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The liquidator not the President should be meeting with policyholders

Today at the National Cultural Centre President Jagdeo will tell policyholders of Clico Guyana about his administration’s arrangements for them to recover the billions of dollars squandered by the failed insurance giant. This follows swiftly on the ruling last week by Ian Chang CJ (ag) that the company be liquidated.

The Chief Justice ruled that the Bank of Guyana be the liquidator. But President Jagdeo had promised that no policyholder would lose out on their investment, and he may be meeting them to say how the government will back his guarantee. That is the extent to which the government can go without frustrating the ruling of the court. In fact the President should be meeting with the Bank of Guyana in its capacity of liquidator and it is the liquidator that should be meeting with the policyholders.

The migration from judicial management to liquidation – two distinct insolvency regimes – involves a number of technical issues including the basis on which principles and statutory provisions of the former could be transplanted into the latter. But the President finds it irresistible to interfere and to try to benefit from the mess to which his administration made no small contribution. It would be the classic case of deus ex machina.

While the collapse of the company cannot be divorced from the demise of its Trinidadian parent, the directors of which are probably equally culpable, the taxpayers of this country will bear a huge cost as a result of the illegal transmission of US$34 million the local company shipped out to its sister company, Clico (Bahamas). It is one of the most costly corporate crimes ever to have been committed against the people of this country and in keeping with the principles of relevant law, it is the directors of the company including Ms Gita Singh-Knight and Mr Ramalho, who should be held culpable. And on top of this, all this took place while we boasted about the quality of the Insurance Act and the supervision by the Office of the Commissioner of Insurance.

We understand that Director Ramalho and his wife surrendered their policies to the tune of $45 million even as the Clico ship was fast sinking. He has denied receiving any money but the question remains whether he acted based on inside information.

As at February 28, 2009, the Guyana company had some $600 million in cash and other liquid assets – much lower than the $1.5 billion it received from the sale to the NBS of investments in the Berbice River Bridge Company Inc. Unfortunately the court did not comment on any person or persons who might have benefited from insider information by cashing in on their policies or those who might have colluded with them. My understanding is that several powerful persons with political connections would have been on the list of beneficiaries and that high political functionaries may have had a hand in the prioritization of the payments. In effect they were paid improperly in advance while the policyholders who will turn up at the National Cultural Centre this afternoon may be told they have to wait years for full, nominal recovery.

The court must have been aware that there had been a concerted cover-up of vital information. With the greatest of respect, I believe it missed a great opportunity to assert the rule of law, by not offering some comment on the selection of persons by CEO Ms Gita Singh-Knight for preferential payment when she must have known that collapse was imminent.

CLICO represents one of the worst acts of corporate misfeasance ever committed in this country. Yet, some of the people whose hands drip with culpability will probably be there this afternoon.

The question is whether today will simply be the end of this sordid affair or should we not follow the call by Government Senator Patrick Watson to the authorities in Trinidad and Tobago that those persons in CLICO in Trinidad responsible for milking thousands of unsuspecting investors of their money should be ‘jailed.’

Hopefully, policyholders will be allowed and will have the courage to ask President Jagdeo some challenging questions. Let us not forget that billions of dollars belonging to the NIS is involved, putting at risk the pensions of workers. It would be a sad day for Guyana and corporate governance would be rendered meaningless if today’s meeting closes the book on this affair.

The advertisement for the meeting mentions that only policyholders will be admitted and that persons would have to provide proof of identification. It is therefore likely that the press will be barred from the meeting.

The court has dealt with one aspect of this matter. A full and thorough investigation is now required to identify all who contributed to this expensive mess. The money to pay the policyholders belongs to the taxpayers. They should join the call.

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The Amerindian Act 2006 has not yet been brought into force

A GINA release in early March 2008, reported that the Amerindian Act, 2006 passed on February 16, 2006 and assented to by the President on March 14, 2006 had “paved the way for Amerindians to empower themselves socially, economically and politically.” Further, and as a measure of its pride in the Act, the Ministry of Amerindian Affairs, under Ms Carolyn Rodrigues, expended considerable sums on the publication of user-friendly booklets for distribution to Amerindian communities. And as recently as August 19, 2010, PPP/C MP Norman Whittaker boasted that the PPP/C government had consistently followed the provisions of the 2006 Amerindian Act. When all things are considered, maybe Mr Whittaker was being more careful than anyone at that time thought.

