Does Dr Luncheon not know that Synergy and Harza were granted a licence in 2002 to develop a hydroelectric plant at Amaila and that Synergy became the sole licencee in 2004?

I thank Dr Roger Luncheon for his attempt by way of a press release issued through his office to educate me about the Amaila Falls Hydro-Electric Project (AFHEP). In the release, Dr Luncheon kindly suggested that if I and others like Dr Janette Bulkan want to move from the “periphery of public discourse” – to which he has banished us – onto ground where we will be respected by governments, civil society and international organisations, then we need to start getting our facts right. Respect from any government that deprives citizens of their fundamental rights, ignores the constitution and the rule of law, tolerates and itself engages in suspect, secret and unlawful transactions, practises nepotism and discrimination and is inept and incompetent is not something I would ever wish or welcome. And as for civil society and international organisations, I take it that even Dr Luncheon could not be so bold as to think he can speak for them.

Devoting part of his statement specifically to me, Dr Luncheon said that a letter I wrote in the press on Monday, April 11, 2011 (‘Serious questions remain about the LCDS…’), proves that I do not “understand the basics” of what is being proposed for Amaila Falls. These were his words: “He [Ram] repeatedly claims that the Amaila Falls Hydro Power project is being built by Mr Fip Motillal and Synergy Holdings. This is not true – the project is being built by the Sithe Global group of companies.”

Let me reciprocate in a mutual education exercise with Dr Luncheon by quoting from Synergy Holdings’ website: “Synergy Holdings Inc. is involved in this project (The Amaila Falls Hydro-electric Project (AFHEP)) as the developer to design, build, own and operate a hydroelectric plant in Guyana.”

Let us assume that that is what lawyers call ‘puff,’ or ‘big talk’ to use a more popular phrase. Does Dr Luncheon honestly not know that in 2002 Synergy and Harza International were granted a licence by the Government of Guyana under the Hydro-Electricity Act Cap. 56:03 for the development of a hydroelectric plant at Amaila Falls? And that the licence was amended and extended in 2004 when Harza pulled out leaving Synergy as the sole licensee? And that the licence was again extended in 2006 for one year?

For Dr Luncheon’s benefit, let me quote from the preamble of a Memorandum of Agreement dated May 23, 2006 between Synergy, GPL and the Government of Guyana on whose behalf no less a person than Prime Minister Sam Hinds signed.

“WHEREAS, SYNERGY proposes to construct a hydroelectric plant at Amaila Falls in Region 8 of West-Central Guyana, has conducted a detailed feasibility and an Environmental Impact Assessment (EIA), and has received a licence from the GoG and an environmental permit from the Guyana Environ-mental Protection Agency to construct the Amaila Falls Hydro Power project…”.

Perhaps Dr Luncheon thinks that by recruiting Sithe as contractors or project managers, Synergy is relieved of its obligations, liabilities and responsibilities under the licence. If so, he could not be more wrong.

It is worth noting that Dr Luncheon avoided my question about the basis and logic for the government putting LCDS money into a project which reverts to the state after a defined term. Instead, he diverts into a discussion about Sithe with which Synergy seems to have worked a deal which leaves Mr Fip Motilall to make money simply by playing the role of speculator and being the President, Chairman and CEO of what is turning out to be a government-financed/guaranteed company, using precious national and natural resources covering thousands of acres.

It is dangerous when the Head of the Presidential Secretariat, Cabinet Secretary and chief spokesperson of the government is not only badly informed but is unable to understand the implications of the increasingly reckless decisions by the government even in the light of what are simple, clear and direct questions. Even as he accuses me of lacking basic understanding, I respectfully offer a word of advice to Dr Luncheon, who I think is a good and well-meaning man: among his colleagues in Cabinet and government, are few persons on whom he should rely for accuracy of information, integrity, competence, moral rectitude and courage.

