes many forms and the cases are legion. It can be the straight bribing of politicians and officials to the extension of concessions, contracts and benefits to those in power. It can take the form of scholarships and plum jobs for relatives of those in power, advisory positions for party officials and all kinds of personal benefits for the politicians. All of these have a real cost to the economy and explain why despite all the tax write-offs and excessive taxation on the backs of the poor our per capita GDP is a mere US$1,000.

Compare Guyana with the African island of Mauritius, which at its independence in 1968 was more dependent on sugar than Guyana was. Its per capita GDP was a mere US$200 and its future gloomy at best. Forty years later, despite the absence of oil or mineral resources and having to import most of its food and energy, the country has a diversified economy and enjoys a per capita GDP of US$7,000. It was rated at 41 on the TI Index and is considered the top African country in the Doing Business Series of the World Bank.

Cost and cancer-effect
Corruption costs the treasury, but also the ordinary person and as one friend wrote to me in an e-mail, “Corruption is not just a morality abstraction. It can and does indiscriminately hurt persons, groups, organisations, communities and nations in concrete and practical terms. For example, the untutored motorist who has corruptly paid for their driver’s licence ‘under the table’ is really a lethal weapon that may be heading your way. And every time you pay for a public service which is nominally available without cost, you obviously and unnecessarily diminish your disposable income and your child may have to do, at least temporarily, without a school book.”

Parts one and two of this article showed that instead of the government taking action to curb corruption, it has dismantled, emasculated and politicised key institutions with the result that corruption goes undetected and unpunished. The question is why is there an absence of outrage at the failure of the government to deal with corruption, and whether it has now gone out of control?

It may be that we have been so accustomed to corruption that it is now part of one’s existence, part of doing business in Guyana. It is also cancerous as businesses find it necessary to adopt corrupt practices to compete. It may also be that corruption takes so many forms that it may not be immediately seen for what it is. The country failed to see the creation of Pradoville, the Cabinet Outreach to get Amerindian votes for the 2006 elections and the virtual abolition of the Office of the Ombudsman and the Integrity Commission either as themselves corrupt practices or the facilitators of corruption. Not even the emasculation of the Audit Office, the abuse of the Lotto and NICIL funds and the misuse of state funds for personal benefits arouse any attention these days.

Tackling the problem
For there to be any real war on corruption requires political will and personal and institutional commitment, all of which seem in very short supply. Threats by the President to deal with corruption and to bring the perpetrators to justice are almost a monthly joke. The PPP/C came to power with a pledge to deal with corruption and its own manifestos may offer some solutions. Here are some of its pledges:

1.  Its 1997 Manifesto pledged to have a Freedom of Information Bill approved in the 1997 Parliament.

2.  In 2006 it promised, among other things, to:

i)  introduce fiduciary oversight reforms that will give greater oversight responsibilities to parliament to monitor executive programmes;

ii)  to reform and strengthen the Integrity Commission to carry out its functions of holding public officers to account;

iii)   strengthen the Audit Office; and

iv)  work with Parliament to establish the Procurement Commission.

As Business Page has shown over the past weeks, the government has not only failed to deliver but has gone into reverse, even as its political control has increased.

The parliamentary opposition chairs the Public Accounts Committee but the PNCR which holds the chairmanship seems to have run out of ideas, energy and capacity to make a real impact. The AFC failed to win government support for a Freedom of Information Bill in Parliament and it and the PNCR have not been effective enough in asking searching questions in the National Assembly that would help to expose and reduce the level of corruption.

That leaves us with ‘civil society,’ which however defined, has shown little or no interest in stemming corruption. For all its feigned complaints about corruption, the private sector is willing to ask for and accept concessions which it knows smack of corruption and which compromise their independence. Beneficiaries themselves of goodies from the government, they are recycled into various forms and on successive days they are members of this or that commission or body, then the next they are in religion and the next, part of the EPA coalition. As a result civil society is so weak that even when it extracts a commitment from the government as in the aftermath of the Lusignan Massacre, it could and did nothing when the President broke his promise to have the outstanding constitutional commissions set up by May, 2008.

In the course of this article I have called on key members of civil society to play their part in cleaning up corruption in their own areas. Significantly this included the Integrity Commission that has been disgraced as much by the politicians as by the Commissioners. A similar call was made to the Gecom commissioners but that too has been ignored. Hopes then are receding and the fear is that things will get even worse.

Conclusion
This may be a last chance for the so-called ‘silent majority’ to find its voice and get involved in the fight against this cancer. Entering the public debate, pushing for resuscitation of the powers of the Office of the Ombudsman, mobilising public support against corruption, demanding accountability for public funds and lodging complaints when approached for bribes are all actions that the lowliest among us can take, so the excuses that we cannot change the situation are just that: a copout. Advocacy in the form of sustained pressure from civic groups and private sector organisations for fundamental reform of how government runs its business can be effective and save the country billions. For starters I would support the recommendation of the friend from whose e-mail I quoted above that we have a country chapter of Transparency International appropriately structured and populated. Any interest anyone?