The reason is that there is one small – to some significant – problem: Four years after its assent, the Act is yet to be brought into force. Effectively then, the 1951 Amerindian Act Cap: 29:01 described by Minister Rodrigues in 2005 as “outdated and not addressing the needs of Amerindian communities,” remains in force.

I find it hard to believe that this was any innocent oversight by the Amerindian-loving government, if there is such a thing. After all, for more than three years, there were three Amerindian MPs in the Cabinet. At every opportunity, whether it is in the “Cabinet Outreaches,” in the National Assembly, in national and international press conferences, and to the Norwegians, the government never ceased to showcase the Act as evidence of its respect for the rights of our indigenous peoples. Now it seems that all might be a deception, a sham and a façade, cynically disguised.

A possible reason why the Act has not been brought into force is that it creates an obligation on the Guyana Geology and Mines Commission (GGMC) to “transfer 20% of the royalties from mining activities to a fund designated by the Minister for the benefit of the Amerindian villages.”

The financial statements of the GGMC show that mining activities garnered more than eight and one half billion dollars since June 2006. The failure to bring the Act into force has, therefore, deprived Amerindian communities of approximately one point seven billion dollars ($1,700,000,000).

Maybe this is all innocent. Maybe it is a mere coincidence that during the same period, the GGMC has transferred one point eight billion dollars ($1,800,000,000) to NICIL.

This is Amerindian Month. It is a test of the sincerity of the government. The onus is on it to prove that it does not consider the Amerindians as naïve and gullible, ready to give up their legal right to $1.7 billion in return for a few outboard engines here, some chainsaws there, trips for its leaders to come to Georgetown to perform, or go on window-dressing trips to Norway.

This is a test too of the multiplicity of Amerindian organisations, politicians across parties and civil society activists. They should stand up and let the Amerindians know where they are on this latest blatant example of official deception. Silence is not an option.

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The tragedy of Godwin Maxwell

Introduction
We will soon forget the name Godwin Maxwell. But his story is most likely unique in Guyana. Mr Maxwell, a man who according to the press made a living by being a jack of all trades in the Mahaicony area, met his death in the most unusual circumstances. Having been granted bail of $30,000 he escaped from police custody and jumped into the Mahaicony River where he died by drowning. He was on a charge of tax evasion. Let us not stretch this. Neither the GRA nor the Magistrate could in any way be remotely responsible for Mr Maxwell’s unfortunate death. The GRA has a mandate to collect taxes and the Magistrate has a duty to execute the law.

Deal with tax evasion
This column has consistently called for and supported the efforts of the authorities to deal with tax evasion. My interaction and experience suggest that there are some genuine efforts to deal with it. But one has to wonder why, like in the drug trade, only the small fish ever get caught. With the politicisation of all aspects of public administration in Guyana, it would be unrealistic and naïve to believe that political influences are not brought to bear on the GRA. Indeed the story about a certain politico using his weight to get containers cleared rings with the loudness of truth.

We are told that Mr Maxwell is a promoter, even as the poor man had to depend on relatives to raise thirty thousand to post his bail. Unfortunately even a Freedom of Information Act would not allow us to know whether the country’s better-heeled promoters are pursued with the same vigour.

A country that cares about corruption would have laws that require disclosure, not to some secretive entity like the Integrity Commission, but to the public. To address corruption requires strong and independent institutions. We abhor them in Guyana. To address corruption we need honest and decent politicians. In Guyana, that would be the leading oxymoron. To address corruption we need equitable laws that are fairly applied. In Guyana, there is one law for the rich, the powerful and the connected and another for the poor, the voiceless and the helpless. The immorality of Guyana is that one set of people pays the tax while another spends it.

Tax evaders
It is often said with considerable justification that behind every fortune in the US was a robber baron, people whose wealth was acquired by the most unscrupulous methods, and often at the expense of others. The ‘honour roll’ includes names that have become famous with time – Andrew Carnegie, JP Morgan and John D Rockefeller being the most internationally recognised – and those who profited from bootlegging. That mostly nineteenth century American culture seems to be the model of economic development favoured by this government, with notable exceptions. Some of our business people actually make their money from various forms of contracts with the state and then turn around and cheat it – or rather the poor people like Maxwell – of taxes.