Dr Luncheon is a busy but clearly tired and overworked gentleman, of whom any expectation of a continuing public exchange concerning the facts about Amaila, Synergy, Mr Motilall and LCDS money would be unreasonable. So instead, I ask him to use his influence to have publicised the licence(s), extensions, agreements including that of May 2006, and the terms and conditions for cash and other inputs by the government towards the Amaila Hydro-electric project. That would be immensely helpful to persons including Dr Bulkan and me.

Serious questions remain about the LCDS including the wisdom of putting Norway funds into the Amaila project

Despite its Stalinist ring, the request to Transparency International by acting Minister of Foreign Affairs Mr. Manzoor Nadir for a purge of the board of Transparency Institute (Guyana) Inc. (TIGI), a civil society group, is no surprise. Similarly, his falsehood that TIGI director Gino Persaud was “removed by the Government from the University Council” and his references to familial connections are entirely consistent with the evolution of the political behaviour of Mr. Nadir.

Not surprising either is President Jagdeo’s threat to host a press conference to deal exclusively with civil society activists Dr. Janette Bulkan and me over a letter on the LCDS signed by a group that includes the two of us. That too has become par for his course. Whether he will carry out that promise is uncertain given his surreal Saturday Night forgiveness fiesta and epiphany.

The venom in the statements by Messrs. Jagdeo and Nadir show how intolerant the Jagdeo administration has become of independent voices and critical views. I have no authority to speak for TIGI, the directors of which are quite capable. I do however feel compelled to respond to the attacks on my colleagues who signed the open letter for their “blasphemy” in expressing their well-grounded fears of abuse of LCDS money by a government that constantly shows only a cynical interest in openness, transparency and accountability and audit of public funds. A government that seems able to find from nowhere sometimes hundreds of millions of dollars to pay for spy equipment, for laptops and for various improper activities.

I assume those associated with a counter-letter under the Jagdeo-led Multi-Stakeholder Steering Committee (MSSC) did in fact read the letter in full and not rely on the government’s misrepresentation of it. To them I wish to pose the following issues relevant to the LCDS:

1. No matter how inevitable, any change in policy has winners and losers. How does the prioritization of the spending projects take account of and compensate, whether by way of cash compensation, retraining or otherwise, some of the biggest losers such as the forestry and mining sectors and their thousands of employees and small operators.

2. Our first peoples deserve reparations and appreciation of the rest of the country. But they also deserve our honesty, not hypocrisy. For four years until I called for action, the Government refus-ed to pay the Amerindians their share of royalty under the Amerindian Act.

3. Under the Guyana-Norway MOU, the Amerindians are not bound by the constraints of the LCDS and can choose to opt in or stay out of the LCDS. They are required to make no sacrifice but are the first in line for rewards. The LCDS is a country project not an ethnic initiative. If the Norwegians wish to assist the Amerindians then they should contribute to an Amerindian Fund.

4. By its patronizing attitude the government is creating a charity, entitlement culture among Amerindians who simply sit back and ask when is the money coming rather than consider among themselves steps to exploit their unique traditional knowledge, their culture and the resources they control.

5. The delay in disbursements is not due to any failings by Norway, the World Bank or members of civil society. It is because the Government has failed to submit proper project proposals which are ready for implementation. At this stage all they can advance is land titling and solar panels for the Amerindians and equity in Fip Motilall’s hydro-electricity project.

To the Government’s credit, land-titling under the Amerindian Act is a low cost administrative exercise which since 2006 has been funded out of the national budget. It does not need LCDS money.

6. The alternative energy initiative is being funded by the IDB and again does not require LCDS money.

7. That leaves the hydro-electricity project spearheaded by a man who has consistently failed to meet his contractual obligations to this country and its people. Under a licence granted to him in 2002, Mr. Fip Motilall’s company was supposed to provide thermal power as an interim measure and commence construction of the Amaila Hydro-Electricity Plant. He did not supply the thermal plant but the Government renewed/extended the licence in 2004, and again in 2006 for one year which means that it would have required further extensions to remain current. That information is not public.