They ensure that their good deeds such as the pittances they periodically donate and the activities they promote are embellished in the national media while the bad is hidden in false returns to the tax authorities and secretive bank accounts abroad. The robber barons of the US on the other hand virtually created American philanthropy, using their immorally and illegally acquired wealth for the establishment of colleges, hospitals, museums, academies, schools, opera houses, public libraries, symphony orchestras, and charities. And they did not ship their money out of the country, hold two passports or live double lives.

Playing politics with taxes
The government in its cabinet outreach plays to the voters of the Amerindian community with outboard motors and motor cycles and more recently promises of laptop computers and solar power. The spending spree by Jagdeo on his outreaches represents a mockery of our campaign financing laws which President Jagdeo had promised since 2004 to address. And it is apposite to quote US president Ronald Reagan who said of the US: “We don’t have a trillion-dollar debt because we haven’t taxed enough; we have a trillion-dollar debt because we spend too much.” Jagdeo keeps racking up larger and larger domestic debts because he spends and spends, with no one around him to tell him that is not the way.

The dysfunction is also evident in the failure of our polity to give life and effect to Article 77A of the Guyana Constitution which requires the Parliament to enact a statute to provide for the formulation and implementation of objective criteria for the purpose of allocation of resources to, and the garnering of resources by local democratic organs. More than ten years on, and after at least two elections, this has not been done.

Kenya
Compare this government with how Kenya in its new constitution treats its indigenous communities and regions. Article 11 of the Kenya constitution on culture requires Parliament to enact legislation that ensures receipt by communities of compensation or royalties for the promotion and use of cultures and cultural heritage and recognises and protects ownership of indigenous seeds and plants, their genetic and diverse characteristics and their use by the communities of Kenya. That constitution sets a five-year time limit for parliament to get this done and gives any person the right to bring an action in the courts to enforce the provision.

The Kenya constitution is explicit on the taxes the central government can raise and provides for a range of taxes which the counties can raise. It also provides that revenue raised nationally is to be shared equitably among the national and county governments and for county governments to be given additional allocations from the national government’s share of the revenue, either conditionally or unconditionally. Criteria for equitable sharing are set out in Article 203, but the amount allocated to county governments must not be less than 15% of the national revenues of the preceding year. If political rivals whose supporters two years earlier were at each others’ throats, pun intended, could come up with such eminently sensible solutions, how else can one describe our situation but as dysfunctional?

The private sector
The dysfunction also takes place at the level of the private sector which is prepared to accept annual promises about tax reform that by now it should know are empty. The reason on the one hand is the weak leadership of the private sector which is satisfied about the number of loopholes and opportunities available in the laws and about VAT which shifts tax from the business to the consumer. And on the part of the government, VAT brings in all the revenue it can reasonably need and for reasons mentioned umpteen times in these columns, provides an annual windfall to the spendthrift government.

We know only too well how the tax system favours the haves over the have-nots and the self-employed over the salaried worker. The national estimates for 2010 show the contribution of the self-employed sector to total tax revenues to be 2.28%! That many salaried employees pay more taxes than the more successful businessman seems further evidence of a structural revenue dysfunction. The single woman gets no relief from the tax system, regardless of the number of children she has to feed and send to school. The small allowance paid to the worker to help defray travel costs is taxed but the chauffeur-driven cars for the company executives are not a taxable benefit. Plato was right: When there is an income tax, the just man will pay more and the unjust less on the same amount of income.

Sacred cows
For reasons which are not clear, the government has resisted calls for a withholding tax in the construction sector where the contractor often treats his employees as self-employed and therefore not in the social security system either. Tax reform should consider data on what they contribute to the tax revenues of various sectors of the economy and what is paid to them by way of transfers and subsidies. We need to start disaggregating the taxes paid by the self-employed and those who can afford attorneys and politician-attorneys to make representation for them at various fora. Too many parts of the system are dysfunctional.

But the greatest irony and dysfunction would be whether the lawyers who were in court that fateful morning will be declaring the fees they charge their clients.