8. Despite all of that bad experience, in 2009 the government awarded Synergy a road project contract under an unlawful process managed by an unlawfully operating government company NICIL. Which businessperson in their right mind would agree to put their money into his company which did not realize that it needed first to have a road to the plant site before it could build the plant?

9. The hydro-electricity plant would revert to the state after an already agreed period with no financial input by the Government. By putting LCDS funds into the company the country is paying for an asset the residual ownership of which is already agreed to be vested in the state. If we are to put money into the project why should Motilall remain in control? Now that we have a Procure-ment Act should we not put the project out to tender? Is the best use of the Norwegian-sourced money rushing headlong into what will amount to a joint-venture with and controlled by Mr. Motilall?

10. Like its comparator the PNC, this government has a poor record on accounting and transparency. But in terms of truth and integrity, this government is in a class of its own. Relevantly, can Mr. Peter Persaud and Mr. Clinton Urling – no doubt well-intentioned and well-informed persons – who have written critically of the letter by Dr. Janette Bulkan and others, tell us how they knew of the Siddhartha 1.8 million acres deal which had been hidden from the rest of the country and possibly the Multi-Stakeholder Steering Committee?

11. I would like too to hear from the informed members of the SSMC about the carbon footprint of the deal with Siddhartha and whether it is compatible with the ethos and concept of a low carbon development strategy.

With all respect to the Amerindians land titling is not a low carbon issue and what do we do with the annual average US$50 million we will receive while Mr. Motilall takes his time in building our hydro-electricity facility? Put it all into his company? I hope the businesspersons on the SSMC would ask their Chairman Mr. Jagdeo to publish the Licence, agreements and extensions with Mr. Motilall before any public funds are put into his company.

Finally, let me say this to Jagdeo, Nadir and those who feel compelled to attack Dr. Bulkan and other members of civil society. I consider Dr. Bulkan and all the other signatories to our letter, capable, patriotic and courageous. I have never distanced myself from such persons and am proud to be associated with them – cuss or no cuss.

Audit Office turns a Nelson’s eye to Office of the President

Introduction
Today’s column resumes the review of the 2011 budgetary allocations to the principal ministries of government. Some of the ministries covered so far are the Ministry of Education, the Ministry of Health and the Ministry of Finance. It focuses on the Office of the President, the budget for which has jumped from $4.274 billion in 2010 to $7.175 billion in 2011, an increase of 68%.

This is even higher – percentage wise – than the increase of 64.3% in the Finance Ministry’s 2011 budget due to the expectation of proposed spending on LCDS projects, including equity spending on the Amaila Falls Hydro-electricity project.

[table to be inserted]

All figures in millions of Guyana dollars.

Source: National Estimates 2011 and 2010.

Public policy? Not really
At first sight, it is striking that only in his last year as President has Mr Jagdeo seen it fit to set up a Public Policy and Planning functional unit in his office, and one naturally wonders whether this function resided in the past with him. But on closer examination the function falls far short of public policy, having as its stated objective “supporting and sustaining the successful transformational process of the Public Service through the necessary reform…”

The absurdity of it all becomes even more apparent when one looks at the impacts and indicators which the operations of the programme are designed to produce. These include reports to Cabinet, stakeholder consultations and documented research on public service reform in the Caribbean and elsewhere.

There is clearly an irony here – no president, perhaps other than Forbes Burnham, has done more to destroy the independence, professionalism and efficiency of the public service than President Jagdeo, and even if he is now seeking to correct his mistakes, he is clearly taking the wrong approach. To add to the irony, every one of the persons in this unit is a contract employee.

In his post-2006 term President Jagdeo realised how easy it is to bloat the public service with politically connected or useful persons and as a consequence the numbers of contract employees have grown inexorably since then. In 2011 alone the number of contract employees in the Office of the President has jumped from 106 to 144, a 26% increase, while over the period 2007 to 2011 it is a staggering 95% increase, as more and more party persons, their relatives and friends are placed on the payroll.

I know one person who told me that there simply were not enough desks for everyone and they had the option of working from home!

Missing line item
A recent expose of an order for spy equipment valued at $118 million (US$583,000) has raised some eyebrows, if only very fleetingly. The question though is where is the line item which is being charged with this grand sum? A reading of the 2011 Estimates does not help as the only line items in excess of this amount are Training and Subsidies and Contributions to local organisations. The Office of the President is known to control extra-budgetary funds well outside of the law and there is a possibility that whatever the spy equipment is, it may have been sourced from one of those secret funds.

It is easy to wonder and link some activities to the yet-to-be explained destination of more than $3 billion that had been lying for years in dormant bank accounts which were suddenly closed in July 2010.

Taken for a ride
The subventions too are paid outside of the law to some agencies that have an unenviable record when it comes to accountability and audit, including GINA, NCN and the Integrity Commission. In respect of the Presidential Guard, Castellani House and the Joint Intelligence Coordinating Agency (‘Spy Agency’), the exchanges between the Audit Office and Dr Nanda Gopaul, the administrative head of the Office of the President have reached a level of absurdity that has to be seen to be believed. Ever since at least 2004, the Audit Office has been drawing attention to the fact that departments of OP cannot be financed by subventions but only by operational programmes. For several years now, Dr Gopaul has given the same response, that the administration, ie, Dr Gopaul, has “written the Finance Secretary to have the matter rectified and is awaiting a response.”

If there is no answer for several years, there ought to be no reason for not discontinuing the subvention and terminating the services of the persons responsible.

The capital budget
The lion’s share of the $4,888 million budgeted to be spent in 2011 is for what is described as the Information Communication Technology project which entails the communication fibre optic networking system from Lethem to Georgetown, the construction of wireless and terrestrial networking systems from Moleson Creek in Berbice to Anna Regina in Essequibo. The total project cost is $9,607 million of which $1,200 million was spent up to the end of 2010.

Not surprisingly, both the fibre optic project and the One Laptop Per Family (OLPF) project are surrounded in mystery, secrecy and controversy, and are not without concerns about impropriety and illegality. The fibre optic project it seems is not as innocuous as it is represented to be and there are persons with connections within the PPP hierarchy whom the project will benefit. Absent this, the government and GT&T could have worked out a much more cost-effective and mutually beneficial relationship but politics it seems is not that straightforward.

The OLPF project has caused the Office of the President some embarrassment as its statements have been found to be misleading as a consequence of subsequent revelations from persons within the project, including a former manager who was astounded at the money which was thrown at him! Volume 3 of the Estimates indicates that of the $4,347 million to be spent in 2011, $2,500 million will be financed by foreign grants/loans and $1,847 million will be financed by the government. All the persons employed in the project in 2011 are employed on contract. Moreover, given the nature and components of the OLPF, rules of accounting would deem some of the expenditure recurrent rather than capital.

Office of Climate Change
The Office of Climate Change cannot be identified at all in the Estimates under Office of the President. One therefore wonders about the accountability of the money that is being spent in running this office which we are told is responsible for managing the whole LCDS process. Indeed, the head of the unit, Mr Shyam Nokta claims that he is working for the unit and the country without remuneration, a claim which may be surprising but which surely does not apply to everyone else. The law requires that all public expenditure should be accounted for, even where it is grant-funded, but this it seems is not being done. This lack of transparency does not encourage and inspire confidence over the substantial sums that are likely to flow from the Norwegians and the more secretive Chinese and Indians.

Missing too are the payments from the lottery proceeds which the government adamantly refuses to place in the Consolidated Fund but which is spent without authority, accountability and any regard for accounting and audit principles.

Audit silence
One would have expected that with all the allegations of financial illegalities and improprieties enveloping the Office of the President, the Audit Office would wish to appear at least to be showing some interest. Indeed it should have had resident auditors there or ensured that there was a competent team of internal auditors. Not so. In 2009, the last year for which there was an Audit Office report, not a single transaction was referred to as being reportable. Does the Audit Office not know and consider the failure to have written contracts a reportable breach? Or the operation of unaccounted funds? Or breaches of the procurement rules? Or unaccounted advances?