Note: I had promised to continue looking at the mining sector this week. However, I thought I should address the dysfunctional environment which confronted Mr Maxwell.

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The case for the Marriott Hotel – conclusion

Introduction
As yet, other than saying that Atlantic Hotels Inc is a public-private sector partnership, the government and its handmaiden NICIL have been silent on where the money to build a hotel in Kingston to be operated under the Marriott label will come from. We have heard about some group operating in Grenada that has run into problems in that country and have heard that some friends may be interested. The fact is we do not know. Meanwhile NICIL is proceeding with speed to identify a contractor to begin construction of the hotel.

Where indeed is the money going to come from? Last week, in part 2 of this series on the decision by President Jagdeo to build a hotel, I wrote that it would take more than investigative journalism to ascertain the labyrinthine sources from which the funds for the hotel would be derived. That it would take an enquiry with full powers to demand information and explanations. And that it would need to look into the books of the Consolidated Fund, NICIL, Guysuco, the Lottery Funds, and other unknowns at this stage.

The strategy of no systems
As this closing piece argues, the first stage in a strategy of misusing money is either to have no system or to undermine the existing system and then exploit its weaknesses. Add to the mix opaque rules such as those dealing with the Lottery Funds, spice it up with an entity that depends on you for its survival (Guysuco), have a few non-accountable entities at the ready (NICIL) and neutralise with carrots those likely to oppose (the leadership of the opposition) and have ready a sufficient number of persons who would be prepared to execute your work. It would help if the press and the public are uninformed or apathetic. When all these forces serendipitously come together, you are on top of the galaxy, with Zeus and Atlas at your side.

There are sufficient secret or hazy sources which could provide some if not all the funding for the hotel. With the role of the Leader of the Opposition becoming increasingly a sinecure, with so many prepared to do the work out of fear or favour, with the carrots dangled to emasculate individuals and groups accustomed to handouts, the government is almost guaranteed not even a whimper of opposition if it decides to use one of these hazy sources to finance the hotel.

A consolidated mess
Despite the boasts by the government, the Consolidated Fund is in a mess. In its 2008 report, the Audit Office reported that it had received confirmation from the Bank of Guyana that the government was holding in special accounts, outside of the Consolidated Fund, some $35.031 billion. But that was the only certainty. The Audit Office’s assessment of the balances held in the special accounts indicated that thirteen accounts with balances totalling approximately $7.868 billion appear to be funds that are transferable to the Consolidated Fund. Of those thirteen accounts, nine reflected static balances totalling $4.778 billion over the last five years; amounts of $10.980 billion held in Other Ministries/Departments Bank Accounts; and twenty inactive bank accounts.

The 2008 report tells of a new and an old Consolidated Fund and it would be fair to assume that the new would be an improvement on the old. Wrong again. The New Consolidated Fund bank account reflected a balance of $2.376 billion compared with an overdraft of $11.602 billion as stated in the cash book as at December 31, 2008. This represents a difference of fourteen billion dollars but was probably considered not too important and so no effort was made to reconcile the difference in the two amounts.

You would think that there would be some serious effort by the government to resolve this mess. Year after year, even as the quantum of the special funds keeps increasing, the only word coming out of the Ministry of Finance is that it is addressing these matters.

Contingencies Fund and the lottery
Then there is the Contingencies Fund provided for under the constitution and the Fiscal Management and Accountability Act 2003 which allows the Minister of Finance, on being satisfied that “an urgent, unavoidable and unforeseen need for the expenditure has arisen (a) for which no moneys have been appropriated or for which the sum appropriated is insufficient; (b) for which moneys cannot be reallocated as provided for under this Act; or (c) which cannot be deferred without injury to the public interest….” to approve a Contingencies Fund advance. This account has been ripe for systematic abuse, year after year as routine payments are made well outside the criteria set out in the law.

Increasingly it seems that the public interest is determined not by law or the technocrats but by the President and the other politicians. And in any case, if expenditure for Carifesta and Amerindian Month could qualify, then maybe with a little bit of a stretch, so could the President’s Marriott.

Then there is the President’s former favourite, the Lottery Funds. I say former because I now believe that his new favourite, based on value and opacity, is NICIL, which I will return to presently. Either as Finance Minister or as President, Mr Jagdeo has unconstitutionally and unlawfully made or authorised payments out of the Lotto Funds totalling $3.097 billion during the period 1996 to 2008. These funds are closely hidden away and spent purely at the discretion of the President on such things as $20 million given to the Commissioner of Police to acquire a steel band; paying to bring Indian cultural groups to Guyana; funding the construction of mosques; Amerindian activities; youth awards; empowerment activities, etc.

If the truth were ever to be told, we might even hear that the Lotto Funds will finance the President’s Buxton initiatives.

The PNC’s black hole
Why the government accounts are in such a mess is hard to imagine. Yes, there was a black hole ten-year period beginning in 1981 when we had no audit reports, and while that in itself was unlawful and unacceptable it did not mean that there was necessarily any major improprieties. But the deteriorating situation over the past five years or so probably has to do with the supine leadership of the political opposition; the departure of Goolsarran from the Audit Office and the quality of staff there; Jagdeo’s increasing boldness if not contempt for accountability and the total failure of the Public Accounts Committee to do any serious work.

Guysuco
This state-owned entity is now pivotal to a matter that is pivotal to a hearing of a matter by the Privileges Committee of the National Assembly. In that matter, the Speaker of the Assembly has ruled that a prima facie case has been made out against one minister of the government. The National Assembly is in recess and it is not known when the matter will come up. Both numerically and qualitatively the composition of the committee weighs heavily in favour of the minister and he may come out of it unscathed. The role of Guysuco in that matter is best left until it is dealt with, not because one attorney-at-law has said – wrongly – that it is sub judice, but for more practical reasons.

What can be said now, however, is that despite a clean audit opinion, Guysuco has not been properly accounting for its land sales. In November 2007 four hundred acres of land were transferred from the corporation to the government and in May 2008 another two hundred acres. The disposal proceeds of those lands do not appear in the books of the corporation. Nor are lands disposed to Republic Bank, GBTI and Demerara Bank.

NICIL
Where did this money go? Even if it was gifted to the government, it should have been accounted for as a distribution. It was not. One probability is that the money went to NICIL which has now replaced the Lottery Funds as the slush fund of choice. It is bigger, more opaque, more convenient and therefore more useful as a fund to be used for anything and everything. NICIL has received hundreds of millions as privatisation proceeds, including lands sold to John Fernandes Limited, GBTI and Queens Atlantic Investment Inc. It is also a rent collector and incredibly an asset fund manager to build roads for the GGMC from which it received $1.8 billion in 2007 and 2008.

The law defines most if not all of these as public moneys which should therefore be placed in the Consolidated Fund. NICIL is many things, but it is not even part of the Consolidated Fund. Its objects set out in its corporate documents do not allow it to do many of the things it purports to do. But it is convenient and, being a private, state-owned company is outside of the formal government accounting rules. The Privatisation Unit that was set up as a department of the Ministry of Finance is not even listed as a budget agency which seems to exclude it from the strictures of the Fiscal Management and Accountability Act. The stage is therefore set for NICIL to do the kind of work which it has been doing for some time and with an increasing sense of impunity.

LCDS: the big one
But even NICIL may be overtaken by another vehicle to channel public moneys into questionable investments. And that is the LCDS funds. As we see with Mr Fip Motilall and the road to Amaila, such funds are already being used by the government, even before their receipt. That I fear is the wave of the future. It would not matter how many lives and jobs in forestry and mining are sacrificed, how many royalties are foregone and how many entrepreneurs and their investments are jeopardized, it is politically expedient for the government to have full control of the LCDS funds.

As a major forester described the matter, the ‘S’ in LCDS stands for sacrifice to be made by the forestry and mining sector as they are strangled by draconian regulations and the commitments by President Jagdeo to the Norwegians. Currently the income from forestry and mining flows to the operators and the government, while jobs are provided for both coastlanders and members of hinterland communities. There is a perception that the persons making the money from these sectors are not supporters of the government, and in consequence, they are dispensable and will be sacrificed to the LCDS.

LCDS funds flow directly to the government which alone decides how they will be spent. If it wants to support a particular project or person, all it has to do is put it in the context of the LCDS as in the case of Amaila and Fip Motilall. And if another project – like a hotel – is not that easy, just prefix the project with the word “green.”