If this was the case in 2009 alone, it might be excusable on the basis of rotation. But it has happened for all the recent years, a situation from which one should be able to draw the inescapable inference that as in so many different ways, the Office of the President is out of bounds. Maybe it is just too hard to audit.

Guyana does not observe the eight sub-rules of the rule of law

Mr Anil Mohabir Nandlall evades my request (‘Not the rule of law’ SN, March 22) for him to state his opinion as to whether Guyana observes Lord Bingham’s eight sub-rules of the rule of law and instead immodestly invites me to examine his legal career: (‘Not a response to letter on mischief caused by prescriptive title’ SN, March 25). I leave an examination of his career to those with the interest, time and inclination to do so, but welcome the opportunity to examine his assertion that “the presence of the rule of law in a society… can be measured by an examination of the workings of the democratic institutions in the society.”

While Mr Nandlall and I may differ on their order of importance, we can at least agree that the principal institutions include the constitution itself, the president, the state, the parliament, national elections, local government elections, the judiciary, the Ombudsman, the Director of Public Prosecutions, the police force, the Audit Office and the Public Procurement Commission. Let us examine them.

1. A fundamental tenet of the rule of law is that all are equal in the eyes of the law while our constitution endows one person with the privileges and immunity of a monarch under the divine right of kings doctrine. Mr Nandlall’s hero Cheddi Jagan, had vowed to change what he and his party referred to as the Burnham constitution, a constitution that hangs like an albatross around the nation’s neck, notwithstanding the timid changes under the St Lucia Accord. If at least ten articles of the constitution have not been operationalised, do we need further evidence that even this “undemocratic” constitution is not working?

2. Few would dispute that over more than a decade, this President has routinely violated the constitution, the Fiscal Management and Accountability Act 2003 and the Procurement Act 2003, broke (tax) and bends (procurement) laws to help his friends; creates jobs for his political cronies whose sell-by date has long expired; heads an office where procurement takes on a special meaning; and who surrounds himself with persons not deserving of respect. In short, the Office of the President is the very antithesis of the rule of law and the constitution.

3. The state’s “supreme organs of democratic power” are spelt out in Article 50 of the constitution as the president, the parliament of which he is a part and of which he plays an important role in the appointment of the majority, and the cabinet which is an advisory body to the president, making the three organs largely embedded in a single individual. Is this Mr Nandlall’s concept of democracy and the rule of law and does it explain why the constitution is so frequently violated by the President with impunity, whether in relation to assenting to bills and the naming of constitutional commissions and office holders? Perhaps I can ask the learned counsel to explain the constitutionality of the President’s refusal to assent to Bill No.18 of 2000 dated December 15, 2000 and unanimously passed by the National Assembly on January 4, 2001. Let me remind him that this was no ordinary bill but one that sought to elevate certain articles from principles to fundamental rights for citizens. In any democratic country where the rule of law prevailed the President would have long had to resign.

4. And what about the National Assembly whose productivity is modest by any standard, whose priority does not see a flooding of agricultural land as a matter of urgent public interest, which regularly passes laws that are a violation of the constitution, whose members represent no one but a political party, who vote for bills they have never read or cannot understand and who receive generous duty-free concessions and qualify for pensions at the age of forty? And that protects at all costs a Minister who misleads the House about a small matter of $4B of public money!

5. National elections which are characterised by playing to ethnic and racial sentiments and insecurities (Babu John annually), patronage, bribing of sections of the electorate by the incumbent, misuse of state funds and justifying it as the privilege of incumbency, and political parties operating outside of a legal framework. Those things distort the fairness of elections and are a real threat to democracy as political debts have to be paid, often with tax immunity, special contracts and other favours.

6. I doubt that Mr Nandlall would consider the absence of local government elections since 1994 as anything but a cynical and gross violation of Article 12 which states that “local government by freely elected representatives of the people is an integral part of the democratic organisation of the State.”