Conclusion
The Office of the President has spent scores if not hundreds of millions on LCDS already. It does so without accountability and transparency. The Audit Office has turned a blind eye to that and to the misdeeds of NICIL. The government can count on the office doing the same with LCDS. And if perchance the hotel succeeds, the government can always sell its interest to a friendly partner.

The case for the Kingston hotel then has little to do with tourism and a top-of-the-line, international standards hotel. When built, it will be a monument to the extent to which egomania has gripped President Jagdeo, testimony that civil society is dead and it will explain why Guyana lags far behind even the smallest Caribbean island, barring Haiti. It will be our beacon of arrogance and attitude to spending public funds on the one hand, and the cowardice of a nation on the other.

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The case for the Marriott Hotel – part 2

Introduction
Last week I wrote that the Government of Guyana through the instrumentality of President Jagdeo was about to enter the tourism sector as a major investor while simultaneously getting out of a major lucrative investment in the telecommunication sector from which it, or rather the increasingly infamous NICIL, received some $3,458,000,000 in dividends. Business Page noted that these decisions, are taken in the name of the people of Guyana, without consultation, logic or justification.

The government and its handmaiden NICIL, completely ignoring the calls by the press and the taxpayers of the country for information on the decision, have taken the investment in the hotel one stage further. The Atlantic Hotel Inc, a creature of NICIL of which NICIL’s CEO Winston Brassington and its Deputy CEO Ms Marcia Nadir-Sharma are the sole officers on record, has put out an advertisement for pre-qualification applications from contractors to undertake the construction of a hotel and entertainment complex in Georgetown.

According to the advertisement the works comprise the construction/erection of a 275,000 square foot compound that will include:

(i) A 200,000 square foot hotel facility; and

(ii) A 75,000 square foot “entertainment complex” outfitted with common services areas/amenities that will be the site for a casino, restaurant, nightclub and other unfinished spaces available for retail.

Keeping the promise
Readers will recall that Mr Jagdeo was embarrassed after an earlier attempt to have a Marriott hotel built at the same location, and after substantial sums of money had been forked out by NICIL on sewerage diversion, consultancy and other big ticket items of expenditure. Of course NICIL, which is chaired by the Minister of Finance and includes some top ministers, does not file annual returns, and with its officers failing to provide the press and the public with financial information, accurate figures on the actual amounts expended cannot be ascertained.

Jagdeo is one president who appears not to tolerate being embarrassed. The impression is conveyed that he has pursued a Marriott Hotel because that is what he had announced. One might ask, for example, why it could not have been a Hilton, or an Inter-Continental or a Holiday Inn, each of which might have offered a better deal, including making an actual investment in a hotel.

No FIA, no Procurement Commission
If any Guyanese wants to understand why Jagdeo is not interested in a Freedom of Information Act, just look at NICIL, a company that breaks the law on a daily basis. If any Guyanese wants to understand why there will be no Public Procurement Commission under Jagdeo, just look at NICIL, a company that has flouted the Procurement Act with impunity in the past.

The stage is being set once again for the flouting of the constitutional and statutory arrangements regarding procurement. One taxpayer and citizen has challenged NICIL’s role in the award of the road contract to Fip Motilall. That challenge has regrettably been stalled by a slothful court system even as Mr Motilall’s failure to start the G$3.4 billion contract on time is being tolerated and ignored by the government. In fact, the role of the government has been reduced to periodic bulletins to the nation of the location of the most tracked ship. According to Minister of Public Works and Communication Robeson Benn, the ship, like that of Antonio in Shakespeare’s Merchant of Venice has successfully navigated the storms, is now out of the Bermuda Triangle and should soon be home to help in delivering hydro-electric power to the nation, another of President Jagdeo’s promises.

Even if there was ever a probability that the penalty clause in the road contract would be imposed, Mr Benn has now made the case for its non-operation by a plea of act of God by Mr Motilall. From commencement to conclusion the road contract to Mr Motilall has been tainted. It characterises so much that is illegal, improper, immoral and irrational, in a haste to deliver on President Jagdeo’s promises, including the new hotel.

The birth of a hotel
First touted as a government/private sector partnership, Atlantic Hotel Inc is at this stage a 100% state-owned company. You would think then that with a strict Fiscal Management and Accountability Act the task of knowing where the government will find the billions to build the Kingston hotel is an easy one. After all, that Act defines public monies and lays down the rules for their accounting and expenditure. You could not be more mistaken.

It will take more than investigative journalism to ascertain the labyrinthine sources from which the funds for the hotel will be derived. It will take an enquiry with full powers to demand information and explanations. It needs to look into the books of the Consolidated Fund, NICIL, GuySuco, the Lottery Funds, and other unknowns at this stage. It may even reveal that some public officers should be charged for the glaring breaches of the Fiscal Management and Accountability Act. But then reality in Guyana does not work in such structured, legal and proper ways.

Under Cheddi Jagan there was a Privatisation Unit which was a department of the Ministry of Finance. That proved too inhibiting and so NICIL was resurrected as a hybrid called NICIL/PU. But that also required some semblance of accountability. So the twain parted and NICIL became the front for a number of misdeeds. And now NICIL has created its own company, Atlantic Hotel Inc, a company that was born, secretly as from an unsuspected pregnancy. The child will be even more wayward than the parent. It is that child that has now placed the advertisement, apparently convinced that it could ignore section 24 of the Procurement Act. This is what that section states:

(1) Public corporations and other bodies in which the controlling interest is vested in the State may, subject to the approval of the National Board [the National Tender Board which the government uses as the substitute for the National Procurement Commission], conduct procurement according to their own rules or regulations, except that to the extent that such rules and regulations conflict with this Act or the regulations, this Act and the regulations shall prevail.

(2) If funds are received from the Treasury for a specific procurement, then the corporation or other body shall be obliged to follow the procedure set out in this Act and the regulations.

(3) Employees of any procurement entity who by their job description are responsible for procurement shall declare their assets to the Integrity Commission.

The Procurement Act, as readers of this column are aware, covers not only the procurement of goods but also services, including construction services. Maybe the two executive officers and the directors of NICIL wrongly believe that by the creation of a subsidiary they are insulating that subsidiary from the reaches of the law. That by the funds for the hotel coming from its parent NICIL and not the Treasury, the provisions of the Procurement Act will not apply. This may not be how the nation sees it or how the law was intended to operate. But the government has other motives and the force of power on their side. That is all they need in practice, if not in law.

Breach of faith and the CIOG
Before I consider the possible sources of the funding of the hotel some general points seem to be in order. Under this new dispensation of direct government involvement in the economy, no business is safe from unfair competition by the government. The government gave valuable land and support to Buddy’s which realised a vast capital gain by selling out to Princess. Now the Princess, under foreign ownership, is criticised by President Jagdeo as a below par hotel, deserving of competition from the government. Unlike Robert Badal, a Guyanese, the Princess Hotel would feel intimidated to challenge the government on bad faith. But would they have paid such a vast sum for Buddy’s Hotel had they known in advance of the impending Marriott? And indeed would Badal have bought the Pegasus if he had known that he would sooner rather than later be facing stiff competition from the government?

Would any investor feel confident enough to even approach the government with any business ideas and initiatives if it cannot trust the government to keep information confidential, or worse, to use it for its own benefit and against the interest of the investor, possibly as a competitor? Competition is of course necessary and beneficial to the consumer, but that must at a minimum assume that the competition will be fair and proper. The PSC cannot criticise the government on the competition issue only on internal flights because the GDF may affect the business of one of its leaders. It must take a position on principle in relation to all businesses. Its failure to address the issue on principle rather than on the basis of personal interest will seriously affect the country’s image as a credible host country for investment.

That can hardly be the focus and intent of the expensive National Competitive Strategy on which the government spends billions of dollars of borrowed funds and for which the Chairman of the Private Sector Commission is the principal cheerleader.

The raison d’etre of the Kingston hotel has hardly been justified to a skeptical Guyanese public, but it seems that big-time gambling is the new strategy of the Jagdeo administration. The CIOG has arrived at a convenient relationship with President Jagdeo while the Christian community has given the appearance of being more concerned about individual lifestyle choices than by policies that will affect the nation.

To be continued