7. The courts which are the guardians of the constitution and the citizens’ rights are hobbled by a law that takes away their independence while the constitutional requirement for consultation between the President and the Leader of the Opposition on the appointment of the head of the judiciary is bypassed by an acting appointment.

8. An Ombudsman, the people’s judge, has not been appointed for six years so that the poor have no avenue and opportunity for redress. That needs no comment, either about democracy or the rule of law.

9. And no discussion on the rule of law can exclude the police that in this major drug transshipment country cede their duty and responsibilities in drug case investigations; whose operational efficiency and independence are often compromised by a telephone call from the politicians; which selectively investigate a blog site critical of the government but refuse to act on another friendly to the government; which needed a drug lord to fight a crime wave; and which is involved in a struggle with its Minister as to who should and should not get a gun licence.

10. The Audit Office, the guardian of the public purse is handicapped by the acting appointment of an unqualified head and compromised by a conflict of interest involving its deputy. No wonder then that it cannot yet publish its 2005 flood report or the 2007 Cricket World Cup report; that it conveniently ignores the improprieties of the big-spending ministries and big ticket items in favour of the checking of vehicle log books and ineffective special investigations on poor people at the Palms and in receipt of pensions.

11. And even as we spend more and more billions on contracts of dubious benefit, quality and authority, the government has refused to establish the constitutionally mandated Public Procurement Commission so that Fip Motilall’s multi-billion dollar contract can pass through NICIL with its huge slush fund, and another multi-billion dollar contract is awarded to a Chinese company, Huawei, now involved in the Laptop scandal.

The litany of violations by these instruments of democracy and the rule of law is long and depressing enough to cause some to refer to Guyana as a failed state. I do not share that view, but rather consider it a dysfunctional state administered undemocratically, that facilitates, permits and protects illegalities and improprieties by a certain class. I am interested to hear Mr Nandlall’s explanation for these phenomena under a government that has been in place for eighteen years, and the reasons why he thinks the party of Cheddi Jagan is unwilling to introduce access to information legislation to give effect to Article 146 of the constitution.

On the Line: 2010 Annual Report of the Guyana Bank for Trade and Industry Limited

Introduction
Last year when the Guyana Bank for Trade and Industry published its annual report for 2009 Business Page interrupted its series on the state-owned Guyana Sugar Corporation. GBTI’s 2010 annual report similarly interrupts a series of articles on the 2011 budget for the principal ministries of the government.

Another similarity this year is the remarkable growth of the Bank particularly in terms of after-tax income which in 2010 increased by a substantial 21.6%, easily surpassing the 5.3% growth in after tax income in 2009 over 2008.

The satisfaction with the results was writ large on the face of Chairman Mr Robin Stoby and in his enthusiastic and lofty prediction of the bank’s future as “luminous in the vein as our head office” and the realisation of the Bank becoming “the leading bank, not only in Guyana but also further afield.”

While there may be some over-enthusiasm in the Chairman’s predictions, they are understandable with net income before taxes increasing by 17.8% in 2010, 25.8% in 2009, 14.8% in 2008 and 23.9% in 2007, making for a cumulative increase since 2006 of 110.6%. Because of the tax effect, after-tax profits have increased cumulatively over the same period by 138.1%.

Highlights

Performance
Earnings per share for the year were $30.1 in 2010, a significant increase from $24.8 in 2009. With the last trade in the company’s shares happening on January 31 at $163, the P/E ratio would be 5.4 compared to 5.6 just under a year before. No offers to sell the Bank’s shares were reported by the local stock market last Monday while the best bid price was $180, theoretically giving a P/E ratio of 5.98.

Given that per-tax income actually grew at a slower rate (17.8%) than in 2009 (25.8%), the enhanced after-tax performance has to be attributed to the lower effective rate of corporation tax which in 2010 was 24.5% compared with 26.2% in 2009.

This of course compares with the nominal rate of corporation tax of 45% up to last year. No doubt the shareholders would have been happy with the announcement that the nominal rate of corporation tax on banks, commercial and telecommunication companies other than telephone companies is being reduced from 45% to 40% effective January 1, 2011.

Commercial banks also enjoy several shelters including on investment income arising in countries with which Guyana has double taxation treaties and certain categories of loans made by the bank.

The interest earned on the average of net loan balances declined from 13.1% to 12.2% while the average interest paid on deposits was 2.1%, compared with 2.2% in 2009. The bank also consistently enjoys a high level of non-interest bearing demand deposits which averaged more than $12 billion during the year. Exchange Trading Gains fell from $733 million or 19.1% of total income in 2009 to $639M or 14.6% of total income in 2010, which took such gains below the 2008 level.

Loans and deposits
Deposits grew by $7.5B from $45.8B to $53.7B, an increase of 17%. Major sectors with increases were State Entities ($3.1B) and Personal ($4.6B), Deposits by the Commercial sector showed no increase while those by non-residents actually declined by 11% to $2.4B. The bank’s deposits increased slightly ahead of growth in deposits of all commercial banks, thus allowing it to increase its market share by 0.29 percentage points to 21.66%. Its market share of loans however could not be reliably determined as the total loans and advances figure published by the Bank of Guyana at December 31, 2010 excludes Real Estate Mortgage Loans.

The strong net increase in loans and advances came mainly in the Services ($2.8B) and Household ($2.6B) sectors. Since Household is wider than housing, it is not possible to ascertain from the financials the extent of mortgage lending from this categorisation.

Once a very strong player in the agriculture sector, the Bank’s loan portfolio suggests that this sector in no longer being emphasised and its growth in 2010 was a mere $73 million.

The Bank’s financial condition remains very strong and shareholders’ funds have increased from $5.7 billion to $6.5 billion.

In addition to providing several tax shelters, government support also comes in the form of treasury bills issued by the government that is prepared to spend billions to mop up liquidity. The bank’s stock of such bills is now $19.2 billion, while its loan portfolio has risen from $13.1 billion to $19.4 billion, an increase of 48%. Empirical evidence is that a substantial share of this is in the form of mortgages but strangely, the financial statements do not show this figure.

Related party transactions
Loans and advances to group companies totalled $660 million compared to $507 million at the end of 2009. Interest income was however recorded at $33 million on these facilities, an average interest rate of 5.69%. With a much higher average earned from the loans and advances portfolio (12.2%), it is difficult to see how the “rates of interest and charges have been similar to transactions involving third parties in the normal course of business” as stated by the Bank. On the other side, deposits by group companies were relatively stable at $1.1billion and interest paid averaged 2.46%, compared to the average on the total portfolio of 2.1%.

Insurance policies placed with a group company more than doubled from $2.1 billion to $5.0 billion.

Another related party is the law firm of Hughes, Fields & Stoby of which the Bank’s chairman is a partner. As with so many financial houses in Guyana, the Bank seems to place much of its customers’ borrowing business with a single firm rather than give the customers the expressed option of independent legal counsel.

Share price
Only 1000 GBTI shares have traded since November 15, 2010 – a single trade on January 31, 2011. 251,500 traded between January 1, 2010 and November 15, 2010, more than half (140,000) of which traded on April 26, 2010 which is the week after the AGM. Share prices on January 11, 2010, April 26, 2010 and January 31, 2011 were $135, $160 and $163 respectively. The highest price for the year was $180 on April 12, 2010.

At $9.0 per share, total dividends in 2010 will represent 29.9% of the year’s distributable profits, compared with 30.3% in 2009.

Conclusion
The Bank is clearly on a growth mode and is so far the only bank approved under the small business amendment to the Income Tax Act; is the centre of the Women of Worth Scheme; and has started construction in Lethem, which will likely make it the first bank to open in that area. The Bank has also taken up an additional 10% shareholding in associate Guyana Americas Merchant Bank Inc. These are significant developments.

On the negative side, the Bank could be more forthcoming with information on its overseas investments and the various loan schemes it operates.